Vintage Filings Legal Blog

Small businesses continue to grapple with the costs of providing healthcare to their employees, but the challenge is becoming disastrous for many businesses that are just trying to stay afloat, according to George S. May International.

A new survey of 912 small to medium-sized business owners across the United States by management consulting firm George S. May International found that 46 percent of respondents don’t offer health insurance to their employees.

Of the 54 percent that do offer health insurance to their employees, the split between employer and employee paid premiums is as follows:

“This survey speaks volumes to what we’re seeing with troubled clients everyday,” said Paul Rauseo, managing director of the George S. May International Company. “A recipe for disaster is looming among small businesses that are already not profitable, as they struggle with this very difficult challenge to try and provide for their own employees.”

“The most glaring number is the fact that 22 percent of those small businesses that offer health insurance only pay 50 percent, which is a clear sign of being in survival mode,” Rauseo said. “These are the same employees that are being driven harder and harder each day to keep the very business alive that simply does not have the means to provide 100 percent employer-paid health insurance; many cannot afford any employer participation, much less holiday bonuses or other benefits.”

According to a study released today, the number of IT contract jobs grew by over 4% in Q2 2009, continuing a growth trend that started in Q4 2009. Corp-Corp.com, an online IT consulting marketplace, conducted the study from March 1 through June 30, 2009.

“One of the best arguments for the longevity of the current economic rebound is temporary hiring,” said Prabakaran Murugaiah, CEO of Corp-Corp.com. “Many companies that cut back to bare bones staff during the worst of the recession are now beginning to hire contract workers.”

According to Murugaiah: “Full-time, regular employment may not pick up until corporate management believes there is sustainable growth in the US economy, but they continue to be willing to spend on contract positions, and our analysis projects growth of at least 6% in Q3 2009.”

If you are in the legal industry, you know the massive turnover rate that many firms are experiencing, due mainly to the national recession.  However, survey data is showing that even lawyers that survive firm layoffs are still struggling mentally.  The August issue of The American Lawyer reports that mid-level associates at the nation’s largest law firms remain anxious and frustrated, even as those who survived past layoffs worry about the next round and wonder whether they’ll have any work to do even if they remain employed. The Am Law 2009 Mid-Level Associate Survey, the most extensive job satisfaction survey for this group, reveals that 83 percent of respondents felt significant anxiety about losing their jobs, while 46 percent said they had seen a drop-off in their workload. Fifty-six percent of respondents said that their firm’s response to the recession had hurt associate morale, while many were also troubled by lack of financial transparency and mishandling of communications related to layoffs, pay cuts and furloughs. For survey results, including detailed A-Z ranking reports for all responding firms and video interviews, visit www.americanlawyer.com/associates.

For the second year in a row, Boston’s Nutter McClennen & Fish ranked number one overall on work satisfaction. Associates said that the firm’s size at just 150 lawyers allowed them to take more of a leadership role in their work. St. Louis’ Thompson Coburn ranked second overall, up from tenth place last year. Gibson, Dunn & Crutcher at fourth place overall was the highest-ranked Am Law 100 firm. White & Case dropped to last place in the 2009 overall rankings, while Winston & Strawn received this year’s lowest rating on the handling of layoffs and communications.

Columbus Ohio’s Vorys, Sater, Seymour and Pease rose in the overall survey ranks from 156^th place to seventh this year—the biggest jump of any firm—by freezing legal fees without freezing associate pay, even though partners saw a 4.5 percent drop in their profits.

Since January 2008, Am Law 200 firms have laid off more than 2,900 lawyers. But despite their job anxiety, only 8 percent of respondents said they were actively looking for another job, and almost half said they expected to be at their current firms in five years. Seventy-three percent said they considered themselves to be on a partnership track.

To find out how third-, fourth-, and fifth-year associates rate their firms as workplaces, the annual midlevel survey examined 12 areas that contribute to job satisfaction. They include relations with partners and other associates, the interest and satisfaction level of the work, training and guidance, policy on billable hours, management’s openness about firm strategies and partnership chances, the firm’s attitude toward pro bono work, compensation and benefits, and the respondents’ inclination to stay at their firm for at least two more years. This year, almost 6,200 third-, fourth- and fifth-year associates from 165 firms responded to the expanded survey questionnaire, representing a 38 percent response rate.

The U.S. District Court, Eastern District of Missouri dismissed all remaining claims in a lawsuit against the City of Arnold, Missouri, and American Traffic Solutions (ATS), confirming the legality and constitutionality of Missouri’s red-light camera programs.

The comprehensive ruling in Kilper, et al. v. City of Arnold, Missouri, et al., adds onto the list of other cases across the United States in stating that photo-enforcement programs are constitutional public safety programs. Today’s ruling is consistent with a January ruling by the Seventh Circuit, U.S. Court of Appeals, affirming the constitutionality of red-light photo-enforcement programs.

“We have long held that this lawsuit was frivolous, and we are pleased that the U.S. District Court of Eastern Missouri has confirmed this fact. This opinion further negates unfounded claims against red-light camera safety programs and confirms the legality, constitutionality and safety benefits of photo enforcement,” said James Tuton, President and CEO of American Traffic Solutions. “Red-light camera safety programs successfully modify driver behavior by increasing compliance with traffic laws. These programs have proven to improve safety on the roadways by reducing red-light running, which causes unnecessary crashes, injuries and deaths.”

The U.S. District Court held that the ordinance allowing for the City of Arnold’s red-light camera safety program “…has a legitimate, non-punitive, public safety purpose. Moreover, the use of red light cameras and related proceedings are rationally connected to the valid public safety purpose of reducing traffic accidents at traffic light intersections.” The court further held that because enforcement of a red-light camera ordinance is a civil proceeding, issuing notices of red-light violations to the owner of the vehicle did not violate due process or wrongfully shift the burden of proof.

Unemployment for people with disabilities reached its highest rate in nine months, according to a quarterly study by Allsup.  At the same time, the Allsup Disability Study: Income at Risk shows the number of people applying for Social Security Disability Insurance (SSDI) benefits continues to climb, and the backlog of SSDI claims continues to slow people’s ability to receive their financial benefits.

Specifically, the quarterly Allsup study shows that for the second quarter of 2009, people with disabilities experienced an unemployment rate 53 percent higher than people without disabilities. Specifically, the unemployment rate for the second quarter averaged 13.6 percent for people with disabilities, compared to 8.9 percent for people with no disabilities, according to non-seasonally adjusted data from the U.S. Department of Labor.

For June, the unemployment rate for people with disabilities reached 14.3 percent, the highest since the Bureau of Labor Statistics (BLS) began reporting data on unemployment rates for people with disabilities last October. This compares to a 9.5 percent unemployment rate for people with no disabilities, also the highest during this same period. However, people with disabilities consistently continued to experience higher rates of unemployment.

BLS also reported that during June, three in 10 of the unemployed had been jobless for 27 weeks or more.

“People who may have been holding on to their jobs despite mild disabilities in the early stages of the recession may now have been out of work for several months,” said Paul Gada, personal financial planning director for Allsup. “Their health may have continued to deteriorate with the stress of no income and potentially no health insurance coverage further exacerbating their condition and putting them at significant financial risk. They may now be recognizing that even if they could find work, they are physically unable to work.”

The Allsup Disability Study: Income at Risk shows that the number of people with disabilities unable to work and applying for SSDI continues to climb. Disability applications rose to more than 727,000 in the second quarter of 2009, up 7 percent from the first quarter. Year to date there has been a 22-percent jump in initial disability applications compared to year to date 2008.

The number of people applying for Social Security disability benefits has a direct impact on the ability of the Social Security Administration (SSA) to process claims. For example, Allsup’s analysis of the Social Security disability 2008 backlog showed that more than 1.4 million people had applications pending. The average time to receive an award was more than 2.5 years (942 days). For the hundreds of thousands awaiting a review of their case by an administrative law judge, the wait can take two to four years, based on additional Allsup analysis.

“It’s crucial that people know the SSDI eligibility criteria before they apply for SSDI benefits,” said Gada. “This helps minimize further bottlenecks in the SSDI process and ensures qualifying people begin receiving monthly SSDI benefits as soon as possible.”

Deciding to Apply for SSDI Benefits

Eligibility for SSDI is determined by the SSA. Generally, applicants are considered disabled by the SSA if:

• They cannot do the work they did previously;
• They cannot do other work because of their disability; and
• Their disability has lasted or is expected to last at least one year, or result in death.

To qualify for SSDI, a person also must have worked and paid into the program (via FICA payroll taxes) for five of the last 10 years and be under retirement age.

“If you do qualify, it’s important to apply as soon as possible and to ensure your application is as thorough as possible,” said Gada. “Delaying the application process or not providing the detail needed will prolong the process and leave you without essential benefits.”

Gada noted that applying for SSDI benefits entails an extensive amount of paperwork. This includes completing an initial Social Security disability application and, in most instances, a detailed activities of daily living questionnaire. This requires detail on the person’s work history and the impact of the disability on his or her day-to-day activities. A doctor must verify information and additional medical exams may be required if there is not enough information to make a decision.

Only 35 percent of initial applications are approved on average, requiring those who are denied to apply for reconsideration and advance further in the SSDI process. Individuals can improve their chances of securing benefits earlier in the process by getting help. For example, more than 54 percent of those who hire Allsup for SSDI representation receive their awards at the initial application. Overall, 98 percent of people that complete the SSDI process with Allsup receive awards.

More than 70 percent of consumers surveyed said they would no longer do business with a company that exposed their sensitive, personal information as result of a data security breach, according to research conducted for Identity Theft 911.

Approximately 77% of respondents said they were “somewhat” or “very” concerned that identity theft could happen to them or someone close to them, and nearly 30% said they had received at least one data breach notification letter in the past two years, with half of those getting more than one letter.

“Businesses have a fiduciary obligation to treat personally identifiable information like assets,” said Matthew Cullina, CEO of Identity Theft 911, America’s leading identity theft resolution and education services provider. “They wouldn’t leave money unprotected, and they should take the same approach with personal data they are entrusted with. Every week, we read about another data breach, and consumers are not only angry, they feel violated when companies do not safeguard their personal information.”

Results of the survey, conducted by GfK Custom Research, include the following:

• If their personal information was exposed, respondents said they would feel “angry” (33%), “violated” (27%), “annoyed” (21%) or “anxious” (14%).
• Depending on their age, 72% to 81% of those surveyed said they were concerned identity theft could happen to them or someone close.
• If their data was exposed, the majority of respondents said they would want: a letter from the company explaining what happened and what was being done to respond (80%); free access to “live” expert fraud specialists providing one-on-one assistance (76%); free credit monitoring tools (70%); and identity theft insurance (55%).

Dow Jones & Company has prevailed in a lawsuit it brought to defend its businesses against unjustified patent licensing demands.  In a case concerning technology to personalize Web sites, a federal district court in Washington, D.C., declared two patents held by Ablaise Ltd. invalid. The court said that although Ablaise generated revenue from one of the patents “it admits that it has done so through a coercive licensing scheme that has more to do with the costs of litigation than the novelty of the patent.”

“Dow Jones vigorously fights unwarranted demands for patent licensing fees,” said Dow Jones General Counsel Mark Jackson.

In 2006, Ablaise demanded that Dow Jones pay a licensing fee to provide personalized content on Dow Jones Web sites. Ablaise claimed those features were possible only by use of its patented technology.

In response, Dow Jones filed a lawsuit against Ablaise asking the court to declare that Ablaise’s patents are invalid or that Dow Jones’s Web sites do not infringe Ablaise’s patents. The court agreed in a decision issued July 15 that the patents are invalid, saying that what Ablaise claimed it had invented was obvious or anticipated by existing technology.

Steven Lieberman of Rothwell, Figg, Ernst & Manbeck represented Dow Jones in the matter.

More than just unhealthy, California’s increasing girth is crippling the state’s economy, according to a study of the economic cost of obesity in California released today by the California Center for Public Health Advocacy (CCPHA). In just six years, reported economic costs of adult overweight, obesity and physical inactivity have nearly doubled and are now costing California an estimated $41 billion a year.

An update of a 2000 report, the study shows a 33 percent rise in obesity rates contributed to sharp increases not only in health care costs but also in lost productivity. The report is based on the latest available data and scientific research on the relationship between overweight, obesity, and physical activity, and their collective impact on health care expenditures and worker productivity.

“To put this in perspective, the economic cost to California of adults who are obese, overweight and physically inactive is equivalent to more than a third of the state’s total budget,” says California State Controller John Chiang. “Think of the programs we could protect, the children we could educate and the families we could help if we could recapture those dollars by investing in prevention. These figures demonstrate the real and very unsettling financial impact of the obesity epidemic on a California economy already in crisis.”

A leading national health econometrics consulting firm based in North Carolina, Chenoweth & Associates, was commissioned by the California Department of Health Services in 2000 to generate the first cost of obesity study. CCPHA hired the firm to update the study to get a more contemporary picture. Chenoweth and Associates found that overweight and obesity claimed a slightly larger percentage of the annual costs ($21 billion) than did physical inactivity ($20.2 billion). They also predict that the trend for dramatic growth in costs will continue and conservatively project that by the year 2011 costs will climb to $53 billion.

“These rapidly escalating costs paint an alarming picture for our state,” says Dr. Harold Goldstein, executive director of the CCPHA, which commissioned the study. “They underscore the need to build community health and prevention into public policies at every level, from national health care reform and the state’s use of federal stimulus funding to regional growth and local policies that help people to eat healthy food and be more physically active.”

In addition to a new statewide figure, today’s study provides an accounting of obesity costs by county. While it is not surprising that the largest counties have the largest costs, the numbers nevertheless are staggering: Los Angeles County – $11.9 billion; Orange County – $3.3 billion; San Diego County – $3 billion; Alameda County – $2.2 billion; Santa Clara County – $2.1 billion; and Sacramento County – $1.7 billion.

As dire as the report’s findings may be, the authors point out that even small improvements in health can have a considerable impact. A 5 percent improvement in the rate of physical activity and healthy weight over five years could trim almost $12 billion from the state’s obesity costs.

“The obesity crisis may seem overwhelming, but California has successfully tackled big health issues before,” says, Kim Belshé, Secretary of California Health and Human Services Agency, who helped design and lead the state’s nationally recognized tobacco programs. “The key is to establish concrete changes at the federal, state, and local level to make it easier for people to make healthier choices. This study shows that if those changes can help just one Californian in twenty reduce their weight and become more physically active, we could realize significant savings and begin to turn this crisis around.”

Echoing the need to address environmental issues that encourage poor diet was the study’s funder. “There are many communities where it is easier to get a cheeseburger than an apple. Communities such as these are designed for disease because of poor planning and policies that actually contribute to the epidemic,” says Robert K. Ross, M.D., president and CEO of The California Endowment, which funded the study. “In order to address the obesity epidemic effectively we must take a cogent look at what is driving it. We must move toward local, state and federal policies that seek to improve community environments and develop opportunities for physical activity.”

President Barack Obama has signed into law the Credit Cardholders Bill of Rights, but according to a new survey from Credit.com, a third (33%) of consumers still say their card company has recently made one or some combination of the following changes to a credit card account:

• Increased their interest rate 19% (up from 15% in February survey)
• Increased their fees 14%
• Lowered their credit limit 14% (up from 8% in February survey)
• Increased their minimum payment due 12%
• Reduced their rewards program 9%

“This is a defining moment between now and when the law is scheduled to go into effect in February 2010,” says Adam Levin, co-founder of Credit.com and a former director of the New Jersey Department of Consumer Affairs. “Will credit card companies actually be “kinder and gentler” or instead look to squeeze the consumer at every opportunity with a new fee or rate hike?”

LexisNexis, a leading global provider of content-enabled workflow solutions, today announced the launch of its LexisNexis Lend a Hand program to provide free marketing services, networking, and employment resources to lawyers who have been laid off in recent months due to economic hardship facing their former firms. The program is offered through the Martindale-Hubbell business and is available to all U.S.-based lawyers who recently worked for a law firm with more than 50 attorneys and are currently unemployed. Program enrollment will be available through the end of August 2009.

“Lawyers, particularly at large law firms, have borne the brunt of an unprecedented series of law firm layoffs in the past year,” said Dave Danielson, vice president and managing director, Specialized Law Client Development at LexisNexis. “The Lend a Hand program is a free service created to help these attorneys promote their personal brand, build and leverage a trusted professional legal network, and access jobs and employment resources available through Martindale-Hubbell.”

The LexisNexis Lend a Hand program provides a complimentary six-month profile on Lawyers.com – the most popular online legal resource that provides consumers and small businesses with the information they need to find the right lawyer; and on martindale.com – the premier destination for corporate counsel and sophisticated buyers of legal services.

The program also provides free access to Martindale-Hubbell Connected – a global online community designed specifically for legal professionals to quickly connect, network, communicate and collaborate with trusted and authenticated colleagues; and the Martindale-Hubbell Career Center – the one-stop employment resource to help attorneys find legal jobs.