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Maryland Court of Appeals Holds Confession of Judgment Executed in Connection with Past-Due HOA Fees Was Unenforceable Banner Image

Maryland Court of Appeals Holds Confession of Judgment Executed in Connection with Past-Due HOA Fees Was Unenforceable

Month: February 2020

Maryland Court of Appeals Holds Confession of Judgment Executed in Connection with Past-Due HOA Fees Was Unenforceable

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In a split decision, the Court of Appeals of Maryland recently held that the plaintiff homeowners’ association (the “HOA”) could not enforce a confession of judgment executed by a homeowner relating to her past-due HOA fees, finding that it violated Maryland consumer law and mandated the dismissal of plaintiff’s action.  See Goshen Run Homeowners Ass’n, Inc. v. Cisneros, No. 3, 2020 WL 415404 (Md. Jan. 27, 2020).  In the case, defendant purchased a home in plaintiff’s development.  Defendant defaulted on her monthly fees, and plaintiff turned the debt over to a law firm to collect.  Defendant then entered into a forbearance agreement whereby she agreed to pay the past-due amounts over the next six years.  As part of this forbearance, she executed a promissory note and mortgage.  The note contained a confession of judgment provision, but also a provision preserving defendant’s legal defenses.  Defendant later defaulted again, and plaintiff entered the confessed judgment and began collection efforts.  Plaintiff filed a motion to dismiss, arguing that the confession violated Maryland’s Consumer Protection Act (the “CPA”), which prohibits contracts “related to a consumer transaction” that “contain[] a confessed judgment clause that waives a consumer’s right to assert a legal defense to an action.”  The trial court agreed that the HOA forbearance agreement was “related to a consumer transaction,” and therefore, that the confession was void.  Nonetheless, the trial court severed the confession provision and proceeded to enter judgment on the promissory note.  On appeal, the appellate court agreed that the collection of homeowners dues was a consumer transaction, but further held that plaintiff’s complaint should have been dismissed because it attempted to enforce a prohibited confession of judgment.

On appeal, the Court of Appeals affirmed, albeit via a 4-3 decision.  First, it found that the contract at issue constituted “an extension of credit to [defendant] to pay delinquent HOA assessments, which falls squarely within the definition of ‘consumer credit’ under the CPA.”  The fact that the confession contained a provision preserving defendant’s legal defenses did not circumvent the CPA’s protections.  Accordingly, the confession was unenforceable.  Second, the Court found that the proper remedy was to dismiss the action without prejudice.  Nonetheless, the Court found that plaintiff could bring a new action under the note, without relying on the confession.  In dissent, three judges argued that HOA assessments do not constitute “extensions of credit” and should not be subject to the CPA.  “The Majority reasons that HOA assessments relate back to the sale of property and original ‘extension of credit’—which is a consumer transaction. This position incorrectly conflates the consumer transaction of purchasing personal property with the property obligation of paying HOA assessments.”  (emphasis in original).

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Federal Regulatory Update: New Quarantine and Medicare Advantage Regulations

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

85 FR 7874 – Interim Final Rule - The CDC issued this interim final rule to amend its Foreign Quarantine regulations, to enable CDC to require airlines to collect, and provide to CDC, certain data regarding passengers and crew arriving from foreign countries for the purposes of health education, treatment, prophylaxis, or other appropriate public health interventions, including travel restrictions. Although the rule was not published until February 12, 2020, it became effective on February 7, 2020. 

85 FR 7500 – Proposed Rule - This proposed rule proposes the methodology and data sources necessary to determine federal payment amounts to be made for program year 2021 to states that elect to establish a Basic Health Program under the Affordable Care Act to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Exchanges. Comments must be received by March 11, 2020.

85 FR 9002:  CMS released a proposed rule and the Advance Notice Part II to update Medicare Advantage and Part D programs.  According to CMS,  the changes proposed would lower beneficiary cost sharing on some of the most expensive prescription drugs, promote the use of generic drugs, and allow beneficiaries to know in advance and compare their out-of-pocket payments for different prescription drugs. The proposed rule would implement changes stemming from recent federal laws, including the Bipartisan Budget Act of 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, and the 21st Century Cures Act. The proposed rule also seeks to codify many existing policies that have been implemented through sub-regulatory guidance.  CMS has summarized the proposed rule in this Fact Sheet and the Advance Notice in this Fact Sheet . CMS will accept comments on all proposals in the Advance Notice through March 6, 2020 and CMS expects to publish the final Rate Announcement by April 6, 2020.

Gene Therapy:  The FDA issued six final guidances on gene therapy manufacturing and clinical development of products and a draft guidance, Interpreting Sameness of Gene Therapy Products Under the Orphan Drug Regulations. The six final guidances provide the agency’s recommendations for product developers on manufacturing issues and recommendations for those focusing on gene therapy products to address specific disease areas. The agency is issuing this suite of documents to help advance the field of gene therapy while providing recommendations to help ensure that these innovative products meet the FDA’s standards for safety and effectiveness. The draft guidance on interpreting sameness of gene therapy products under the orphan drug regulations provides the FDA’s proposed current thinking on an interpretation of sameness between gene therapy products for the purposes of obtaining orphan-drug designation and eligibility for orphan-drug exclusivity. The draft guidance focuses on how the FDA will evaluate differences between gene therapy products when they are intended to treat the same disease. 

New York Federal Court Holds Title Agent Entitled to Professional Liability Coverage Despite Pre-Policy Subpoena

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The United States District Court for the Southern District of New York recently granted a title agent’s motion for summary judgment regarding a professional liability insurer’s duty to defend the agent, despite the fact that the agent was served with a subpoena before the liability insurer issued the policy.  See Protective Specialty Ins. Co. v. Castle Title Ins. Agency, Inc., 2020 WL 550700 (S.D.N.Y. Feb. 3, 2020).  In the case, the plaintiff professional liability insurer issued three consecutive professional liability policies to the defendant title agency between 2014 and 2017.  In July of 2015, defendant was served with a subpoena duces tecum by SR Holdings I, LLC, who was seeking documents regarding various property transfers.  In September of 2015, defendant applied for a second year of coverage from plaintiff.  As part of the application, defendant confirmed that it was not aware of any claims against it.  Plaintiff issued another policy.  In 2016, SR Holdings filed a state court lawsuit against defendant, among others, alleging that it “negligently and/or fraudulently delayed” in submitting real estate documents for recording.  Plaintiff then brought this action seeking a declaratory judgment that it was not required to defend defendant in the state court action.  Plaintiff argued that the 2015 subpoena constituted a “claim” that defendant failed to report, and that because the 2016 action was “related” to the unreported 2015 claim, both were excluded from coverage.  The parties cross-moved for summary judgment.

The Court granted defendant’s summary judgment motion and denied plaintiff’s.  The Court first held that insurance policies should be interpreted according to the general rules of contract interpretation and that “[u]nambiguous terms are to be given their plain and ordinary meaning.”  In this case, the parties disputed whether the 2015 subpoena constituted a claim, which the application defined as “a written demand by subpoena upon an Insured as a non-party to litigation or arbitration involving Professional Services provided by such Insured.”  The Court rejected plaintiff’s argument that any subpoena “involving Professional Services provided by such Insured” was a claim.  Instead, it agreed with defendant that the phrase “involving Professional Services provided by such Insured” modifies “litigation or arbitration,” not “subpoena.”  Because the 2015 subpoena was part of SR Holdings’ judgment collection action, which did not involve defendant’s professional services, it was not a claim against defendant.  Accordingly, the Court found that plaintiff had a duty to defend defendant.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Colorado Federal Court Grants Title Insurer’s Summary Judgment Motion, Finds There Is No Coverage for Monetary Set-Off Claim

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The United States District Court for the District of Colorado recently granted a title insurance company’s motion for summary judgment and found that there was no coverage under a title insurance policy for a neighbor’s monetary set-off claim against the insured regarding a disputed strip of property.  See Cherry Hills Farm Court, LLC v. First Am. Title Ins. Co., 2019 WL 6682835 (D. Colo. Dec. 6, 2019).  In the case, the plaintiff insured purchased a property in 2015 and obtained a title insurance policy from the defendant insurer.  Plaintiff later discovered that its neighbors had constructed a fence, a garden, and an irrigation system on part of the insured property in 2006.  Plaintiff brought a quiet title and trespass action against the neighbors, and the neighbors filed counterclaims for adverse possession and, alternatively, for monetary set-off for the improvements the neighbors had made on the disputed parcel.  Defendant accepted coverage for the adverse possession claim, but not the set-off claim.  Plaintiff ultimately prevailed at trial, and then brought this action against defendant seeking a declaratory judgment that defendant had a duty to defend the monetary set-off claim.  The parties cross-moved for summary judgment.

The Court granted defendant’s motion and denied plaintiff’s.  The Court first found that the claim for monetary set-off does not “affect[] title,” and therefore was not covered under the policy.  “The set-off counterclaim is not an adverse title claim and does not seek interest in the property. There was no dispute over ownership or possession—it was solely a claim to recover the value of the [neighbors’] admittedly trespassory improvements. It is linked to the title only in that the improvements were located on the property. But this is no greater a link than, for example, a tort that occurred on the property.”  Second, the Court found that defendant’s coverage of the adverse possession claim did not require it to cover the set-off claim.  Although the Court acknowledged an “in for one, in for all” rule for general liability claims, it found that this rule did not apply to title insurance policies.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Governor Murphy Launches Broad Regulatory Reform to Protect Against Climate Threats

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Governor Phil Murphy took a groundbreaking step toward reducing greenhouse gas emissions and addressing climate change threats in New Jersey, when, on January 27, 2020, he simultaneously unveiled the final version of the updated Energy Master Plan (the “EMP”) and signed Executive Order No. 100 (“EO 100”).  As discussed below, the EMP charts a course for achieving Murphy’s goal of 100% clean energy by 2050, while EO 100, among other things, directs the New Jersey Department of Environmental Protection (“NJDEP”) to immediately begin developing regulatory reforms to address sea level rise and other climate change threats under the banner, Protecting Against Climate Threats (“PACT”).  The EMP and EO 100 represent long-term initiatives that will be implemented over a number of years and will have significant impacts on a wide variety of businesses within New Jersey.

The Energy Master Plan

Governor Murphy previously signed Executive Order No. 28, in May 2018, which directed the New Jersey Board of Public Utilities (“NJBPU”) to develop a comprehensive statewide energy plan—entitled the Energy Master Plan—in order to move the state away from energy sources that contribute to climate change.  Now that it has been finalized, the EMP contains the tactical blueprint outlining how the state can work toward the goal of achieving 100% clean energy usage by 2050.  This broad blueprint includes seven key strategies aimed at reaching the 2050 goal:

  1. Reducing energy consumption and emissions in the transportation sector by encouraging electric vehicles;
  2. Accelerating the use and development of renewable energy and distributed energy resources;
  3. Optimizing energy efficiency while reducing energy demands through new programs and strengthening building and energy codes;
  4. Reducing energy consumption and emissions from new and existing buildings;
  5. Decarbonizing and modernizing New Jersey’s energy system by reducing reliance on natural gas and increasing electrification;
  6. Supporting community energy planning and local renewable power generation in low-income and environmental justice communities; and
  7. Expanding the clean energy economy through investments in clean energy jobs and technological development.

As New Jersey continues to move towards clean energy pursuant to the EMP, specific issues will arise.  For instance, the NJBPU recently approved a program to aid in the transition from the current Solar Renewable Energy Certificate (“SREC”) Program, which provides a financial incentive for energy generated by a solar facility.  The transition program is intended to smooth the conversion from more-valuable, legacy SRECs to an as-yet-to-be determined successor incentive program, but the annual value of the Transition Renewable Energy Certificate (“TREC”) has yet to be fully and finally determined.  As a result, it is not yet clear how the TREC program, or the other initiatives highlighted in the EMP, will impact the financing and development of renewable energy projects within the state.

The PACT Regulations

EO 100, in turn, addresses climate change threats on the regulatory front in several ways.  Initially, EO 100 directs the NJDEP within two years to establish a monitoring and reporting program designed to identify all significant sources of greenhouse gas emissions in the state.  In addition to addressing greenhouse gas emissions, EO 100 instructs the NJDEP to integrate climate change considerations into its existing regulatory and permitting programs, including land use permitting.  EO 100 also requires the NJDEP Commissioner to issue and update periodically an administrative order within which the Department will identify the specific regulations it intends to modify to include climate change considerations.  Pursuant to this directive, NJDEP Commissioner Catherine McCabe issued Administrative Order No. 2020-01 (the “AO”) on the same day as EO 100’s execution. 

The AO describes the Department’s intent to prepare a report by June 30, 2020 that will recommend necessary regulatory measures to reduce greenhouse gas emissions and climate pollutants to meet the 2050 emissions reduction goal.  In support of this goal, the NJDEP will propose regulations to establish a greenhouse gas monitoring and reporting program to identify and monitor all significant sources of statewide greenhouse gas emissions, and to incorporate climate change considerations, such as sea level rise, into land use regulatory programs within the next two years. 

Specific programs named in the AO to be modified include the Coastal Zone Management Rules, Freshwater Wetlands Rules, Flood Hazard Control Act, and Stormwater Management Rules.  The incorporation of these considerations into such programs will undoubtedly result in changes to permit applications and renewals for development projects that qualify under these programs, including projects located on coastal waterfront areas or near flood-prone areas further inland.  The full extent of the changes to applicable regulations will not be known for some time, but the NJDEP has begun to schedule public hearings to discuss its plans.

Conclusion

As Governor Murphy’s administration begins implementing its strategies to confront climate threats in a multitude of areas ranging from technological changes in transportation to regulatory changes in land use permitting, the degree to which these strategies will impact New Jersey’s future is uncertain.  However, the Garden State can certainly expect to see significant regulatory changes occurring rapidly in numerous areas in the coming months and years.

For more information, please contact the author Jason M. Boyle at jboyle@riker.com or any attorney in our Environmental Practice Group.

New York Court Holds Creditor Law Firm Can Pursue Guarantor Without First Pursuing Primary Debtor

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The New York Supreme Court, New York County, recently held that the law firm could pursue the guarantor of payments due under its retainer agreement with a client without first pursuing the client herself, but that there were issues of fact on the amounts due to the firm.  See Aronson Mayefsky & Sloan, LLP v. Toboroff., 151038/2018 (N.Y. Sup. Ct. Jan. 6, 2020).  In the case, the plaintiff law firm represented the defendant’s daughter in a litigation.  The defendant signed a guaranty for his daughter’s debts to the firm, and plaintiff brought this action seeking to enforce the guaranty.  Defendant moved to dismiss the action, arguing that plaintiff could not seek to enforce the guaranty until it first sought to recover from and obtained a judgment against his daughter.  Defendant also argued that plaintiff was collaterally estopped from seeking more fees than it had been awarded in the underlying litigation.  Plaintiff cross-moved for summary judgment.

The Court denied both parties’ motions.  First, the Court acknowledged that a guaranty of collection requires a creditor to first attempt to collect against the principal debtor, and only after those means fail could the creditor pursue the guarantor.  A guaranty of payment, on the other hand, does not require a creditor to pursue the principal debtor first.  In this case, the Court found that the guaranty was one of payment based on the guaranty’s language that it guaranteed “timely payment and timely performance of all obligations . . .”  Further, the guaranty did not contain any language that required plaintiff to pursue the daughter first.  Second, the Court found that plaintiff was not bound by the amount of fees awarded in the underlying litigation, and was allowed to seek all reasonable fees under its retainer with the daughter.  Accordingly, the Court denied the motion to dismiss.  Finally, the Court denied plaintiff’s cross-motion for summary judgment, finding that there were issues of fact as to the amount of fees that were reasonable here.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Federal Regulatory Update, Including Acupuncture Approval to Fight Addiction

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

On January 30, 2020, CMS issued a new initiative to allow states to carry out demonstrations under Section 1115 waivers converting some of their federal Medicaid funding to block grants.  Under the initiative, states that apply can provide Medicaid coverage using flexible benefit designs under either an aggregate or per-capita cap financing model for certain populations without being required to comply with a list of Medicaid provisions, CMS said.

In an effort to fight opioid abuse, CMS announced on January 21, 2020, it will cover up to 12 acupuncture sessions in any 90-day period with a possible additional eight sessions for those with chronic lower back pain. CMS has not historically considered acupuncture reasonable and necessary, but a recent review and analysis of the evidence concerning the clinical effectiveness of acupuncture for chronic low back pain presented CMS with sufficient evidence to conclude that acupuncture does improve health outcomes for Medicare beneficiaries with chronic lower back pain.

85 FR 7088 – Proposed – The Department of Health and Human Services issued its annual proposed rule to update payment and policy parameters for the Affordable Care Act (ACA) marketplace. The proposed rule would apply to plan years beginning on or after January 1, 2020. For 2021, the rule proposes to maintain user fees for the federal facilitated and state-based exchanges at the current 2020 plan year rates, which stand at 3% and 2.5% of total monthly premiums, respectively. The proposed rule also seeks comments on modifying the automatic re-enrollment process for enrollees who would be automatically re-enrolled with advance payments of the premium tax credit (APTC) to cover the enrollee's entire premium. Last year, the agency considered ending automatic re-enrollment but decided not to make the change at that time.  The proposed rule would change benefits related to essential health benefits and would provide states with additional flexibility in the operation and establishment of the exchanges, changes related to cost-sharing for prescription drugs.  It also proposes to repeal regulations relating to the Early Retiree Reinsurance Program. Comments are due by March 2, 2020.

New OIG Advisory Opinion On Travel Expenses, Changes to Medicare Advantage, and Final Rule On How Pharmacist Input in the NCPDP

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

OIG Advisory Opinion No. 20-02

In a January 15, 2020 Advisory Opinion, the Office of Inspector General (OIG) weighed in on whether financial assistance for travel, lodging, and other expenses provided by a pharmaceutical manufacturer to certain patients prescribed the manufacturer’s drug, constitutes grounds for imposition of sanctions under the civil monetary penalty provision prohibiting inducements to beneficiaries, § 1128A(a)(5) of the Social Security Act (the “Act”), or under the exclusion authority at § 1128(b)(7) of the Act, or the civil monetary penalty provision at §1128A(a)(7) of the Act, as those sections relate to the commission of acts described in § 1128B(b) of the Act, the federal anti-kickback statute.

OIG determined that, although such an arrangement could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of federal healthcare program business were present, OIG declined to impose administrative sanctions under the circumstances presented.  OIG’s analysis and subsequent determination was fact-sensitive, and OIG emphasized that the Advisory Opinion could not be relied upon by any persons other than the original requestor of the Opinion.  Nevertheless, the Opinion confirms that financial assistance provided by pharmaceutical manufacturers to certain patients may be lawful under certain scenarios.  A copy of the Opinion can be found here.

CMS Proposes MA Risk Adjustment Changes for 2021

CMS released an advance notice of proposed changes to Medicare Advantage’s (MA) risk adjustment payment model, indicating that it plans to move forward with a proposal to use more data from healthcare providers’ encounters with patients to calculate risk-adjustment payments for MA plans. CMS currently uses MA’s risk-adjustment model, known as the CMS-HCC Risk Adjustment model, to determine payments for MA plans. Under the model, MA plans assign each beneficiary a risk score based on medical coding that reflects the beneficiary’s medical condition. Beneficiaries with poorer health will have higher risk scores, while healthier beneficiaries will have lower risk scores. MA plans are given higher payments for beneficiaries with higher risk scores than they are for beneficiaries with lower risk scores.   The new proposal would continue phasing in changes to the risk adjustment model required between 2019 and 2022 by the 21st Century Cures Act of 2016.  For 2021, CMS would calculate 75% of the risk score based on encounter data and 25% of the score based on Risk Adjustment Processing System data. CMS proposes to continue using its 2020 risk adjustment model to calculate the encounter data-based score and its 2017 risk adjustment model to calculate the RAPS-based score. Comments are due by March 6, 2020.

HHS Announces Final Rule CMS-0055-F

The Department of Health & Human Services (HHS) announced Final Rule CMS-0055-F (the “Rule”) on January 24, 2020, modifying the requirements for use of the National Council for Prescription Drug Programs (NCPDP) Telecommunication Standard Implementation Guide, by requiring the use of the Quantity Prescribed field to identify partial fills for Schedule II drugs.  The modification enables covered entities to distinguish whether a prescription is a “partial fill,’’ where less than the full amount prescribed is dispensed, or a refill, where the full amount prescribed is dispensed, in the HIPAA retail pharmacy transactions. This modification is intended to provide a greater quantum of data that may help prevent impermissible refills of Schedule II drugs, which will help to address the public health concerns associated with prescription drug abuse in the United States. 

Will the Feds Do Anything About Vertical Mergers in Healthcare? Read the Latest Guidelines on Vertical Mergers as Well as Other Regulatory and Litigation Updates

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For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

Federal Guidelines On Vertical Mergers

In January 2020, the DOJ’s Antitrust Division and the FTC published draft guidelines regarding vertical mergers.   The DOJ has not drafted merger guidelines in approximately 36 years, perhaps indicating that vertical mergers will receive heightened scrutiny in the near future.  Vertical mergers combine two or more companies that operate at different levels in the same supply chain. The draft guidelines provide a framework that regulators would consider when evaluating vertical mergers.  Vertical mergers have been significant in healthcare where payors are purchasing providers at a rapid rate or where pharmaceutical companies are merging with payors, such as the merger of Cigna with Express Scripts.  The draft guidelines are open for public comment until February 11, 2020. It should also be noted that the FTC’s Competition Bureau recently announced leadership changes in late January 2020, including several in the division responsible for pharmaceutical mergers.  

New Jersey and Federal Litigation

In Hager vs. M&K Construction, Docket No. A-0102-18T, the New Jersey Appellate Division held that an employer had to reimburse its employee for a medical marijuana prescription that was prescribed for a work-related injury. The employee was working for a construction company when a truck delivering concrete dumped a load on him, resulting in injuries causing chronic pain and leaving the employee permanently disabled. The employer argued that it should not have to pay for the marijuana prescription because payment was preempted by federal Controlled Substances Act (CSA), which outlawed marijuana. The appeals court reasoned that the CSA would only preempt state law if it required the performance of actions specifically prohibited by the law.  Because reimbursing the cost of the marijuana prescription did not require the employer to "manufacture, possess, or distribute marijuana,” the court held there was no conflict.

In Ciox Health, LLC v. Azar, et al., No. 18-cv-0040 (D.D.C. January 23, 2020), the Federal District Court for the District of Columbia nullified an HHS rule that capped the fees a healthcare provider or companies could charge when a patient requests to send their health data to a third party.  In 2013, HHS issued a rule limiting the amount a party can charge a patient for accessing the patient’s own records.  HIPAA-covered entities and business associates were directed to charge fees based on calculating the labor cost it takes to fulfill a record request or by charging a flat fee capped at $6.50 per request.  In 2015, HHS extended the limitation to when a patient requests to send their health data to a third party.  But extending that rate to third parties should have gone through a notice and comment rulemaking, according to U.S. District Judge Amit Mehta.   Judge Mehta also vacated an HHS rule from 2013 that broadened a directive established in the HITECH Act.  That Act said that patients can request for organizations to send a copy of their electronic health record to a third party, but the regulation issued by OCR said that should also include any protected health information even if it is not stored in an EHR. The judge said that could not be added to the regulation since it goes beyond statutory requirements set by Congress.

New Jersey Regulation

52 N.J.R. 16(a):  This rule proposal prevents nursing education programs from preventing its students from graduating or taking licensing exams because a student fails a predictor exam.  Nursing programs can lose accreditation if less than 75% of its graduates pass the national licensing examination.  To avoid this situation, nursing programs require their students to take a predictor exam, and if they fail, the students cannot graduate.  This rule is intended to prohibit this practice.  Comments are due by March 6, 2020.

52 N.J.R. 10(a): This proposal amends the rules for accrediting nursing programs.  Such changes include, but are not limited to, requiring nursing program administrators to have three years of experience with a background in developing curriculum, limiting the body of graduates that will affect a nursing program’s licensing examination pass rate, deleting requirements that faculty members who teach online have a New Jersey license, and changing the time frame from submitting an application to establish a nursing program from eight months to eighteen months before the start of the program.   Comments are due by March 6, 2020.

Federal Regulation

CMS announced on January 27, 2020 that it will cover laboratory diagnostic tests using Next Generation Sequencing (NGS) for patients with inherited ovarian or breast cancer. 

Seventh Circuit Finds That Inclusion of “Time Sensitive Document” on Outside of Debt Collection Envelope Violates FDCPA

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The United States Court of Appeals for the Seventh Circuit recently held that a debt collector’s inclusion of the phrase “TIME SENSITIVE DOCUMENT” on the outside of a debt collection letter violated the Fair Debt Collection Practices Act (“FDCPA”).  See Preston v. Midland Credit Mgmt., Inc., 2020 WL 290451 (7th Cir. Jan. 21, 2020).  In the case, plaintiff received a letter from the defendant debt collector, and the envelope included the phrase “TIME SENSITIVE DOCUMENT.”  The letter itself contained settlement offers that were contingent on how quickly plaintiff made payments.  Plaintiff then brought this class action alleging violations of the FDCPA based on both the language on the outside of the envelope and the language of the letter itself.  Under § 1692f(8), a debt collector is prohibited from using “unfair or unconscionable means” to collect a debt, including “[u]sing any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.”  According to plaintiff’s complaint, the “TIME SENSITIVE DOCUMENT” language violated this provision.  Plaintiff also claimed that the combination of that language on the envelope and the settlement offers in the letter violated the FDCPA because they contained deceptive language that created a false sense of urgency.  Defendant moved to dismiss, and the District Court granted the motion.  It found, among other things, that there was a benign-language exception to § 1692f(8), and that this particular language fell into that exception because it did not create privacy concerns or expose plaintiff to embarrassment.

On appeal, the Court reversed in part and affirmed in part.  First, the Court reversed the District Court and found that the language on the envelope violated § 1692f(8), holding that the statute was unambiguous on what was allowed on the envelopes, and that any other language violated the statute regardless of whether a court thought it was benign.  In doing so, the Court disagreed with interpretations from other circuit courts that found that benign language on envelopes did not violate this provision because such language was not “unfair or unconscionable.”  See Strand v. Diversified Collection Serv., Inc., 380 F.3d 316 (8th Cir. 2004); Goswami v. Am. Collections Enter., Inc., 377 F.3d 488 (5th Cir. 2004).  Second, the Court found that the letter’s contents did not violate the FDCPA, and that offers to settle debts for a discounted amount if done within certain periods was not deceptive.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

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