The health care industry includes health care providers (hospitals, nursing homes, pain management clinics, doctor’s offices, surgical centers, rehab facilities, etc.) and health care professionals (physicians, nurses, dentists, pharmacists, therapists, psychologists, psychiatrists, mental health counselors, medical students, medical interns, hospital administrators, etc.). These health care providers and health care professionals are often the subject of legal issues.
In the recent case of Mendelsohn v. State of Florida Department of Health, Mendelsohn’s license to practice medicine was suspended under an Emergency Suspension Order (ESO).
(b) A misdemeanor or felony under 18 U.S.C. s. 669, ss. 285-287, s. 371, s. 1001, s. 1035, s. 1341, s. 1343, s. 1347, s. 1349, or s. 1518 or 42 U.S.C. ss. 1320a-7b, relating to the Medicaid program.
Mendelsohn argued that his federal conspiracy conviction was not related to the Medicaid program, so the Florida Department of Health could not issue an ESO without establishing that his actions posed an immediate danger to public safety.
Florida law requires that an order directing the immediate suspension of a practitioner’s license contain “every element necessary to its validity . . . on the face of the order.” In general, an ESO will not be upheld unless the order on its face sets out the specific facts and reasons for finding an immediate danger to the public health, safety, or welfare, as well as the Florida Department of Health’s reasons for concluding that the procedure used is fair under the circumstances.
However, Section 456.074(1), Florida Statues, however, requires DOH issue an emergency order suspending a medical license in certain circumstances without regard to specific proof that a petitioner is acting in a way that poses an immediate danger to public safety.
Although Mendelsohn was convicted of a felony in violation of § 18 U.S.C. 371, he contended his conviction was not related to the Medicaid program, and thus, did not support the issuance of an ESO without further proof that he posed a threat to public safety.
Do not let the Florida Department of Health take away your license unless it is warranted. Contact a board certified health law attorney who is knowledgeable in handling these matters. For more information about Emergency Suspension Orders and other legal matters concerning healthcare providers visit www.TheHealthLawFirm.com.
With the increase in popularity of online review sites, defamatory attacks against doctors have also increased. On these sites, patients and competitors can post almost anything they want – good or bad – about a doctor or any health care professional. As more physicians become employees of hospital systems or large health care institutions, adverse surveys, reports or reviews may impact advancement, bonuses and basic income.
Internet ratings on review sites like Vitals.com and Yelp.com can range from jabs about the patient’s waiting time in the doctor’s office to ruthless attacks that can seriously impact a physician’s career, including economical impact. In many cases, the review, comment, or rating may be a purposely untrue statement by a disgruntled patient, competitor or former employee. When the comment is posted, search engines like Google, Yahoo, Bing, AOL, or MSN may bring up the false statement every time someone searches for that doctor’s name. This can cost doctors both their reputation and their business, especially if they start losing patients because of bad reviews.
Many doctors are now seeking legal strategies to combat alleged online libel and defamation in order to save their reputation and their practice. However, not all negative online comments or ratings meet the actual definition of “defamation.” Defamation generally is a factual statement that can be proven true or false. For example, if a patient writes that she had a procedure performed by a doctor, this is a statement of fact that can be confirmed or disproved. However, if someone writes about a doctor’s poor attitude during a visit, this statement is usually considered to be an opinion which cannot necessarily be proven true or false.
Your own records should be checked. Your notes about office visits or procedures, your appointment schedule or your own billing records may help you identify the patient who wrote the review or comment. If you think you may know who wrote a comment, try to contact the patient directly to discuss his or her concerns and request that the comment be removed. Sometimes you will find that you never treated this patient or that the patient has the wrong physician.
Before making any decisions about the contents of a comment, consult with an experienced attorney for guidance. An experienced attorney will be able to determine whether the internet posting is considered an opinion or defamation.
4. Send a letter to the website, host, owner and internet service provider.
Once the poster has been identified, doctors can contact the patient directly to ask that the post be removed. If the patient refuses, a doctor should request that his or her attorney send a letter warning the poster of potential legal action if the post is not removed from the website. If that doesn’t work, the physician should have his or her attorney send a letter demanding the comments be removed to the website, website host, owner and internet service provider.
For more information, please visit our website at www.TheHealthLawFirm.com.
Doctors and hospitals around the country seem to be butting heads. In the past month, an article in The New York Times and a segment on the television “magazine” show 60 Minutes shed light on some questionable practices being enforced by hospitals on physicians working for them.
I previously wrote a blog on this structural shift in the practice of medicine. Click here to read that blog.
The effects of this trend are examined in these two news stories. Doctors and former employees from a number of hospitals around the country were interviewed and all seem to be dealing with the same issues. The biggest concerns addressed were: pressure to order unnecessary tests, admitting patients to fill hospital quotas and drive hospital profits, and the feeling of being controlled by hospital executives and administrators instead of practicing effective medicine.
Doctors Allegedly Pressured to Fill Emergency Room Beds to Increase Profits.
On December 2, 2012, 60 Minutes aired an investigative segment on one of the largest for-profit hospital chains in the country. Former employees and physicians alleged this hospital system thrived by buying urban-area hospitals and turning them into profit centers by filing empty beds from emergency rooms. A former emergency medicine doctor stated that the hospital in which he worked required an admission rate of twenty percent (20%) for patients seen in the ER and fifty percent (50%) for patients who were 65 years old and older (most of whom are Medicare patients) seen in the ER.
A former hospital system employee interviewed by 60 Minutes claimed he was in charge of auditing the hospital chain in question. He stated that he was convinced that doctors were under an extraordinary amount of pressure to fill hospital beds. He stated that he personally audited hospitals in Texas, Florida and Oklahoma, and concluded there were hundreds of thousands of dollars submitted to Medicare and Medicaid for hospital stays that did not meet standards for reimbursement, including medical necessity.
Doctors interviewed for The New York Times article had similar stories. They stated in interviews that hospital administrators created quotas for how many patients should be admitted, because more admissions allegedly meant more money. Doctors who met or exceeded quotas were rewarded with increased compensation, while doctors who did not felt in danger of losing their jobs.
Consequences of Ordering Unnecessary Tests.
The New York Times article looked at a number of lawsuits filed by former employees who allege the hospitals they worked for compensated doctors for ordering more tests than necessary.
The Department of Justice (DOJ) recently settled with a hospital group in Joplin, Missouri. According to the DOJ press release, the hospital system had to pay more than $9.3 million for rewarding doctors partly based on how many tests they ordered. This is in direct violation of the Stark Law and the False Claims Act.
I recently wrote an article for Medical Economics on the legal ramifications of ordering unnecessary tests. To read that article, click here.
If you want to know more on the Stark Law, click here.
Doctors Feel Controlled By Hospital Executives.
Doctors also stated they felt controlled by hospital executives. This was due, in part, to a corporate wide computer software system that was customized to automatically order an extensive battery of tests, some unnecessary, as soon as a patient walked into the hospital. It’s also stated that the software would prompt a physician to reconsider when he or she decided to send an emergency room patient home.
Most doctors interviewed were upset that the program also generated reports that evaluated each doctor’s performance and productivity.
To watch the segment from 60 Minutes, click here.
Hospitals Say They are Embracing the New Model of Health Care.
The hospital system in question by 60 Minutes maintains that these allegations are not correct. The executive vice president said that as a whole admission rates haven’t changed in four years and are near or below industry averages. The hospital systems believe that by consolidating they are embracing the new model of health care and state patient care comes first.
Do you think there are constant battles between doctors and hospitals? As a health professional, have you experienced the pressure to admit patients, order unnecessary tests or refer a patient inside your network? Please leave any thoughtful comments below.
As the Centers for Medicare and Medicaid Services (CMS) prepares to designate the next class of accountable care organizations (ACOs), the agency sought the advice and input of the Medicare Payment Advisory Commission (MedPAC) on how to proceed. MedPAC is an independent Congressional Agency established to advise the U.S. Congress on issues affecting Medicare.
Click here to read our previous blog on the background and purpose of ACOs.
MedPAC Suggests All Medicare Shared Savings Program ACOs Join the Two-Sided Risk Model.
In response to the request from the CMS, MedPAC reiterated its previous position that it would like to see all Medicare ACOs take on greater financial risk. As it presently stands, some Medicare-contracted ACOs do not share in the risks associated with the ACOs patients’ healthcare costs exceeding certain target ranges. Even though those ACOs do not bear any financial risk if the goals are not met, they nevertheless stand to benefit if they are.
MedPAC found that the one-sided risk model being used by most Medicare Shared Savings Program (MSSP) ACOs to be insufficient to reach the goals of the MSSP.
Specifically, MedPAC wants to see all MSSP ACOs in the two-sided risk model. That model requires the ACO to reimburse Medicare for some of the costs which exceeded the target ranges. This pressure is important to note because only 13 of the 32 Pioneer ACOs generated enough savings to Medicare to qualify for MSSP savings payments.
Understand an ACO Agreement Before You Sign.
As we see more and more physicians being approached to join or form ACOs, it is crucial to understand exactly what type of arrangement you are getting into.
Many ACO contracts we see are simply for participation as a provider in the organization. However, some of the contracts we see require that the physician make a financial investment in the ACO or otherwise require that the physician pay a “pro rata” share of any penalty assessed by CMS.
Current ACO participation and recruiting is something akin to the gold rush of the nineteenth century. Everyone is rushing to stake a claim in fear of being left out. Be careful about what kind of an agreement you sign and be sure that you understand the long-term consequences of tying your practice to an as-yet unproven model. To read our previous blog on the first year pioneer ACO results, click here.
If you are approached to join an ACO, or are considering signing a participation agreement/contract with one, make sure to read the contract carefully and consult with an experienced healthcare attorney.
What do you think of MedPAC’s position on ACOs? Have you considered joining an ACO? Why or why not? Please leave any thoughtful comments below.
Despite mailing out hundreds of thousands of postcards and letters to physicians, nurses, dentists, pharmacists, and psychologists throughout Florida, we continue to receive calls from new clients and from potential clients, after they have already spoken to and made critical harmful admissions against their own interests to investigators. In Florida, you do not have any duty to cooperate with any investigator who is investigating you. This extends to Department of Health (DOH) investigators (who are sometimes titled “Medical Quality Assurance Investigators” or “Medical Malpractice Investigators“), Drug Enforcement Administration (DEA) special agents, police officers, sheriff’s deputies, or criminal investigators of any type.
For more information about investigations and other legal matters, visit www.TheHealthLawFirm.com.
Although Meyers v. Columbia/HCA Healthcare Corp.is one of the major cases concerning termination of clinical privileges and peer review hearings, there have been other recent clinical privileges cases that are important for physicians to know when confronted with a peer review action. This is especially true if the physician is being accused of disruptive behavior.
One such case is Isaiah v. WHMS Braddock Hospital Corp., decided in 2008. In this case, Dr. Isaiah’s medical staff privileges were revoked after hospital staff members reportedly expressed concerns about the surgeon’s surgical skills and allegedly compulsive behavior. Dr. Isaiah argued that his behavior did not impact his skills. The court concluded that the hospital’s revocation of Dr. Isaiah’s medical staff privileges was immune from liability under the federal Health Care Quality Improvement Act (HCQIA) because the hospital acted in an attempt to protect quality health care, which relates not only to a physician’s abilities, but also to the doctor’s behavior.
In 2009, Abu-Hatab v. Blount Memorial Hospital was decided, again in favor of the hospital. In this case, Dr. Abu-Hatab sued Blount Memorial Hospital after his medical staff membership and clinical privileges had been terminated due to his allegedly disruptive behavior. Dr. Abu-Hatab argued that allegations of his poor conduct were not true. However, the court decided that it didn’t matter whether the complaints were undisputedly true. Under the Health Care Quality Improvement Act, as long as a hospital and its medical staff act “reasonably” in considering complaints, the professional review actions are protected. According to the court, the hospital’s many meetings concerning Dr. Abu-Hatab’s behavior were enough to show that it acted reasonably.
Another case reported originally in 2009, Leal v. Secretary, U.S. Department of Health and Human Services, involved a urologist, Dr. Leal, who held clinical privileges at Cape Canaveral Hospital in Florida. According to the reported court decison, after being told he would have to wait to use an operating room, Dr. Leal exhibited behavior that led the hospital to suspend his clinical privileges for sixty (60) days. The reported decisions state that Dr. Leal broke a telephone receiver and copy machine, threw jellybeans into a trash can in a medical suite, shoved a metal cart and spoke sternly to a nurse. The hospital filed a report of its action taken against Dr. Leal with the National Practitioner Data Bank (NPDB), which was established under the Health Care Quality Improvement Act (HCQIA) to collect information on the professional conduct and competence of health care practitioners. Dr. Leal felt that he should not have been reported to the NPDB and challenged the action. However, the trial court found that the decision to report Dr. Leal to the NPDB was supported by the HCQIA, which requires a report to the NPDB for a professional review action that adversely affects the clinical privileges of a physician for a period longer than thirty (30) days. This decision was also upheld by the appellate court (the Eleventh Circuit Court of Appeals) in 2010.
One of the more recent clinical privileges cases is Badri v. Huron Hospital, decided in 2010. According to case reports, in this case Dr. Badri was involved in a car accident. Allegedly, the other driver involved choked Dr. Badri. Dr. Badri then began experiencing neck pain for which he self-medicated with steroids. He was then accused of disruptive behavior after several alleged incidents of poor conduct towards hospital employees and patients. When deciding Dr. Badri’s case, the court relied on Meyers, which provides authority for immunity for hospitals and medical staffs in professional review actions that cite a physician’s disruptive behavior as undermining quality health care.
These are just a few of many cases concerning clinical privileges and peer review actions where the hospital involved is found to be acting in accordance with the Health Care Quality Improvement Act and therefore not liable.
If you are a physician or any hospital staff member accused of disruptive behavior, misconduct, “rudeness,” disrespectful conduct or language, abusive acts, anger, hostility, profanity or other similar acts. beware. This is a serious matter. It could result in adverse peer review action that could be career-ending.
If you are concerned that your medical staff privileges may be suspended or revoked, or if you are currently facing a peer review action, make sure you consult an experienced health care attorney who is familiar with matters regarding clinical privileges.
For more information about clinical privileges, peer review, or fair hearings, please visit our website at wwww.TheHealthLawFirm.com.
It’s been a long time since most of us have seen a report card, but hospitals all over the nation received their safety grades on November 28, 2012. Leapfrog, a national group that advocates for safer health care, determined the grades. According to the Orlando Sentinel, Florida hospitals ranked well. Overall, 39 percent (39%) of the 156 hospitals graded received A’s, earning the Sunshine State a tenth place ranking in the nation.
To see the number of hospitals receiving each grade for patient safety by state, click here.
Grades Were Calculated by Safety Measures in Hospitals.
According to the Kaiser Health News article, Leapfrog calculated the grades based on 26 different measures of safety. The company used publicly-available data, including the number of blood line infections, falls in the hospital, bedsores and the consistency that hospitals follow recommended methods of care.
Physicians Believe Rating System is Pointless.
This grading system has physicians reportedly complaining. In the Kaiser Health News article doctors interviewed said that the grades are redundant and offer no benefit to hospitals since Medicare calculates and publishes most hospital-related issues.
Click here to read the Kaiser Health News article.
Leapfrog defends the ratings, saying the report cards provide a more transparent health care system for patients.
How to Fight Poor Online Reviews.
The Leapfrog grading system is just one of the many ways the performance of physicians, hospitals, nurses, dentists and all health providers is put on the chopping block. Other internet review websites like Vitals.com and Yelp.com allow patients to post virtually anything they want – good or bad. If you’ve personally received an unfavorable review that was possibly planted by a disgruntled patient, competitor or former employee you need to fight it. When the comment is posted, search engines like Google, Yahoo, Bing, AOL, or MSN may bring up the false statement every time someone searches for that health provider’s name. To learn legal strategies for health providers to fight bad online reviews, click here.
As a health professional, do you think this grading system is redundant? Do you believe there is any merit to the grades hospitals received? Do you think patients benefit from the published grades? Please leave any thoughtful comments below.
The American Medical Association (AMA) and several other physician organizations announced support of a court appeal by physicians at Avera Marshall Regional Medical Center in Minnesota. The medical staff at Avera alleged the hospital’s governing board amended the medical staff’s bylaws and took away the medical staff’s right to self-govern. On February 6, 2013, the AMA, the Minnesota Medical Association, the American Academy of Family Physicians, the American Osteopathic Association and the Minnesota Academy of Family Physicians filed a friend-of-the-court brief on behalf of the hospital’s medical staff.
Click here to read the press release from the AMA announcing its support of the medical staff at Avera.
Background on the Case at Avera Marshall Regional Medical Center.
In January 2012, the Avera medical staff filed a lawsuit alleging the new bylaws created by the hospital’s governing board left the physicians without “nearly all rights and responsibilities” and gave Avera’s governing board controlling power in processes that required medical staff direction. On September 26, 2012, a Minnesota District Court judge issued a final order on a lawsuit refusing to recognize the medical staff’s lawsuit and refusing to recognize the bylaws as a contract.
To read more on the final order by the judge in the Minnesota District Court, click here.
AMA and Other Physician Organizations in Favor of Self-Governance by a Medical Staff.
The brief supports reestablishing the independence of the hospital’s medical staff to ensure their right and responsibility to uphold the quality of patient care, without interference by the hospital’s governing board. The AMA president said the judge’s ruling gave unchecked power to Avera’s governing board over the medical staff. The brief urges the state’s court of appeals to revise this ruling and allow the medical staff to present its case for self-governance. The AMA believes giving the medical staff the right to self-govern will restore balance between patient care and corporate interests at the hospital.
Click here to read the friend-of-the-court brief file by the AMA.
My Input on a Self-Governing Medical Staff.
By law the medical staff in a hospital is supposed to be self-governing. The AMA, along with other medical associations, created a minimum standard to govern hospitals and to lay out what health care professionals need to do to improve the quality of care in the hospitals. Self-governing includes allowing the medical staff to discipline its own members when necessary, conduct peer reviews, and take action when they see hospital issues.
To watch a video explaining medical staff self-governance in more detail, click here.
What are your thoughts on medical staff self-governance? Please leave any thoughtful comments below.
Don’t wait until it’s too late. If you are concerned of any possible violations and would like a consultation, contact a qualified health attorney familiar with medical billing and audits today. To contact The Health Law Firm please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.


The most common traffic offenses in Florida include reckless driving, driving with a suspended license, and driving under the influence. Some traffic crimes are serious felony offenses such as fleeing to elude, vehicular manslaughter or DUI manslaughter.
After charges for a criminal traffic offense in Leon County or the surrounding areas, contact a criminal defense attorney in Tallahassee, FL, at Pumphrey Law. Our attorneys have years of experience. Let us put our experience to work for you. Call our lawyers at (850) 681-7777 to find out what you need to do today to protect yourself against a criminal prosecution and to keep your driving privileges.
Pumphrey Law represents clients charged with serious traffic violations in Leon County and the surrounding areas of Florida’s Second Judicial Circuit including Wakulla County, Gadsden County, Liberty County and Jefferson County, plus the cities of Crawfordville, Quincy, Bristol and Monticello.
Some of the most common traffic violations can result in fines, a driver’s license suspension, or even jail time.
Reckless driving, according to Florida Statutes § 316.192, is when a person drives without care for the safety of other drivers or drives in complete disregard for the safety of others or property.
Another common offense in Florida is driving while license suspended. Florida Statutes § 322.34 states that anyone whose license has been suspended or revoked and drives on Florida’s roads can be found guilty of a moving violation, misdemeanor or felony, depending on the reasons for the license suspension, the number of prior offenses and the alleged offender’s knowledge of their suspended license. A Tallahassee driving while license suspended attorney can help.
For those who have had several traffic tickets, they can be issued habitual traffic offender revocations. Florida Statute § 322.264 defines a habitual traffic offender in Florida as someone who has accumulated a certain number of criminal convictions or offenses within a five-year period. A habitual traffic offender can have his or her license permanently revoked or suspended for up to five years.
Vehicular manslaughter is considered a traffic offense that comes with extreme sanctions if convicted. Florida Statutes § 782.07 says vehicular manslaughter is caused by someone operating a motor vehicle negligently, and it results in the death of another person. A vehicular homicide charge is a level above manslaughter because the offender acted recklessly. To be specific, Florida Statutes § 782.071 states vehicular homicide is the killing of another human by operating a motor vehicle in such a reckless way that is likely to cause bodily harm or death to another person.
Another traffic violation that occurs is fleeing with the intent to elude. This criminal traffic offense is defined in Florida Statutes § 316.1935, which says any person who has been ordered to stop by a law enforcement officer, and has knowledge he or she has been ordered to stop, but does not could be charged. Someone who attempts to flee or does flee from an officer also can be charged with this third-degree felony.
Leaving the scene (often called hit-and-run) is defined in Florida Statute § 316.027. Any person who is involved in a car accident that causes injury to someone else must stop their vehicle and remain at the scene until they are permitted to leave. Anyone who does not do this, intentionally, commits a felony of the third degree.
If someone causes death to another person from an automobile accident and intentionally leaves the scene, he or she could be convicted of a felony of the first degree. Additionally, under Florida Statute § 316.061, if someone is involved in a car accident, and causes property damage or damage to another vehicle, and intentionally leaves the scene, they can be found guilty of a misdemeanor of the second degree.
Florida has created a point system in which points are assigned after a conviction for certain types of offenses. If someone accrues too many points from the system within a specific time period, that person can have his or her license suspended.
If a person accumulates 12 points within one year, his or her license can be suspended for 30 days. If 18 points are accumulated within one year and a half, a license can be suspended for 90 days. If a driver accrues 24 points within three years, a license can be suspended for one year.
To avoid points from a ticket for a moving violation, anyone can attend a traffic school. However, the election to go to traffic school only can be made once per year, and only five times within a 10-year period. A person making this election will have to notify the Clerk of Court that he or she intends to attend traffic school for a moving violation citation. This option is not available to those with a commercial driver’s license. You can also avoid the points if the court “withholds adjudication” so that you are not convicted of the offense.
If your license has been suspended due to too many violation points, you may be eligible to receive a hardship license if you complete a 12-hour Advance Driving Improvement course, pay the required fee for reinstatement and any other additional fees.
The Florida Highway Patrol maintains law enforcement and traffic safety awareness and promotes safe driving throughout Florida. The site focuses on providing information concerning the roles and responsibilities of the patrol along with resources on driver licenses, vehicle tags, and registration, office locations and relevant forms.
If you have been charged with a traffic violation in Leon County, Tallahassee, contact the attorneys at Pumphrey Law to discuss the facts of your particular case. The attorneys will help you determine if there are defenses or mitigating circumstances to reduce your charges or have them dismissed. Contact Pumphrey Law at (850) 681-7777 or send an online message for a free consultation about your traffic violation.


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Bibliography: Volgograd: ‘Uchitel’ Publishing House, 2015. – 336 pp.
Editorial Council: H. Barry III (USA), Yu. Е. Berezkin (Russia), M. L. Butovskaya (Russia), R. L. Carneiro (USA), Ch. Chase-Dunn (USA), V. V. Chernykh (Russia), H. J. M. Claessen (Netherlands), D. Christian (Australia), S. Gavrilets (USA), А. V. Dybo (Russia), K. Yu. Es'kov (Russia), I. V. Ilyin (Russia), N. N. Iordansky (Russia), P. Herrmann (Ireland), A. A. Kazankov (Russia), E. S. Kul'pin (Russia), G. G. Malinetsky (Russia), A. V. Markov (Russia), A. Yu. Militarev (Russia), M. V. Mina (Russia), V. de Munck (USA), А. P. Nazaretyan (Russia), E. B. Nay-mark (Russia), A. D. Panov (Russia), Zh. I. Reznikova (Russia), B. H. Rodrigue (USA), P. Skalník (Czech Republic), F. Spier (Netherlands), D. White (USA).

matches: V. V. V. V. V. V.


Article 115-3 of Treasury Regulations 101, promulgated under the Revenue Act of 1938, requires that, for computing under § 112(b)(7)(E) the amount of "earnings and profits" distributed by a corporation as liquidating dividends with respect to securities which the corporation had acquired by tax-free exchanges for its own stock and had later sold, the basis be the transferor's cost, rather than the value of the securities at the time of their acquisition by the corporation.
1. The regulation was reasonable, and a valid exercise of the rulemaking power. P. 324 U. S. 546.
2. Though the Tax Court relied on § 501 of the Second Revenue Act of 1940, it is unnecessary here to determine the constitutionality of applying that section retroactively. P. 324 U. S. 547.
Certiorari, 323 U.S. 694, to review the reversal of a decision of the Tax Court, 1 T.C. 640, which sustained the Commissioner's determination of deficiencies in income tax.
Since our problem is not computation of a tax, the facts relevant to the issues in the five cases, consolidated on appeal may be shortly stated. In 1925, John H. Wheeler and his wife, Frances, organized under the laws of California the John H. Wheeler Company. Then and thereafter, they transferred an assortment of securities to it in exchange for shares of its common stock. The securities had cost them $304,683.49, and, at transfer, had a fair market value of $491,800. In exchange, the Wheelers received 4,918 shares with a par value of $100 each. No gain by them was recognized for income tax purposes by reason of the exchange. Cf. Internal Revenue Code, § 112(b)(5).
After considering the applicability of § 112(b)(7), the stockholders duly dissolved the corporation and distributed its assets during December, 1938. They elected to be taxed on the gains on their shares pursuant to § 112(b)(7), and they reported, of course, according to the higher or market value basis for the securities acquired and disposed of by the Company. The Commissioner asserted a deficiency based on the lower cost to the transferors. In explaining his determination, he relied on § 501(a) of the Second Revenue Act of 1940, 54 Stat. 974, 1004, which provides that earnings and profits on the sale or other disposition of property shall be determined by using the adjusted basis for determining gains and by recognizing such gains to the extent that they are recognized for computing net income, and on § 501(c), which makes the provisions of § 501(a) applicable to prior years.
The Tax Court sustained the Commissioner. [Footnote 4] It held § 501(a) of the Act of 1940 a "complete answer" to taxpayers' contention, and it overruled their claim that, if the section was applicable to increase their 1938 liability, it was retroactive in contravention of the Fifth Amendment to the Constitution. The Circuit Court of Appeals agreed that the section was applicable, but held that such retroactivity rendered it unconstitutional.
"Gains and losses within the purview of Section 112 or corresponding provision of prior Acts are brought into the earnings and profits at the time and to the extent such gains and losses are recognized under that section. [Footnote 6]"
This regulation, if valid, disposes of the controversy, for, when the corporation sold its securities acquired from the Wheelers, it realized gain, based on transferor's cost, which was fully recognized under § 112.
persisted in applying the regulation. The question was never reviewed here. Before it was finally judicially considered, Congress enacted § 501 of the Second Revenue Act of 1940, as the committee reports show, [Footnote 7] to "clarify the law" by enacting the substance of the regulation. But, if the regulation itself was valid and effective, the clarifying amendment of 1940 added nothing to the liability of these taxpayers, and even though the Tax Court relied on it, rather than on the regulation, no question of retroactivity is presented.
"In the case of a sale or exchange, the extent to which the gain or loss determined under this section shall be recognized for the purposes of this title shall be determined under the provisions of section 112. [Footnote 9]"
In this case, to be sure, there was no question of recognition of gain or loss to the corporation at the time of the exchange with the Wheelers, because it was issuing its own stock, and so realized no gain or loss. But to recognize the increment in value as affecting earnings and profits would no more harmonize with the taxless character of the transaction than to treat a realized gain as doing so. The same policy which carries over the transferor's basis for purposes of the corporation's income tax, § 113(a)(8), requires carrying it over for determining the taxability of its distributions as the Commissioner's regulation directs: gains and losses are to be brought into earnings and profits at the time and "to the extent" that they are recognized under § 112. Finally, no doubt of the reasonableness of the rule can linger in the presence of § 501(a), by which Congress has indicated its express approval of the principle that the basis for determining earnings and profits shall be the basis for determining gain.
has no retroactive effect on the liability of these taxpayers, and the conclusion of the Court of Appeals that it is unconstitutional is not warranted. The judgment of the Court of Appeals is reversed. and that of the Tax Court is affirmed.
MR. JUSTICE ROBERTS is of opinion the judgment should be affirmed for the reasons stated by the Circuit Court of Appeals, 143 F.2d 162.
This was slightly modified by the Tax Court in an aspect not material here.
See Paul, Selected Studies in Federal Taxation, Second Series, 1938, 149, 155 et seq.
The provision appears in Reg. 94, Art. 115-3, under the Act of 1936; Reg. 86, Art. 115-1, under the Act of 1934, and in Reg. 103, Sec.19.115-3, and Reg. 111, Sec. 29.115-3, under the Internal Revenue Code.
See H.R. Rep. No. 2894, 76th Cong., 3d Sess., p. 41; Sen.Rep. No. 2114, 76th Cong., 3d Sess., p. 22.
See 1 Mertens, Law of Federal Income Taxation (1942) § 9.33.
(Italics supplied.) See Paul, Selected Studies in Federal Taxation (Second Series, 1938) 193-95.
Boske v. Comingore, 177 U. S. 459, 177 U. S. 470; Brewster v. Gage, 280 U. S. 327, 280 U. S. 336; United States v. Kirby Lumber Co., 284 U. S. 1, 284 U. S. 3; Fawcus Machine Co. v. United States, 282 U. S. 375, 282 U. S. 378. It may also be noted that the regulation has the support of the doctrine that reenactment of the statute without disapproval of regulations thereunder gives them added sanction. United States v. Dakota-Montana Oil Co., 288 U. S. 459, 288 U. S. 466; Helvering v. Winmill, 305 U. S. 79, 305 U. S. 83; Helvering v. Griffiths, 318 U. S. 371, 318 U. S. 395-397.


160-bbb. Independent livery driver benefit fund.
160-ccc. Contributions to the fund.
160-ddd. Use of the fund.
160-fff. Membership in the fund.
"Independent livery driver" means a livery driver that is dispatched by an independent livery base.
"Annualized basis" means the product of the number of livery drivers affiliated with a dispatching livery base and the number of months each such driver is affiliated with the livery base, divided by twelve.
"Covered services" means all dispatches from a livery base regardless of where the pick-up or discharge occurs.
"Fund" means the independent livery driver benefit fund as established in this article.
"Independent livery base" has the same meaning as set forth in section eighteen-c of the workers' compensation law.
"Livery" means a for-hire vehicle licensed by a local taxi and limousine commission, carrying no more than five passengers or such other limited number as set by a local taxi and limousine commission, which charges for service on the basis of flat rate, time, mileage or zones, and which is dispatched by a livery dispatch facility, but shall not include a vehicle owned or driven by a black car operator, as defined in article six-F of this chapter.
"Livery driver" means an individual that drives a livery, is dispatched by a livery base, receives compensation for such driving, and is licensed to do so by a local taxi and limousine commission.
"Livery base" means a central facility that manages, organizes or dispatches liveries, and is licensed to do so by a local taxi and limousine commission.
"Livery registrant" means a person in whose name a livery is licensed by a local taxi and limousine commission.
"Local taxi and limousine commission" means a unit of local government in New York city, Nassau county or Westchester county authorized to license and regulate liveries.
§ 160-bbb. Independent livery driver benefit fund.
There is hereby created a not-for-profit corporation to be known as the New York independent livery driver benefit fund. To the extent that the provisions of the not-for-profit corporation law do not conflict with the provisions of this article, or with the plan of operation established pursuant to this article, the not-for-profit corporation law shall apply to the fund, which shall be a type C corporation pursuant to such law. If an applicable provision of this article or of the fund's plan of operation relates to a matter embraced in a provision of the not-for-profit corporation law but is not in conflict therewith, both provisions shall apply. The fund shall perform its functions in accordance with its plan of operation, and shall exercise its powers through a board of directors established pursuant to this article.
Within thirty days of the effective date of this article, there shall be appointed a board of directors of the fund, consisting of nine directors appointed by the governor, one of whom shall be chosen upon nomination of the temporary president of the senate; one of whom shall be chosen upon nomination of the speaker of the assembly; one of whom shall be chosen upon nomination of the chair of the workers' compensation board; one of whom shall be chosen on nomination of the superintendent of insurance; one of whom shall be chosen on nomination of the American Federation of Labor-Congress of Industrial Organizations of New York; and four of whom shall be chosen without prior nomination, at least two of which shall be a livery registrant or owner, officer or director of a livery base or livery registrant. The initial terms of directors shall be staggered, the four directors appointed by the governor without prior nomination serving for initial terms of three years from the effective date of this article, the two directors appointed upon nomination of the speaker of the assembly and temporary president of the senate serving for initial terms of two years from the effective date of this article, and the three directors on nomination of the superintendent of insurance, the chair of the workers' compensation board and the American Federation of Labor-Congress of Industrial Organizations of New York serving for initial terms of one year from the effective date of this article. The subsequent terms of all directors shall be three years. The board of directors shall have the power to remove for cause any director. The failure of any nominating authority to appoint a director within the time set by this subdivision shall not bar the fund from operating, so long as at least six directors have been appointed.
The directors shall elect annually from among their number a chair and a vice chair who shall act as chair in the chair's absence.
For their attendance at meetings, the directors of the fund shall be entitled to compensation, as authorized by the directors, in an amount not to exceed two hundred dollars per meeting per director and to reimbursement of their actual and necessary expenses.
Directors of the fund, except as otherwise provided by law, may engage in private or public employment or in a profession or business.
All of the directors shall have equal voting rights and five or more directors shall constitute a quorum. The affirmative vote of four directors shall be necessary for the transaction of any business or the exercise of any power or function of the fund.
A vacancy occurring in a director position shall be filled in the same manner as the initial appointment to that position, provided however that no individual may serve as director for more than three successive terms.
engage in such additional actions as the board of directors may deem necessary or proper for the execution of the powers and duties of the fund.
§ 160-ccc. Contributions to the fund.
Each independent livery base shall be assessed an annual payment to the fund, to be set by the board of directors no later than January first of each calendar year or such other date as the board of directors may set consistent with, and as necessary to effectuate, this article. The total amount of the payment shall be determined by the fund as sufficient to provide it with total assets equal to one hundred fifty percent of the cost of an insurance policy issued under section one hundred sixty-ddd of this article, and to provide for any administrative expense of the fund. Each independent livery base's own share of such payments shall be determined by a formula set by the board of directors, to be based on the number of liveries affiliated with each livery base at the time the payments are calculated, or such other measure set by the chair of the workers' compensation board. Each independent livery base shall make the payments assessed against it annually within thirty days of assessment. If it is determined by the board of directors that there may be an insufficient amount of money in the fund to purchase the requisite coverage or to pay amount of money in the fund to purchase the requisite coverage or to pay amount of money in the fund to purchase the requisite coverage or to pay administrative expenses in a given year, the board of directors may require each independent livery base to make an additional payment to the fund based on the amount of its affiliated drivers on an annualized basis or such other criteria as shall be established by the chair of the workers' compensation board, except that no such payments shall be assessed, such that the fund will have funds greater than necessary to provide compensation under the workers' compensation law, to the extent set forth in section one hundred sixty-ddd of this article for eighteen months.
§ 160-ddd. Use of the fund.
total and permanent blindness or deafness. The provisions of the workers' compensation law shall govern any application for and the receipt of such benefits.
The chair of the workers' compensation board may promulgate regulations necessary to effectuate the provisions of this article.
§ 160-fff. Membership in the fund.
The membership of the fund shall be comprised of all independent livery bases. If the workers' compensation board or local taxi and limousine commission revokes a livery base's authorization to act as an independent livery base, it shall cease to be a member of the fund within thirty days. Such revocation shall not entitle the livery base to the return of any moneys deposited into the fund.
to present proof to the local taxi and limousine commission that it has secured compensation under the workers' compensation law, to the extent required of employers, for all livery drivers it dispatches.
Each local taxi and limousine commission shall supply the fund and the workers' compensation board, at any such time as the fund or workers' compensation board requests, a list of all liveries affiliated with each livery base licensed by the commission.
The fund shall, within seventy-five days of the appointment of the fund's board of directors, provide to its members a copy of the proposed plan of operation filed with the workers' compensation board and all local taxi and limousine commissions and shall inform its members of their rights and duties pursuant to this article.
§ 160-ggg. Plan of operation.
Within seventy-five days of the appointment of the fund's board of directors, the fund shall file with the workers' compensation board and local taxi and limousine commissions its plan of operation, which shall be designed to assure the fair, reasonable and equitable administration of the fund. The plan of operation and any subsequent amendments thereto shall become effective upon being filed with the workers' compensation board and all taxi and limousine commissions.
contain such additional provisions as the board of directors of the fund may deem necessary or proper for the execution of the powers and duties of the fund.
§ 160-hhh. Violations; penalties; appeals.
Any person that knowingly submits a materially false statement on the affirmation provided for in section eighteen-c of the workers' compensation law shall be guilty of a class A misdemeanor. Any person that commits a second or subsequent offense under this subdivision shall be guilty of a class E Felony.
refer the independent livery base to the local taxi and limousine commission for such additional sanction as it may impose under its rules and regulations.
Any independent livery base which has been found on two separate occasions, under subdivision two of this section, to have made a materially false statement in its certification shall be permanently barred from acting as an independent livery base.
a penalty of up to five hundred dollars for each thirty days after notice is given that the payment is overdue. The workers' compensation board or local taxi and limousine commission may suspend or revoke such livery base's authorization to act as an independent livery base for failure to make such payment. The rate of interest applicable to this subdivision shall be twelve percent per annum. Any monetary penalty imposed pursuant to this subdivision shall be retained by the workers' compensation board and be used to defray the costs of administering this article.
If the workers' compensation board or local taxi and limousine commission determines that any independent livery base has made any material misrepresentations, or temporarily altered the affiliation of any livery, livery driver or livery registrant, for the purpose of reducing its payments into the fund, the workers' compensation board or local taxi and limousine commission may suspend the livery base's membership in the fund for a period of up to two years, and may impose a penalty of up to five thousand dollars.
If the workers' compensation board or local taxi and limousine commission determines that any independent livery base has coerced any livery driver into making false statements or refraining from reporting any violations of this article, the workers' compensation board or local taxi and limousine commission may suspend the livery base's membership in the fund for a period of up to two years, and may impose a penalty of up to five thousand dollars.
Except as otherwise provided in this section, a livery base that is found to have violated a provision of this article or a rule promulgated by the workers' compensation board or local taxi and limousine commission pursuant to this article shall be liable for a fine in an amount not to exceed five thousand dollars per violation.
If the fund has reason to believe a violation of this article by a fund member may have occurred, the fund shall notify the workers' compensation board. Upon receipt of such a referral, the workers' compensation board shall hold a hearing to determine the validity of the charge, or refer the matter to the local taxi and limousine commission for such determination.
the president, secretary and treasurer of a livery base, regardless of its form of organization.
Failure of the independent livery base, or of its responsible persons, to pay any charges or penalties awarded pursuant to this section within twenty days of issuance of a valid order so to do, or in the event an appeal has been taken from the determination of the workers' compensation board, to deposit with the workers' compensation board within twenty days of the issuance of the determination from which the appeal is taken the total amount of the award as security for its payment, shall entitle the workers' compensation board or local taxi and limousine commission to file with the clerk of Albany county or the county where the local taxi and limousine commission is located a certified copy of the determination of the workers' compensation board or the local taxi and limousine commission, and thereupon judgment shall be entered in the supreme court by the clerk of the county where the determination is filed immediately upon such filing. Such judgment shall be entered in the same manner, have the same effect and be subject to the same proceedings as though rendered in a suit duly heard and determined by the supreme court, except that no appeal may be taken there from.
Within twenty days after issuance by the workers' compensation board of a determination adverse to a livery base pursuant to this section, an appeal may be taken there from to the appellate division of the supreme court, third department, by the aggrieved party.
If the membership of an independent livery base in the independent livery fund is suspended for failure to pay assessments under this article, the livery base may make application for reinstatement only upon payment of such assessments and such penalties and interest as the local taxi and limousine commission or workers' compensation board has imposed, or upon the agreement by the base and fund to a schedule for such payment.
Any sanction imposed under this section shall be after notice to the independent livery base and an opportunity for a hearing.
Nothing in this article or in the provisions of the workers' compensation law pertaining to coverage of livery drivers under this article shall be construed as limiting the discretion of the state insurance fund, in providing coverage to the New York independent livery driver benefit fund, inc., in choosing a premium basis, rating plan or setting a rate to cover the risk posed by insuring such fund.
§ 18-c. Independent livery bases.
For purposes of this section, "covered services," "livery," "livery driver," "livery registrant," "livery base," "local taxi and limousine commission" and "responsible person" shall have the meanings set forth in article six-G of the executive law.
no livery driver is subject to being fired or discharged by the livery base. The base shall agree to provide the board with immediate notice of any inaccuracies in the affirmation, including any failure to adhere to any of the matters set forth on its affirmation.
The board shall alter the criteria set forth in paragraph (a) of this subdivision to conform to any statutory definition for employer or independent contractor applicable to livery drivers.
The livery shall provide the board and local taxi and limousine commission, and all livery registrants or drivers whose liveries may be dispatched by the livery base, with a copy of a written policy in plain language, in the primary language spoken by each registrant or driver, setting forth all matters to which it has attested on the affirmation provided for in paragraph (a) of this subdivision. The failure to distribute such a policy shall not have any legal consequence except in accordance with section one hundred sixty-hhh of the executive law.
The base shall pay into the independent livery fund such payments as are directed by the independent livery driver benefit fund pursuant to article six-G of the executive law.
The base may not owe any payments into the fund established under section twenty-six-a of this article, or otherwise owe any moneys under this chapter, unless it has an agreement with the board to repay the money owed, or to relieve it of the obligation to make any such payments.
The base shall maintain such records as are provided for by regulation of the chair.
The base shall permit the local taxi and limousine commission, the independent livery fund and any carrier providing compensation under this title for the independent livery fund to audit its books and records during regular business hours solely as necessary to determine compliance with this section, or to determine the amount owed to the fund.
No responsible persons of the livery base may have been a responsible person of a base whose status as an independent livery base was revoked within the previous five years, or which has no agreement on moneys owed in as required by paragraph (e) of this subdivision, unless such criteria are waived in the discretion of the board.
The board may revoke any livery base's status as an independent livery base if it determines that the base is in violation of any of the criteria set forth in subdivision one of this section, or may suspend the livery base's status as an independent livery base pending the base's compliance with any such criteria.
An independent livery base's obligations under this chapter regarding the securing and provision of workers' compensation benefits for any livery driver it dispatches shall be satisfied in full by compliance with the requirements imposed upon an independent livery base by this section and article six-G of the executive law. Insurance coverage directly procured by any independent livery base for the purpose of satisfying the requirements of this chapter with respect to employees of the central livery dispatch facility shall not include coverage of any livery driver to the extent that the livery driver is covered under coverage secured by the New York livery drivers' injury compensation fund pursuant to the requirements of article six-G of the executive law except as provided in that article.
Any livery base that is not an independent livery base shall be deemed an employer of any livery driver it dispatches for purposes of this article.
A livery base's designation as an employer or independent livery base in accordance with this section shall not be considered in any determination as to whether a livery base is an employer or independent contractor under any other provision of law. The livery base's designation under this section shall not be admissible in any court or administrative proceeding in this state, except any proceeding under this article or article six-G of the executive law, to demonstrate the base's status as an employer or independent contractor.
For all injuries or illnesses resulting to a livery driver arising out of covered services for an independent livery base, and for which compensation must be paid in accordance with section one hundred sixty-ddd of the executive law, the independent livery driver benefit fund shall be deemed the employer for all purposes of this chapter.
An independent livery driver that sustains injury as a result of the use or operation of an automobile during a dispatch by an independent livery base may obtain recovery in accordance with article fifty-one of the insurance law, and shall not be entitled to workers' compensation benefits except as set forth in section one hundred sixty-ddd of the executive law.
3. "Employer," except when otherwise expressly stated, means a person, partnership, association, corporation, and the legal representatives of a deceased employer, or the receiver or trustee of a person, partnership, association or corporation, having one or more persons in employment, including the state, a municipal corporation, fire district or other political subdivision of the state, and every authority or commission heretofore or hereafter continued or created by the public authorities law. For the purposes of this chapter only "employer" shall also mean a person, partnership, association, corporation, and the legal representatives of a deceased employer, or the receiver or trustee of a person, partnership, association or corporation who delivers or causes to be delivered newspapers or periodicals for delivering or selling and delivering by a newspaper carrier under the age of eighteen years as defined in section thirty-two hundred twenty-eight of the education law. For the purpose of this chapter only, "employer" shall also mean a person, partnership, association, or corporation who leases or otherwise contracts with an operator or lessee for the purpose of driving, operating or leasing a taxicab as so defined in section one hundred forty eight-a of the vehicle and traffic law, except where such person is an owner-operator of such taxicab who personally regularly operates such vehicle an average of forty or more hours per week and leases such taxicab for some portion of the remaining time, and except if the taxicab is a livery subject to section eighteen-c of this chapter, in which case the livery driver's employer shall only be such employer as is defined in that section. For the purposes of this section only, such an owner operator shall be deemed to be an employer if he controls, directs, supervises, or has the power to hire or terminate such other person who leases the vehicle.
Notwithstanding any other provision of this chapter and for purposes of this chapter only, "employer" shall mean, with respect to a jockey, apprentice jockey or exercise person licensed under article two or four of the racing, pari-mutuel wagering and breeding law performing services for an owner or trainer in connection with the training or racing of a horse at a facility of a racing association or corporation subject to article two or four of the racing, pari-mutuel wagering and breeding law and subject to the jurisdiction of the New York state racing and wagering board, The New York Jockey Injury Compensation Fund, Inc. and all owners and trainers who are licensed or required to be licensed under article two or four of the racing, pari-mutuel wagering and breeding law at the time of any occurrence for which benefits are payable pursuant to this chapter in respect to the injury or death of such jockey, apprentice jockey or exercise person.
Notwithstanding any other provision of this chapter, and for purposes of this chapter only, the employer of a black car operator, as defined in article six-F of the executive law, shall, on and after the fund liability date, as defined in such article, be the New York black car operators' injury compensation fund, inc. created pursuant to such article.
For the purpose of this chapter only, whether a livery base operating in any locality where liveries must register with a local taxi and limousine commission shall be deemed the "employer" of any livery driver engaging in covered services shall be determined in accordance with section eighteen-c of this chapter.
For the purpose of this chapter only, whether a livery driver dispatched by an independent livery base, as those terms are defined in article six-G of the executive law, is an "employee" shall be determined in accordance with section eighteen-c of this chapter.
For the purpose of this chapter only, "employee" shall also mean a driver, operator or lessee who contracts with an owner, operator or lessor for the purpose of operating a taxicab as so defined in section one hundred forty-eight-a of the vehicle and traffic law, except where such person leases the taxicab from a person who personally, regularly operates such vehicle an average of forty or more hours per week, and except if the taxicab is a livery subject to section eighteen-c of this chapter, in which case the livery driver's employer shall only be such employer as is defined in that section. For the purposes of this section only, such person shall be deemed to be an employee of the owner-operator if the owner-operator controls, directs, supervises, or has the power to hire or terminate such person.
Notwithstanding any other provision of this chapter, and for purposes of this chapter only, a jockey, apprentice jockey or exercise person licensed under article two or four of the racing, pari-mutuel wagering and breeding law performing services for an owner or trainer in connection with the training or racing of a horse at a facility of a racing association or corporation subject to article two or four of the racing, pari-mutuel wagering and breeding law and subject to the jurisdiction of the New York state racing and wagering board shall be regarded as in the "employment" not solely of such owner and trainer, but shall instead be conclusively presumed to be in the "employment" of The New York Jockey Injury Compensation Fund, Inc. and of all owners and trainers who are licensed or required to be licensed under article two or four of the racing, pari-mutuel wagering and breeding law, at the time of any occurrence for which benefits are payable pursuant to this chapter in respect of the injury or death of such jockey, apprentice jockey or exercise person. For the purpose of this chapter only, whether a livery driver's performance of covered services, as those terms are defined in article six-G of the executive law, constitutes "employment" shall be determined in accordance with section eighteen-c of this chapter.
(15) "Workers' compensation and employers' liability insurance," means insurance against the legal liability, under common law or statute or assumed by contract, of any employer for the death or disablement of, or injury to, his employee, including volunteer firefighters' benefit insurance provided pursuant to the volunteer firefighters' benefit law [and] including volunteer ambulance workers' benefit insurance provided pursuant to the volunteer ambulance workers' benefit law and insurance for workers' compensation benefits for death and injuries arising out of crimes provided by the independent livery driver benefit fund pursuant to article six-G of the executive law.
The wages of a livery driver, as defined in article six-G of the executive law, shall be calculated in accordance with this paragraph. The chair shall promulgate regulations, in consultation with the independent livery driver benefit fund, and all local taxi and limousine commissions, as defined in article six-G of the executive law, establishing amounts that livery drivers are presumptively deemed to receive in annual wages, and may vary such presumptive wage by such geographic region or political subdivision of the state as the chair may set. Such regulations may establish other factors or criteria for determining the presumptive wage. The presumptive wage shall be set based on the chair's findings as to the amount earned by livery drivers, and their expenses. A livery driver or the livery driver's employer, including the independent livery driver benefit fund, may rebut the presumptive wage by competent evidence that the driver's actual wages for covered services, as defined in article six-G of the executive law, were different. The chair shall promulgate such other rules as are necessary to compute livery driver wages in accordance with this paragraph.
any statutory penalty resulting from the failure to secure such payment.
2-b. The purposes of the state insurance fund created in this section are hereby enlarged to provide for the insurance by the state insurance fund of the payment of the benefits required by section one hundred sixty-ddd of the executive law.
a fair and reasonable differential charge which takes into consideration the nature and hazards of the insured's business or operations, the insured's prior loss experience, the insured's prior and presently existing safety practices, the insured's prior premium payment history, the number of persons the insured employs in such business or operations and the specific type of work they perform, the insured's prior and current compliance with obligations imposed upon the insured by the workers' compensation law and other laws which require premium or other payments by the insured on the basis of earnings and other remuneration earned by persons engaged in the furtherance of the insured's enterprise or enterprises, the promptness and complete ness of such reports as the insured has filed on accidents and claims, and such other factors as may be relevant to the appraisal of the insured or proposed insured as a risk in whole.
(3) The provisions of this section shall not apply to a policy sold by the state insurance fund under article six-G of the executive law. The rate which the state insurance fund may charge under such article shall be governed only by such regulations or guidelines as the superintendent may issue.
§ 3451. Regulations. Notwithstanding any other provision of this article or article twenty-three of this chapter, and subject to the superintendent's approval of the rates and forms in accordance with such article, the superintendent may promulgate regulations authorizing an insurer licensed to write workers' compensation and employers' liability insurance, as defined in paragraph fifteen of subsection (a) of section one thousand one hundred thirteen of this chapter, to provide coverage as afforded under article six-G of the executive law in a manner to effectuate the intent and purposes of such article.
subdivision 2 of section 160-fff and section 160-hhh as added by section one of this act and sections two through twelve of this act shall take effect January 1, 2009 except that the provisions of subdivision 5 of section 18-c of the workers' compensation law, as added by section two of this act, shall take effect January 1, 2010.
EXPLANATION – Matter in underscored is new; matter in brackets [brackets] is old law to be omitted.


November 15, 1995. Order Denying Rehearing January 10, 1996.
Appeal from the Circuit Court, Dade County, Juan Ramirez, Jr., J.
Perse Ginsberg and Arnold R. Ginsberg; Jay Rothlein, Miami, for appellants.
Brian S. Keif, Key Biscayne, for appellees.
Before HUBBART, BASKIN and GODERICH, JJ.
This is an appeal by the plaintiff Jimmie Lee Grant and the codefendant U.S. Security Services Corporation [USS] from an amended final judgment entered upon a partially favorable jury verdict in a negligence action arising from a criminal attack by a third party against the plaintiff while he was a business invitee of the defendants Ramada Inn, Inc., Prime Motor Inns, Inc. and State Southern Management Company [Ramada].
The jury awarded damages for the plaintiff in its verdict and found that (1) Ramada was 50% negligent [based on evidence that Ramada's desk clerk was actively negligent in the incident sued upon by refusing to allow the plaintiff to call the police from a Ramada phone in the motel lobby]; (2) the codefendant USS was 35% negligent [based on evidence that USS's security guard on duty in the motel was actively negligent in failing to protect the plaintiff from the criminal attack suffered by the plaintiff on Ramada's premises]; (3) the plaintiff was 15% comparatively negligent; and (4) USS acted as an "agent" of Ramada during the incident sued upon.
In accord with the jury verdict, the trial court entered judgment against Ramada for 50% of the total damages awarded and against both USS and Ramada, jointly and severally, for 35% of the same damages. Subsequently, the trial court granted Ramada's renewed motion for directed verdict (treated as a motion for judgment notwithstanding verdict [JNOV]) on the "agency" issue, finding that USS was an "independent contractor" and not an "agent," and entered the amended final judgment appealed from which holds Ramada solely liable for 50% of the damages and USS solely liable for 35% of the damages.
The plaintiff and USS contend on appeal that the trial court erred in granting Ramada's motion for JNOV and that the original judgment entered by the trial court based on the jury's verdict should be reinstated. We entirely agree based on a holding that (1) Ramada had a non-delegable duty to the plaintiff, as Ramada's business invitee, to provide the plaintiff with reasonably safe premises, including reasonable protection against third party criminal attacks; and (2) Ramada could contract, as it did, with USS, an independent contractor, to provide the required security for its guests, but it was nonetheless vicariously responsible for any negligence of USS in providing such services based on the non-delegable duty theory. Prosser and Keeton on the Law of Torts § 71, at 511-12 (W. Page Keeton et al. eds., 5th ed. 1984); see Mortgage Guarantee Ins. Corp. v. Stewart, 427 So.2d 776, 780 (Fla. 3d DCA), rev. denied, 436 So.2d 101 (Fla. 1983); Goldin v. Lipkind, 49 So.2d 539, 541 (Fla. 1950).
It therefore follows that Ramada and USS are jointly and severally liable for USS's 35% negligence, and that Ramada is individually liable for its own 50% negligence, as reflected in the original judgment entered by the trial court based on the jury's verdict. It is perfectly obvious that in vicarious liability cases, as here, a joint and several liability judgment must be entered against both the active tortfeasor (USS) and the party which is vicariously responsible for the active tortfeasor's negligence (Ramada), in accord with the percentage of negligence attributed by the jury in its verdict to the active tortfeasor. In addition, the vicarious-liability defendant (Ramada) is also solely liable, as here, for any active negligence committed by one of its employees in accord with the percentage of active negligence found by the jury as to that defendant.
The amended final judgment under review is reversed, and the cause is remanded to the trial court with directions to re-enter the original judgment previously entered on the jury's verdict in this case, except for the agency finding, as the propriety of the JNOV on that issue has not been raised on appeal; accordingly, the JNOV declaring that USS was an independent contractor shall not be disturbed.
Ramada has filed a motion for rehearing in which it takes issue with the statement in our opinion that (1) Ramada had a non-delegable duty to the plaintiff, as Ramada's business invitee, to provide the plaintiff with reasonably safe premises, including reasonable protection against third party criminal attacks; and (2) Ramada could contract, as it did, with an independent contractor (USS) to provide the required security for its guests, but was still vicariously responsible for any negligence of the independent contractor (USS) in providing such security services. Although Ramada concedes that it had a duty to the plaintiff, as its business invitee, to provide the plaintiff with reasonably safe premises, including reasonable protection against third party criminal attacks, it urges, in effect, that this was a delegable duty which it could contract out of by hiring an independent contractor to provide the required security services — and thereby insulate itself from any liability to its business invitees such as the plaintiff when, as here, the independent contractor does not provide adequate security services for the invitee. We disagree and deny the motion for rehearing.
"The law imposes on hotels, apartments, innkeepers, etc., the duty to keep their buildings, premises and appliances in a condition reasonably safe for the use of their guests, or at least those parts of the buildings and premises to which the guest are invited and may reasonably be expected to use. The duty of maintaining safe premises cannot be delegated to another."
Goldin v. Lipkind, 49 So.2d 539, 541 (Fla. 1950) (emphasis added). Moreover, this is a well-established principle of law recognized throughout the country. W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 71, at 511-12 (5th ed. 1984).
"[T]he law has always permitted a person to hire an employee or an independent contractor to perform a non-delegable duty owed by that person to third parties [i.e. the duty of a landowner to invitees to maintain its premises in a reasonably safe condition]; the law only precludes such person from escaping, by that devise, vicarious responsibility for the proper performance of that nondelegable duty."
Mortgage Guarantee Ins. Corp. v. Stewart, 427 So.2d 776, 780 (Fla. 3d DCA), rev. denied, 436 So.2d 101 (Fla. 1983) (emphasis added).
"Holding a particular undertaking to be nondelegable means that responsibility, i.e., ultimate liability, for the proper performance of that undertaking may not be delegated. The term nondelegable does not preclude delegation of the actual performance of the [nondelegable] task. `Nondelegable' applies to the liabilities arising from the delegated duties if breached."
Atlantic Coast Dev. Corp. v. Napoleon Steel Contractors, Inc., 385 So.2d 676, 679 (Fla. 3d DCA 1980).
It is important to understand, however, that a landowner in these circumstances is not vicariously responsible for all torts committed by the independent contractor [whom the landowner has hired to carry out the landowner's non-delegable duty to provide reasonably safe premises for its business invitees]; the landowner is only liable for the independent contractor's breach of the landowner's non-delegable duty to provide reasonably safe premises for its invitees. Accordingly, we have held that a landowner is not legally responsible for the negligent discharge of a firearm by a guard of the independent contractor who injures or kills a business invitee of the landowner. This is so because such a shooting in no way constitutes a breach of the landowner's non-delegable duty to provide reasonably safe premises to its business invitees, including reasonable protection against third-party criminal attacks; it is solely a breach of the independent contractor's tort duty to conduct itself in a reasonably safe manner so as not to injure third parties. Williams v. Wometco Enters., 287 So.2d 353 (Fla. 3d DCA 1973), cert. denied, 294 So.2d 93 (Fla. 1974); Brien v. 18925 Collins Avenue Corp., 233 So.2d 847 (Fla. 3d DCA 1970).
In the instant case, however, Ramada has quite properly been held legally responsible for the independent contractor USS's negligent failure to protect the plaintiff from a criminal attack by a third party on Ramada's premises. This is so because such failure clearly constituted a breach of Ramada's non-delegable duty to provide the plaintiff with reasonably safe business premises, including reasonable protection against third party criminal attacks. Based on this analysis, Ramada's reliance on the Williams and Brien cases is entirely misplaced as these decisions are entirely consistent with the result we reach in this case.
Nor can Ramada gain any comfort from the general rule against imposing tort liability against a landowner for the torts of an independent contractor hired by the landowner. One of the recognized exceptions to this rule is where the landowner, as here, has a legally imposed responsibility which is breached. Webb v. Priest, 413 So.2d 43, 47 n. 2 (Fla. 3d DCA 1982). Ramada's motion for rehearing is, therefore, in all respects.


The fallout from the U.S. Supreme Court’s decision in Riley v. California, 134 S. Ct. 2473, 189 L. Ed. 2d 430 (2014), has already changed police practices regarding the search and seizure of a cell phone that is held incident to an arrest. Before Riley, a police officer could search the cell phone of an arrestee for incriminating information or to expose the identities of accomplices. The Riley decision held that “[m]odern cell phones are not just another technological convenience. With all they contain and all they may reveal, they hold for many Americans ‘the privacies of life.’” The fact that technology now allows an individual to carry such information in his hand does not make the information any less worthy of the protection for which the Founders fought.” Riley, 134 S. Ct. at 2495. In so doing, the court made clear that the vast quantities of personal information could only be searched when accompanied by a proper warrant.
However, recent advances in encryption technology are out-pacing the ability of courts and legislatures to adapt, increasingly putting the contents of smartphones outside the reach of the police and courts even when searches are authorized by warrant. The stated aim of this new technology is to “lock out the government,” regardless of the Riley decision.
Apple, maker of the iPhone, which uses the iOS software platform, has upgraded its encryption standard to the point that it claims is “unbreakable,” and the company does not have the ability to unlock a user’s phone even when requested to do so by government entities. Google, which distributes the competing Android platform to smartphone manufacturers, has also decided to encrypt its phones by default.
This has lead to a situation that the FBI has termed “The Black Box” or “Going Dark.” The argument goes, that if a smartphone cannot be accessed even under a lawful court order, then kidnapped children will go un-rescued and drug kingpins will go un-caught. Criminals’ secrets can then be stored worry-free, in these “black boxes” far from the reach of the police and courts. The FBI has gone so far as to demand that the tech companies implant “back door” access for police and courts to ensure continued access to users’ data.
The tech companies have responded that such scare scenarios are “inflammatory and inaccurate,” and that any “back doors” provided to the government would inevitably be exploited by opportunistic hackers. They point out that the “metadata,” data about who a person calls and texts from a smartphone, is accessible elsewhere, and that society’s expectations of privacy have fundamentally changed as more and more people shift a greater portion of their private lives onto their smartphones.
In the ongoing debate between security and privacy, the inexorable forward march of technology may leave the courts behind.
Steven Lapkoff, Security and Privacy for Every Attorney, Pace Criminal Justice Blog (Oct. 17, 2013).
POST WRITTEN BY: Michael B. Mushlin, Professor of Law at Pace Law School, Scholar, and Renowned Expert on Prisoners’ Rights.
Just a few days ago a rare, if not unprecedented, event occurred: the United States Supreme Court ruled unanimously in favor of a prisoner. The case, Holt v. Hobbs, was an Arkansas prisoner’s challenge to a state prison policy that forbade him from growing a beard. Holt, who is Muslim, asserted that his religion requires that he grow a beard of at least a half- inch. His request to grow a beard was denied because of a prison rule that prohibited inmates, aside from prisoners with medical problems, from growing beards of any length. Holt sought an exemption for himself on religious grounds. When the prison denied this exemption he sued.
The Supreme Court, in an opinion by Justice Alito, upheld Holt’s right to grow a beard over the strong objections of prison officials who insisted that the no beard rule was essential to the security of the institution. The Court subjected the prison officials’ security arguments to close scrutiny. It ruled that it was “hard to take seriously” the state’s argument the rule was needed to prevent Holt from hiding weapons in his beard. It is impossible to hide most items in a beard so small and even small items could be detected by running a comb through Holt’s beard. Defendant’s argument that the no beard rule is needed to prevent inmates from changing their appearance thereby avoiding detection if they escape was similarly found to be without merit. This danger could be easily prevented by photographing the inmate without the beard and then later with the beard. The fact that the prison allowed prisoners with skin problems to grow quarter-inch beards also demonstrated that some facial hair on prisoners was not a serious security problem. In addition the Court emphasized, the “vast majority” of other states and the federal government permit inmates to grow at least a half-inch beards.
This ruling, which was based on the Religious Land Use and Institutionalized Persons Act (RILUPA) 42 U.S.C. § 2000cc-1(a), was not a constitutional decision. Instead it was based on Congress’ direction that a prisoner’s sincere claim to practice religion can only be burdened when the prison has a compelling state interest in a rule that restricts the prisoner’s religious practice and when the prison rule burdening religion is the least restrictive means of advancing its interest. Nevertheless, the Holt decision indicates that the Supreme Court will not always simply defer to prison officials when they proclaim – as they often do – that security needs require diminution of prisoners’ rights. Whether this signals that the Court will now begin to give meaningful review to prisoners’ claims that are not based on religious liberty rights remains to be seen. But the decision gives some cautious cause for hope that a new day is dawning for prisoners’ rights.
Holt v. Hobbs, No. 13-6827, __ U.S. __ (Jan. 20, 2015).
Eugene Volokh, Holt v. Hobbs: Unanimous Victory for Muslim Prisoner in Religious Rights Cases, The Washington Post (Jan. 20, 2015).
Holt v. Hobbs, ACLU (Jan. 20, 2015).
Adam Liptak, Ban on Prison Beards Violates Muslim Rights, Supreme Court Says, The New York Times (Jan. 20, 2015).
Jesse Wegman, A Prisoner and His Beard Win at the Supreme Court, The New York Times (Jan. 20, 2015).
Technology helps law enforcement agencies and justice personnel stay one step ahead of criminals, furnishing new ways to detect and prevent crimes, as well as helping prosecutors convict offenders. And since emerging technology is available on both sides of justice, the cat-and-mouse game between perpetrators and police is never-ending, requiring continual adjustments from law enforcement agencies.
The good news for public safety is that crime rates have generally decreased over the past two decades, due in part to advancements in crime detection and deterrent technology. Since effective policing leans heavily on the rapid sharing of sensitive crime-related data; the recent explosion in information technology is a positive development for law enforcement agencies. Identification technology, social media, and mobile capabilities also enhance public safety, enabling justice staff to do their business more efficiently and respond to unfolding investigations in real-time.
While technology poses challenges for law enforcement agencies, which continually strive to keep up with technology-based criminal enterprises; it does more good than harm in the fight against crime. Tech advancements in law enforcement include the following capabilities, which illustrate how quickly things change alongside technology.
Law enforcement agencies are spread throughout a national criminal justice system that involves, regional, state, and local authorities, each administering their policing efforts independently. Too often in the past, lack of access to timely information prevented various agencies from coordinating their efforts adequately. Advances in the way agencies share information and use criminal identification systems have led to tighter connections between independent law enforcement organizations and universal enforcement standards across jurisdictions. Sharing information about offenders also has a positive preventative impact, helping keep guns out of the hand of dangerous criminals and barring offenders from certain types of employment.
Property crimes continue to decrease statistically, so security and video surveillance upgrades have improved public safety dramatically. Camera technology, for example, produces modern models with higher image quality than past versions, and the size of high-quality cameras has also diminished, allowing them to be concealed for covert surveillance. Face-recognition technology is particularly rewarding, enabling law enforcement officials to literally pick faces from crowds. In fact, the technology is so accurate as to create privacy-rights controversies among those who feel it is too intrusive.
Though it is a social trend as much as it is a technological breakthrough, social media use nonetheless furnishes law enforcement advantages for agencies that use the technology effectively. For example, criminals leave trails using social media platforms, so justice agencies turn to Facebook, Twitter and other channels for vital clues and insight into criminal behavior. The technology also enables officers to distribute information directly to concerned citizens, informing them of unfolding crimes and dangerous developments.
Social media links law enforcement directly to the public at large, so it is a great tool for spreading descriptions, videos and other information about criminals. Communicating in real-time closes the crucial gap between the point at which crimes occur and when investigations begin, enabling citizens to respond with timely information.
Modern computing power speeds up data analysis and enables law enforcement to track crime trends geographically. What was once accomplished through countless man-hours pouring over data is now a matter of a few mouse clicks. Crime mapping enables agencies to zero-in on problem areas, stepping-up enforcement efforts and assisting in bringing in fugitives. Like highly sophisticated “pin-maps” highlighting crime location, mapping and geographic profiling give enforcement officers clear snapshots of crime trends.
Mobile technology furnishes an electronic trail of texts, emails, calls and GPS location information that law enforcement uses to solve cases. Smartphones are so widespread the contact information and other data they contain give officers a starting point for their investigations, which often unfold in arrests directly related to information gleaned from mobile devices and usage. Using advanced digital forensics technology, investigators find links between suspects and their crimes, which might go unnoticed without mobile connections. In addition to investigative benefits, mobile technology speeds communication between officers, agencies and citizens.
Technology will never replace solid investigative work, but modern advances assist law enforcement efforts to stay ahead of criminals. Mobile technology, social media, and rapid access to information contribute to better enforcement and prevention. And crime-mapping and video surveillance breakthroughs also increase public safety, enabling justice agencies to direct resources to where they are needed most.
*Daphne Holmes is a writer from ArrestRecords.com. She can be reached at daphneholmes9@gmail.com.
Opinions expressed in this post are those of the author and do not reflect the position of the Pace Criminal Justice Center or its Board of Advisors.