Author: gotcha_admin

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

The FTC issued a nearly-complete ban on non-compete agreements which would have taken effect 120 days after the new rule had been published in the Federal Register, or on September 4, 2024. A Texas Court has now enjoined the rule, but only as to the parties in the case. So, where are we now?

First, for those of you needing context, or just like keeping score of “who just punched whom”, the Biden Administration is “Blue.” Blue politicians and states are more Labor and regulatory friendly. (See, Exhibit “A”: California).

In California, employers can get into trouble and fined $2500 for each unfair competition violation, including either asking an employee to sign a non-compete, or failing to tell an employee with an unenforceable non-compete that the agreement isn’t worth the paper it is written on.

Texas is “Red,” which is pro-business. You might say that Texas prides itself on “beating the pants off” California, when it comes to encouraging businesses to move from Blue states to the Lone Star State.

One way Texas does this is found in Texas Bus. & Com. Code 15.50, which allows non-competes which are reasonable in time, scope and geographic limits.

But, complicating matters, is the fact that Texas has pockets of Blue cities, Dallas, Houston, Austin, San Antonio (basically, any large city in America tends to be Blue, while the countryside is Red), and Texas state court judges in big cities are more likely to find that the “reasonableness” element of non-compete contracts, are not, well, “reasonable.”

In sum, it is a mess, even in states that allow non-competes.

The Biden FTC rule was intended to make the rest of the country more like California than Texas. And in Texas, “them’s fightin’ words.”

Not surprisingly, then, Ryan LLC, the world’s largest business tax firm, headquartered in Dallas (if you’ve ever ridden by the Dallas Galleria Mall, you can’t miss the building) filed suit in Texas federal court to seek an injunction against the enforcement of the FTC ban.

According to a July 16, 2024 blog I found on Westlaw:

On July 3, 2024, a federal court in Texas issued an order that partially enjoins the Federal Trade Commission (“FTC”) from implementing or enforcing its Final Rule prohibiting most non-compete agreements (the “Final Rule”), marking the latest development to the FTC’s issuance of the Final Rule.

The July 3rd order was issued in the case of Ryan, LLC v. Federal Trade Commission , (“Ryan, LLC”) in which the plaintiff, Ryan, LLC , a tax firm, brought suit against the FTC with the backing of the U.S. Chamber of Commerce, and others, including two Texas trade associations. The Court’s order, issued just two months before the Final Rule was set to take effect on September 4, 2024, comes with two significant caveats:

First, it is applicable only to the plaintiffs in the Ryan, LLC litigation, as the Court declined to impose a nationwide injunction without further briefing from the parties as to why such nationwide injunctive relief would be necessary to the plaintiffs at a preliminary stage. Second, the order left open the possibility of a nationwide injunction as the Court signaled an intent to rule on the merits of the case on or before August 30, 2024. Yet as written, the order leaves the Final Rule intact for all other employers beyond those named as plaintiffs in the pending action.

The Texas Court held that the plaintiffs were likely to prevail on the merits of their claims. It reasoned that Section 6(g) of the FTC Act does not grant the FTC the authority for “substantive rulemaking,” such as the Final Rule, but rather limits it to issuing “housekeeping rules” necessary to prevent unfair competition. As a result, the Court concluded that the FTC lacked the authority to issue the Final Rule in the first place. The Court further criticized the FTC for adopting a “one-size-fits-all approach with no end date,” without adequately considering alternative, less restrictive measures and reasoned the Final Rule is arbitrary and capricious because it is “unreasonably overbroad without a reasonable explanation.” As such, the Court found that Ryan, LLC and the other plaintiffs in the case had shown a likelihood of success on the merits.

Then again, if Trump gets elected, the first thing he will likely do, is undo anything the Biden administration did, so this might all be a moot point anyway.

So, what do we do when Congress writes a statute pertaining to a federal agency and administrative law which no one can understand?

On Friday, June 28 the U.S. Supreme Court expressly overruled the case from which “Chevron deference” is derived. The case is Loper Bright Enterprises v. Raimondo (22-451) (holding that “The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous.”)

If you don’t know what “Chevron deference” is, don’t worry, I am one of those nerds who spent the 4th of July reading the case so I can unpack this for you. After all, it isn’t that often we a get S.Ct. decision that takes me back to law school, with cites to Chief Justice Marshall and Marbury v. Madison.

The way a bill becomes a law, meaning how a “statute’ ends up published in the United States Code (“U.S.C.”) is very cumbersome, in that both houses of Congress must vote to pass the bill, then the President must sign it. This is a hugely inefficient way to govern. Anytime the government wishes to change anything, there would need to be a new statute, complete with presidential signature.

The way a rule becomes a law, one that ends up published in the Code of Federal Regulations (“C.F.R.”) is that Congress must first delegate rule-making authority to the executive branch (a/k/a the “administrative branch”) through an “enabling statute,” which is why we call it “administrative law.” Every official CFR rule will cite its enabling statute, which helps us know the rule is valid and we must obey it.

Administrative law exploded in the industrial era after the “New Deal,” (there wasn’t much need for the F.A.A. until we invented airplanes.) And soon too, problems of interpretation followed. There is a reason for this.

Congress frequently paints a big fuzzy picture in very low resolution of what Congress intends by a statute (think Monet’s “Water Lilies”). Then somebody has to figure out what Congress meant.

Chevron Deference is (“was”) one method of interpretation, which held that if Congress wrote an ambiguous law, it did so on purpose, intending that the relevant administrative agency figure it out. Courts would then just defer to the agency’s interpretation. And everybody would be perfectly content, walking hand in hand into the sunset.

“The Rise of Tyranny.” While it is very difficult for Congress to pass any law, it seems federal administrative agencies literally cannot stop themselves making new ones. As noted, after the “New Deal” era, administrative law rapidly expanded, to the point there is seemingly a regulation for every regulation. Critics argue that giving federal agencies that much power leads to tyranny by unelected officials.

For example, federal agencies frequently don’t stick to the plan of writing formal CFR “rules,” but instead will also issue “sub-regulatory” pronouncements about the rules, published in the Federal Register (F.R.) Which sounds official, but really isn’t. These interpretations aren’t law at all, but merely ideas stuck in a register where the government publishes both real laws and almost every thought the government ever has had.

Nevertheless, these sub-regulatory Federal Register pronouncements will then be cited (volume and page) by the very agencies who dreamed them up, as if these “ideas” are laws. For for example in lawsuits against my clients, the government will cite these FR entries to demonstrate that a defendant was “on notice” of an interpretation taken by a federal regulatory agency, even though the position was neither in an actual rule nor a statute.

One of the best books criticizing this state of affairs, is The Rise of Tyranny, by Jonathan Emord (2008), because of quotes like this:

“Since the 1930s the Congress has delegated legislative, executive, and judicial powers to over 200 independent regulatory commissions. Those agencies enact over ninety percent of all federal law. They are ruled by individuals who are unelected and largely unaccountable to the Courts and Congress. Repeatedly they pursue their own self-interest at the expense of life and health. Often the agencies become captives of the industry they regulate, as in the case of the FDA (captive to the pharmaceutical industry) because it is in the economic self-interest of those who run the agency to obtain lucrative post government employment form the key industries regulated. The result is widespread corruption, biased and perverse enforcement of the law, and anti-competitive regulation.

The Chevron Doctrine comes from a “Clean Air Act” Supreme Court decision during the Reagan Administration in 1984, where the Court reasoned that under the Administrative Procedures Act, courts should accord due respect to the Executive Branch’s interpretation of ambiguous federal statutes because “[t]he officers concerned [were] usually able men, and masters of the subject,” who may well have drafted the laws at issue.

While the APA specifically mandates that Courts treat most agency determinations of fact as binding on the courts, under the Chevron Doctrine, courts also began deferring to administrative agencies’ interpretation of Congressional intent on questions of law. Which is not in the APA.

At the time in 1984, the Chevron case wasn’t thought to be that big a deal. But in subsequent cases, the Court eventually stated that Chevron rested on “a presumption that Congress, when it left ambiguity in a statute meant for implementation . . . first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows.”

In Loper Bright Enterprises v. Raimondo (June 2024) The S.Ct. expressly overruled Chevron, holding:

“Chevron cannot be reconciled with the APA by presuming that statutory ambiguities are implicit delegations to agencies. That presumption does not approximate reality. A statutory ambiguity does not necessarily reflect a congressional intent that an agency, as opposed to a court, resolve the resulting interpretive question.

However, the Court was clear, that any case decided under Chevron is still valid.

“By overruling Chevron, though, the Court does not call into question prior cases that relied on the Chevron framework. The holdings of those cases that specific agency actions are lawful—including the Clean Air Act holding of Chevron itself—are still subject to statutory stare decisis despite the Court’s change in interpretive methodology.

Which means, we lawyers (representing regulators and the regulated), get to go fight all over again, about what Congress’ might have meant, because we can no longer presume Congress knew what it was doing, when it wrote a statute no one understands.

I hope you all have a wonderful Independence Day! The word “patriot,” meaning loyal to your country, comes from two Latin words smashed together “pa” (father) and “terra” (land). As in, dulce et decorum est pro patria mori. (“Sweet and fitting it is to die for one’s country.”)

As much as everyone likes to complain about the government, take heart that this is nothing new. This friction is by design. If you are wondering, politically speaking, I am one of these people who finds that the farther to the left or right a person is, the less I would want them in charge of anything that matters.

Thomas Jefferson explain below, why we do politics this way in his Notes on the State of Virginia, 1881. The idea here is that in America, everyone has a say in governance. We don’t have a king, we have elected officials. But, you have to watch those we elect like a hawk. They will misbehave, especially for money. Because as in England, from whom we won independence, people are reliably all the same when it comes to power:

Thomas Jefferson, Notes on the State of Virginia, 1881

“Mankind will soon learn to make interested use or every power they possess. . . . human nature is the same on both sides of the Atlantic. . . 173 despots would surely be as oppressive as one.”

“With money we will get men and with men we will get money, said Caesar. The time to guard against corruption and tyranny, is before they shall have gotten hold on us. It is better to keep the wolf out of the fold, than to trust to drawing his teeth and talons after he shall have entered.”

“The purpose of establishing different houses of legislation is to introduce the influence of different interests or different principles.”

“Thus in Great-Britain it is said their constitution relies on the house of commons for honesty, and the lords for wisdom; which would be a rational reliance if honesty were to be bought with money, and if wisdom were hereditary.

“But with us, wealth and wisdom have equal chance for admission into both houses.

“The concentrating these in the same hands is precisely the definition of despotic government. All the powers of government, legislative, executive, and judiciary, result to the legislative body. It will be no alleviation that these powers will be exercised by a plurality of hands, and not by a single one.

“An elective despotism was not the government we sought for . . .the powers of government should be so divided and balanced among several bodies of magistracy, as that no one could transcend their legal limits, without being effectually checked and restrained by the others.

“They should look forward to a time, and that not a distant one, when corruption in this, as in the country from which we derive our origin, will have seized the heads of government, and be spread by them through the body of the people; when they will purchase the voices of the people, and make them pay the price.

In sum, we have to watch our elected officials, if we don’t like what our elected officials are doing, and feel that corruption has seized the heads of government, vote the bastards out. The price of freedom is eternal vigilance.

As a health lawyer, you won’t see me on any “largest plaintiff’s verdicts” list. Which is probably a good thing. If I ever were, I don’t think you’d ever see me again. I will likely be doing what I love, health law, for a long time—one-tenth of an hour at a time.

One of the things I do love best about my job is getting to save people. This week, I got a “two-for-one.”

I had this kid that just graduated medical school and the TMB was holding up his license to “re-investigate” an old criminal matter in his background, which at the time, the grand jury had “no billed.” If you know anything about grand juries, they will indict a ham sandwich, so there was nothing there. But that didn’t stop the TMB from making the kid sweat. We just got word this week that he got his license.

But, he also said that his dad, who is a doctor, needed me, because he was the target of a DEA investigation. A DEA agent had called with her badge number, and said that the doctor’s bank account looked suspicious for drug activity, and they wanted information.

It took me about 15 seconds of listening to the story to tell the kid, “this is a scam.” There is no way that the DEA will call a doctor to ask for bank account information—they’re the government. They already know “what’s in your wallet.” (And besides, the DEA shows up in a doctor’s office to count pills, not money.)

The kid called me back to tell me, “yeah, it was a scam.”

Corporate Transparency and the New Beneficial Ownership (BOI) reporting rules for lawyers and clients. With “two-for-one” win, who needs to be on the largest pile of money, anyhow? Well, funny thing about piles of money, turns out lots of dishonest people do want to get their hands on them.

There are new rules for lawyers who represent clients who want to form limited liability companies with the Secretary of State. I do this about 100 times a year and the new rules are fairly intrusive, because if a lawyer files with the SOS for a client, the client must now waive attorney-client confidentiality as to who his lawyer was. Client lists with lawyers are confidential, unless they aren’t. And now they aren’t. At least when it comes to corporate formation.

If I form the company for the client, I must now give the client my FinCEN number, which I could only get after navigating this rabbit hole: (1) going to the Texas “txt.gov” car tag and driver’s license website to set up an account for my authenticated driver’s license, (2) go to a similar federal ID website, sort of like the Texas one, to give them a copy of my license to drive, prior to being allowed to (3) go the to the FinCEN website to get a number from them, which I must (4) give to the client so that the client can go waive confidentiality and tell the government who their lawyer or “Company Applicant” might be, even though no crime/fraud has occurred.

I started to count the number of government issued ID numbers I needed to accomplish this task, but gave up.

The Financial Crimes Enforcement Network (FinCEN). FinCEN is part of the Department of Treasury and investigates financial crimes. After looking at their website, it is hard not to be a fan. They are after terrorists and drug dealers who are money-laundering, financial exploitation of elderly people, money laundering from human trafficking of all kinds, foreign kleptocracy money, ransomware operators, (and yes, health care fraud.) I am very glad FinCEN exists.

The reason they want to know what lawyer set up a company is so they can send legitimate subpoenas and discovery to law firms, who set up suspected companies. We can argue about the implications of this, or we can go scream at clouds, both feel like they would do the same amount of good.

But what is also entering through the same door, are the very scammers FinCEN is set up to combat. Much like the doctor who was told the DEA is after them, scammers will quickly figure out that they too, can send out fake document requests to law firms and make phone calls to all kinds of professions, posing as FinCEN agents.

According to an April 22, 2024 posting by the Industrial Federal Credit Union, entitled “Beware of Scammers Posing as Law Enforcement Agents:”

“These scammers employ various deceptive tactics, including the use of fake names and badge numbers. In some instances, they may even use the identities of real law enforcement agents, accompanied by a text in what appears to be legitimate law enforcement credentials in photo form. Additionally, these scammers may possess certain details about you, such as part or all of your Social Security number (SSN). For medical professionals like doctors and pharmacists, they may possess National Provider Identifier numbers or state license numbers.

And now, after the Corporate Transparency Act takes effect, add lawyers to the list of professionals who may be asked for financial information about the firm and clients. Here are key points to remember:

• Law enforcement will never call and ask for your SSN or any other personal information. It will not demand payment, nor will it call you to threaten arrest or claim you are under investigation if you don’t pay.
• Caller ID may display a legitimate law enforcement phone number, but this does not confirm the authenticity of the call. Modern technology enables scammers to manipulate caller ID information, so it’s crucial not to rely solely on this.
• Never disclose your SSN or confirm any portion of it to unknown callers. Similarly, refrain from providing bank account or credit card numbers to anyone contacting you unsolicited.
• Any request to wire money, purchase gift cards, or send cash or cryptocurrency should be treated as a scam, regardless of the identity the caller claims to have.

If you receive a suspicious call, promptly end the conversation and report the incident to ReportFraud.ftc.gov.

Yesterday, I gave the annual ethics speech to the Dallas Bar Association Health Law Section on “how not to go to jail when criminal and civil laws overlap.” Which, in health law is a bit of an inside joke. (There is no time when criminal and civil cases aren’t overlapping.)

First, I am no expert in ethics. I never get the questions right, for example, when they publish an ethics problem in the Texas Bar Journal. What I am, is an expert in “healthcare fraud.” Which is a crime under 18 USC 1347. Or at least what health insurance payers think healthcare fraud might be.

“Fraud” in health law usually is sort of a one-way street, 18 USC 1347 doesn’t say that Medicare, and private health insurance companies don’t get to lie, cheat and steal from patients and providers with impunity. Just take a look at the very first section of the Medicare Statute in 1965, which was included by Congress in order to get the program passed over AMA objections:

42 U.S. Code § 1395 – Prohibition against any Federal interference

Nothing in this subchapter shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided . . . or compensation of any . . . person providing health services. (Pub. L. 89–97, title I, § 102(a) July 30, 1965, 79 Stat. 291.)

Today, I have healthcare fraud cases going on the west coast, the east coast, from Minnesota all the way down to San Antonio, and many points in between, because CMS did precisely what it promised it would not. Almost all of them are due to the allegation that the provider didn’t practice medicine consistent with CMS’s “supervision or control over the practice of medicine or the manner in which medical services were provided or compensated.” Most every commercial payer also follows CMS guidelines. Then, unleashes “Special Investigation Units” to go after anyone who gets out of line.

As a defense lawyer, I am generally more forgiving when somebody “screws the pooch.” And that’s what Congress did with Medicare (and commercial insurance followed suit.) Congress simply had no idea what it was getting itself into in 1965, when it promised all the “Who’s down in Whoville,” practically free healthcare, while leaving in place, an “eat what you kill” system for providers. (What could possibly go wrong?)

CMS and Commercial insurance today, certainly know they are lying to providers and patients. What they can’t seem to do, is admit their mistake. It is very easy to promise an entitlement, but God help them, if they try to take a benefit away or raise taxes or premiums to pay for it.

What we are left with is a system, Maggie Mahar describes in her great book, “Money Driven Medicine,” (2006) as a “war of all against all, where insurers cheat patients, doctors cheat insurance and everybody cheats the government.”

So, what is a lawyer supposed to do with all this “fraud” flying around?

The State Bar Rules, by my count, use the word “fraud” 66 times. While I can’t cover all the ways clients can get into trouble, I can cover some of the ways lawyers can get into trouble. Obviously, if a lawyer is a “participant” in the crime (that is “in on it”), then he is independently responsible for a crime. (See, Cohen, Michael, & “**** Star.”)

1.02(c) Scope and Objectives of Representation. A lawyer shall not assist or counsel a client to engage in conduct that the lawyer knows in criminal or fraudulent. A lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel and represent a client in connection with the making of a good faith effort to determine the validity, scope, meaning or application of the law.

1.02(d) When a lawyer has confidential information clearly establishing that a client is likely to commit a criminal or fraudulent act that is likely to result in substantial injury to the financial interests or property of another, the lawyer shall promptly make reasonable efforts under the circumstances to dissuade the client from committing the crime or fraud.

1.02 (e) When a lawyer has confidential information clearly establishing that the lawyer’s client has committed a criminal or fraudulent act in the commission of which the lawyer’s services have been used, the lawyer shall make reasonable efforts under the circumstances to persuade the client to take corrective action.

Comment 7: The fact that a client uses advice in a course of action that is criminal or fraudulent does not, of itself, make a lawyer a party to the course of action. However, a lawyer may not knowingly assist a client in criminal or fraudulent conduct. There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity.

Comment 8. When the client’s course of action has already begun and is continuing, the lawyer’s responsibility is especially delicate. The lawyer may not reveal the client’s wrongdoing, except as permitted or required by Rule 1.05. However, the lawyer also must avoid furthering the client’s unlawful purpose, for example, by suggesting how it might be concealed. A lawyer may not continue assisting a client in conduct that the lawyer originally supposes is legally proper but then discovers is criminal or fraudulent. Withdrawal from the representation, therefore, may be required.

Comment 9: Paragraph (c) does not, however, preclude undertaking a criminal defense incident to a general retainer for legal services to a lawful enterprise.

Taken together, these rules mean two things: (1) that a lawyer may not “participate” in an ongoing crime, but may counsel a client on what is, and is not withing the bounds of the law. The fact the client uses the advice to them go break the law, does not in itself, make the lawyer a party to the crime. When a lawyer begins innocently, but then discovers the client is doing illegal things, then the lawyer has a duty to not assist the client in continuing. The lawyer shouldn’t blow the whistle on the client, but should take steps to advise the client to take corrective action. (2) When the crime has already happened, and the lawyer is hired to defend the client, the lawyer may provide a defense of a past crime.

Crime Fraud Exception. There is nevertheless, a “Delta” between a lawyer’s ethical duty and the attorney-client privilege. Even when a lawyer has done nothing wrong, his advice and representation may be subject to discovery in a subsequent legal proceeding. The message then being, watch what you say in emails. Jokes don’t translate well when blown up on a big courtroom screen.

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

“Philosophy,” is Greek for “love” (philo) of “knowledge” (sophy.) Before social media, intellectuals would sit around places like the Algonquin Hotel in Times Square just to talk about life and what they thought about it. One of the ideas that seems to have landed with them is something called “Schrödinger’s Cat,” which is a kind of “thought experiment” (another thing people who think too much often say.)

Schrödinger’s Cat is an imaginary cat, closed in a box with a potentially lethal atomic device, which would only activate and kill the cat half the time. There was no way to know if the random atomic event occurred (whether the cat is dead or alive), unless someone opened the lid and looked inside.

Admittedly, no one is handing out awards for an idea you can read in a comic book. Schrödinger used the idea in talks with Albert Einstein to illustrate that subatomic, quantum mechanics do not behave the same way as things in the larger world, like cats. (Maybe when the universe was created, the creator didn’t think we’d look that closely.) But that’s another story for another day.

It is the potential “dual nature” of existence, where the cat could be both dead and alive in different universes, which makes “existentialism” interesting. On the one hand, life is almost too absurd to be real. Then again, the only reason Schrödinger’s Cat exists at all, is because we exist to think of it. Proving Descartes, cogito, ergo sum, “You think, therefore, you are.” But who’s to say, maybe we only exist, because someone imagined us?

What good can we make of a half-dead cat? I prefer to make more practical use of thinking. Schrödinger’s Cat resonates with people because of this—we all sometimes feel like Schrödinger’s Cat —trapped in a box waiting for life to blow up. Worse, we all kinda know we are screwed either way. Even if bad luck doesn’t kill us, time eventually will. So, what are we to do with that?

The millionaire’s paradox. Let’s do another thought experiment to illustrate what good we can make of Schrödinger’s Cat.

Suppose one man has a goal of becoming a millionaire before he retires. He scrimps and saves and on the final day of his working life, he reaches his goal of having one million dollars. Although he is a millionaire by any objective measure— if he spends one penny of it, he is no longer a millionaire. He has failed.

Suppose a second man makes similar money, but he spends a bit lavishly and at the end of his working life, he has no money at all.

The question becomes, if we are like the first man, who can’t bring himself to enjoy a penny of his money (or perhaps any other facet of his life), is he any different from the penniless second man? Maybe they are parallel versions of the same man (or us). The box we find ourselves in, might just depend on a few choices we make here and there.

And this isn’t limited to money. It scales across all the things where life could be much richer for all of us, if we just weren’t trapped in our imaginary boxes. At least life could be better, if we decided to climb out of them once in a while.

If you want to read more about this kind of thinking, just go to Wikipedia, “Existentialism.” It hyperlinks to all of the great modern philosophers.

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

This week, I became an accidental user of Generative AI to help me with legal research. I didn’t mean to do it. I didn’t ask for AI help. I just Googled the question, “When was the FTC noncompete rule published in the Federal Register?” (I asked, because the effective date is 120 days from publication in the FR.)

Although I wasn’t looking for generative AI, I am now an expert. Google has apparently begun to treating all my Google searches as requests for a generative “AI Overview,” which I now recognize, because it comes with a little med-century “starburst” logo, that reminds me of the bowling alley in The Big Lebowski.

And the AI answer is not bad at all. Here is the generative AI Overview answer Google came up with:

“Yes, the Federal Trade Commission’s (FTC) final rule on non-compete agreements was published in the Federal Register on May 7, 2024. The rule will become effective on September 4, 2024, unless pending litigation delays it.

“The rule bans new non-compete agreements between employers and all workers, including independent contractors, employees, and unpaid workers. The rule considers non-compete agreements to be an unfair method of competition and a violation of Section 5 of the FTC Act.

“The rule requires employers to notify workers in writing that non-compete provisions are unenforceable. The notice must include the identity of the person who entered into the non-compete with the worker. Employers can use the model language provided in the rule to create the notice, and they can deliver it by hand, mail, email, or text message.

Once the rule is in effect, market participants can report suspected violations to the FTC’s Bureau of Competition by emailing noncompete@ftc.gov

Following the AI Generated answer (which does not cite any authority), I clicked the “regular” Google results showing the link to the online Federal Register, which is considered primary source material that can be cited by lawyers, which is at 89 FR 38342, published May 7, 2024 (the Federal Register is not law, but merely where the government “thinks out loud.” But, publication in the FR on May 4 is the operative date that triggers the 120 day countdown to the September 4 effective date.) The Code of Federal Regulations “CFR” (which is law) citation where the final rule is located is 16 CFR 910 and 912.

So yes, two clicks, and I got everything I needed (except someone to read me the entire 165 page rule.) I suppose some things will have to be done the old fashioned way.

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

Someone posted a photo today on Facebook showing Uptown Dallas 18 years ago. There is almost nothing there, except the American Airlines Center. In fact, standing on the rooftop terrace of the Swexan Hotel (which is one of the new uptown buildings that wasn’t there a minute ago), I made the observation that I have a story for just about every building in the Dallas skyline.

In the 1990’s, before the American Airlines Center was built, I used to play basketball every day with Mark Cuban in the the Premier Club building across from SMU. This was before he became the Owner of the Mavericks. I distinctly remember exchanging the usual, “What to you do?”

He said he had a company that allows people to listen to basketball games over the internet. In 1990 there was almost no way to pick up radio signal, let alone video, in Texas if broadcast from anywhere farther than Oklahoma. So he invented “Broadcast.com.”

I thought, “good luck making any money with that!” He sold the company a couple years later for $5.7 billion to Yahoo, which never made a cent on the purchase. In fact, the other thing I remember him saying on television:

“For any proposed business arrangement, look around the table and try to spot the one being played for a fool, if you can’t spot him, it’s you.”

The “Door Dash” Trap. I suppose the “.com bubble” (of which Yahoo was a part), has always left me with suspicion about online platforms. I am not picking on Door Dash, but it is an online platform, that neither cooks food, nor delivers it, and like many “.com” companies, has never made a penny in profit.

If you have ever wondered how the Door Dash model makes any financial sense—it doesn’t. There is no way to deliver a McDonalds meal in a private car for anywhere near the cost the customer would willingly pay. Because it can’t be done.

I am told, the online platform eats up any profit the restaurant would make. But the drivers are the ones in jeopardy. The driver is paid for the trip, but at the hidden cost that his vehicle depreciates at a rate of $.67 a mile. He is basically giving away his car, one mile at a time. Worse, he is very likely driving “naked,” without liability insurance, because auto personal auto insurance usually excludes driving for a delivery service.

I did check, Door Dash says it provides “excess” liability coverage, while the independent driver must maintain “primary” coverage. Which probably means (just a guess), that absent primary coverage, there is no liability insurance coverage at all. The driver also doesn’t have coverage, for the same reason, if he totals his car crashing into a tree while delivering food.

I am sure, without reading it, the Door Dash independent contractor agreement is perfectly legal and clearly states this and drivers should know better than to drive without commercial insurance (making the driver the fool.)

Online Marketing of the Delivery of Legal Services and Health Services. But a platform can be perfectly legal and people with licensees can still get in trouble. Doctors and lawyer who “deliver” professional services come to mind.

SOAH is the same State Office of Administrative Hearings which revokes driver’s licenses, just the same as medical and law licenses. I should know, I have defended a few.

This all came to mind because I gave a legal ethics speech I gave last week. One of the attendees asked me for my thoughts on Legal Services Plans, in which a third-party online platform advertises to clients that for “one low fee,” lawyers will provide a free “consultation” and “discounted services.” There is no way the up front fee the client pays, could cover the entire legal services bill.

The problem, the attendee said, is that people don’t understand what “consultation” means. (And instead, think “discount” means that everything the lawyer does is discounted to “zero,” because the customer already paid the online platform company.)

Much the same way people don’t understand what “primary” and “excess” auto insurance means, this illustrates the problem with online marketing of any professional service. While the plan might be “legal,” that doesn’t mean there won’t be legal problems for lawyers or medical professionals whose licenses are on the line when someone else speaks for them about the services being delivered.

If you allow online platforms to do the marketing and advertising, you can’t necessarily control the expectations that the client or patient is being led to believe. Especially if there is a phone call where the customer is talking to a person at the online platform, which generated the lead, about the services professionals are to deliver.

Licensing boards, like the state bar and medical boards, don’t generally have jurisdiction over non-licensees. Going after online platforms companies requires involvement with the attorney general’s consumer protection division, which is fairly over-worked as it is.

If you are a professional licensee, medical or legal, and sign up for online marketing services, you must watch what these people are telling customers.

Look around the room, if you can’t spot the one being played fool, it could be you.

“Please Tell Me you Didn’t. . . How to Keep Client’s Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

This week, the same week I turned 62, D Magazine came out with its “Best Lawyers List” for 2024. After nearly 4 decades of nonstop litigation work, seeing my name on the list is mostly comforting because it is some assurance I am not dead yet.

Not that 62 is that old. I honestly feel I could do this another 30 years. Instead, I feel more like Captain Hook in Peter Pan, who has a crocodile chasing him with a ticking clock in its belly, representing mortality. It’s already eaten a piece of him, and the “tick, tick ticking” reminds the anti-hero Hook, that he has no idea when mortality is coming back to get the rest.

Oh. . . and also this week, the FTC banned non-competes.

FTC Bans Non-Competes. I have been put out of business twice in my life by changes in the law. The first was workers compensation. Which is a kind of health law, though I didn’t know it at the time. Worker’s Comp was the kind of case firms would assign a kid out of law school, because the stakes are so low, it would be hard to screw it up in any way that matters.

Then, they changed the law on Medical Malpractice, meaning nobody was suing doctors and there was no need for me to defend them. But the one good thing about knowing how to try cases, is that it is a skill that can transfer to any other sort of litigation. Like non-compete litigation in healthcare cases. So I learned that.

Then, “tick, tick, tick” the FTC just gobbled that up too.

The new rule has several features:

• It does not affect non-competes in the sale of a business
• It invalidates existing non-compete clauses for low-level employees
• It does not invalidate any causes of action that accrued before the effective date
• It grandfathers in any executive non-competes which exist at the time the rule becomes effective, which is 120 days after published in the federal register
• Executives are $151,164 annually and who are in policy-making positions
• It could be blocked by litigation over the FTC’s authority
• Exiting state non-compete laws which are more restrictive on non-competes could remain in effect. Otherwise, they are preempted.
• It wouldn’t affect Trade Secret theft and other NDA protections for confidential information.
• Employers must notify workers that non-competes are invalid, rather than re-draft existing contracts.

You can find the rule at FTC.gov by Googling “FTC Final Rule Non-competes.”

“Please Tell Me you Didn’t. . . How to Keep Client’s Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

I just returned from Miami and a visit with the FBI, OIG and DOJ to negotiate about a client’s case (that I can’t talk about.) I can tell you we stayed in the hotel Fontainebleau where they filmed the James Bond scene in Goldfinger.

I had never been to Miami, but having watched way too many episodes of Miami Vice in the 80’s, I was half expecting that the hotel soap would be at last 20 percent illegal narcotics. But no. Miami is just a lovely place; I didn’t see any gangsters or international spies.

This did get me thinking, however, that one of the big the differences between narcotics smugglers and Medicare law breakers (which could mean anything which the OIG declares to be “law breaking”), is that narcotics outlaws have better sense than to hazard illegal activity– where the federal government is the intended customer.

It is super hard to get away with much, when most of what the government needs to know about unlawful claims is giftwrapped and delivered to their door, on the HCFA 1500 claim form. The rest of what the government needs is in the medical records that must be preserved for 7 years, lest a doctor have his NPI number revoked by CMS (for up to 10 years) under 42 C.F.R. § 424.535(a)(10).

Most medical records mistakes are not crimes, but can be civilly-actionable errors, that can be very, very costly.

Trouble with Telemedicine and MSOs. If you are a doctor, an attorney representing doctors who wish to try telemedicine platforms, it might sound tempting to turn the administrative headaches over to an online management platform and think no more of it.

Please understand, many telemedicine companies and Management Services Organizations are new to this nascent telehealth industry and have absolutely no idea what the rules are for doctors and medical record keeping. The doctor can do everything correctly, but a chain is only as strong as its “weakest link.”

Last year, I defended a doctor at the Texas Medical Board, who signed on with a telehealth company, which stored records electronically in the cloud. But nobody told the $12 an hour receptionist this.

When investigators called the telehealth company to ask to review certain medical records, the receptionist looked around the room, and not seeing any, told investigators: “I don’t think we have any medical records here.” ( Notice: When the complaint was filed, It wasn’t the receptionist nor the telehealth platform who ended up before the medical board.)

What needs to be in a medial record? CMS and most states require that records be kept for 7 years in most cases. As to the contents of the records, take a look at 22 TAC 165.1 as a good roadmap (just Google it). MSOs and telemedicine companies must be prepared to produce medical records containing the following:

a) Contents of Medical Record. Regardless of the medium utilized, each licensed physician of the board shall maintain an adequate medical record for each patient that is complete, contemporaneous and legible. For purposes of this section, an “adequate medical record” should meet the following standards:

(1) The documentation of each patient encounter should include:
(A) reason for the encounter and relevant history, physical examination findings and prior diagnostic test results;
(B) an assessment, clinical impression, or diagnosis;
(C) plan for care (including discharge plan if appropriate); and
(D) the date and legible identity of the observer.

(2) Past and present diagnoses should be accessible to the treating and/or consulting physician.

(3) The rationale for and results of diagnostic and other ancillary services should be included in the medical record.

(4) The patient’s progress, including response to treatment, change in diagnosis, and patient’s non-compliance should be documented.

(5) Relevant risk factors should be identified.

(6) The written plan for care should include when appropriate:
(A) treatments and medications (prescriptions and samples) specifying amount, frequency, number of refills, and dosage;
(B) any referrals and consultations;
(C) patient/family education; and
(D) specific instructions for follow up.

(7) Include any written consents for treatment or surgery requested from the patient/family by the physician.

(8) Include a summary or documentation memorializing communications transmitted or received by the physician about which a medical decision is made regarding the patient.

(9) Billing codes, including CPT and ICD-9-CM codes, reported on health insurance claim forms or billing statements should be supported by the documentation in the medical record.

(10) All non-biographical populated fields, contained in a patient’s electronic medical record, must contain accurate data and information pertaining to the patient based on actual findings, assessments, evaluations, diagnostics or assessments as documented by the physician.

(11) Any amendment, supplementation, change, or correction in a medical record not made contemporaneously with the act or observation shall be noted by indicating the time and date of the amendment, supplementation, change, or correction, and clearly indicating that there has been an amendment, supplementation, change, or correction.

(12) Salient records received from another physician or health care provider involved in the care or treatment of the patient shall be maintained as part of the patient’s medical records.

If a telemedicine company or an MSO offers to handle the administration of records, doctors, not laymen, are responsible for complying with the law.