Monthly Archives: May 2012

Ohio Statehouse Update: Week in Review — May 25, 2012

 

1. General MBR clears legislature

House Bill 487, the main component of Governor John Kasich’s Mid-Biennium Review (MBR), received final approval this week. Both legislative chambers accepted the joint House-Senate conference committee report, which included a majority of the Senate provisions in the bill. The governor said the legislation is the result of a comprehensive review of the enacted state budget, state policy programs and agency operations.

The policy-heavy bill includes $42 million in “green projects” for the Clean Ohio Program and $15 million for the Clean Ohio Brownfield Remediation Program. An appropriation of $13 million was added to support Governor Kasich’s third grade reading guarantee. Additionally, $3 million is included in the bill for the Healthy Lake Erie Fund to reduce algae blooms on Lake Erie as well as inland lakes and streams. 

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Seventh Circuit: Pharmaceutical Sales Representatives Are Exempt Because They Use Significant Discretion In Visits With Physicians.

By Michael Thompson

The Seventh Circuit has ruled that pharmaceutical sales representatives are covered by the Administrative exemption to the FLSA because “the core function of the representatives’ duties, the physician office visits,” requires significant discretion and independent judgment. While other courts have applied a case specific analysis to determine the applicability of the Administrative exemption in this context, the Seventh Circuit’s analysis appears to be applicable to virtually all sales representatives in the pharmaceutical industry. Indeed, without separate analyses, the Court of Appeals dismissed two distinct class actions (against Eli Lilly and Abbott Laboratories) in one fell swoop.

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Illinois Court Gives EEOC a Boost On Controversial Pre-Lawsuit Techniques

By Forrest Read

In recent years, the Equal Employment Opportunity Commission (EEOC) has taken the aggressive approach of expanding charges it receives from one or a few individuals into larger-scale class actions in federal courts.  Last week, in EEOC v. United Road Towing, Inc., the U.S. District Court for the Northern District of Illinois declined to challenge the adequacy of the EEOC’s administrative practices, thus giving ammunition to the EEOC to continue its approach of widening litigation involving alleged discrimination.

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Preparing for Non-Compete Litigation

We are pleased to announce that “Preparing for Non-Compete Litigation,” a guide published by The Practical Law Company and authored by EpsteinBeckerGreen’s Peter A. Steinmeyer and Zachary C. Jackson, is now available in PDF format. The guide is a valuable discussion of the primary considerations for employers seeking to initiate legal action to enforce a non-compete agreement.

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Bradford worker injured after just weeks in job

A Bradford textile firm has been sentenced for safety failures after a worker was left with a long-term hand injury after only a month in the job.

The 30 year-old employee joined the company as a wool sorter, a job that did not involve any working with machinery.

The following month he was told to clean debris from the trays of a machine that untangles woollen fibres – despite the fact he had no training or experience for handling machines at the factory.

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Calls for employers to support foster carers

Children’s Minister Tim Loughton is calling for employers to do more to support employees who are foster carers, as new figures show that the care system is facing major challenges.

Mr Loughton is asking more big employers to give foster carers the same rights to flexible working and time off, as to any other parent. He wants more employers to follow in the footsteps of Tesco and O2, which have introduced “foster family friendly” policies.

These include allowing them to take five days off for pre-approval training; flexible working to help foster children settle in at home; shift swapping schemes to help foster carers juggle commitments; and having the same access to emergency compassionate leave as any parents with their own children do.

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Real Estate Strategies In Hospital M&A Transactions: An Overview

You frequently hear the phrase “location, location, location” be used to describe the value of real estate.  True, location matters tremendously, no matter the type of real estate.  But, in hospital M&A transactions, the value of the real estate assets is often derived from “strategy, strategy, strategy”.  Today, the real estate assets of hospitals are playing an increasingly important role in hospital M&A transactions.  This trend is caused in part by the desire of purchasers to support purchase prices or other financial impact of the transaction with “hard” physical assets, given the current uncertainty about reimbursement rates and concerns of the ratings agencies about the hospital sector in general.  We see hospital M&A parties using several strategies for using real estate assets.

Perhaps the most common strategy is for a purchaser to pledge the hospital’s real estate assets as collateral for a loan to finance the purchase.  This approach frequently frees available capital for other purposes—such as performing needed repairs or investing in operational improvements.  This strategy may also provide easier access to capital since many traditional lenders are more comfortable in determining the value of physical real estate assets rather than attempting to understand how to value the revenue, operations, and good will of a hospital.  But, this strategy may not be useful if the purchaser is assuming existing debt and the assets are already heavily leveraged as is often the case with struggling systems.  Although purchasers such as private equity and other investors may be familiar with and actually have employed this strategy in prior transactions, the terms and conditions for any such financing must be carefully considered and specifically planned for each transaction.  When reviewing this strategy, purchaser may also want to consider whether tax-exempt financing may be available.

In instances where the real estate assets are not used to obtain financing for the acquisition, some purchasers use the real estate assets to obtain different financing.  Because many healthcare-focused real estate investment trusts (REITs) and publicly traded companies may not need to obtain financing to fund the purchase, these purchasers often pledge post-closing the acquired real estate assets for the purpose of obtaining or increasing revolving lines of credit.  The added capacity in the credit facility is then frequently used to fund additional acquisitions or to pay for improvements and upgrades for the hospital.  We would expect to see this approach increase in frequency if current trends for-profit hospital acquisition of community hospitals and private equity investment continue.

A third strategy is to monetize certain non-core real estate assets by divestiture, which may be accomplished through outright sales, sale-leaseback transactions, or other means such as joint ventures.  Medical office buildings, outpatient medical centers, and non-campus imaging centers are frequent candidates for monetization.  Outright sales involve the total divestiture of the non-core asset so that the hospital no longer holds any interest in the property.  Newer medical office buildings are sometimes sold by hospitals not only for the financial benefits but also because the hospital will be relieved of its responsibilities to oversee the management of the building and the leasing of space.  Another benefit to hospitals is that an outright sale may avoid future regulatory complications that may occur when space in a hospital-owned building is leased to physicians or other potential referral sources.  In sale-leaseback transactions, the non-core assets are typically sold to REITs, private equity companies, or other investors and then leased back to the hospital under a long-term lease.  So, although the hospital may no longer own the real estate asset, it is still able to use the property through the lease.  Proceeds from sale-leaseback transactions are often used to reduce debt or occasionally to pay for physical plant or operational improvements.  For example, some hospitals use the sales proceeds to acquire state-of-the art medical equipment or to invest in electronic medical records systems.  REITs continue to be active purchasers of non-core real estate assets as many REITs currently enjoy solid borrowing capacity at attractive interest rates in today’s market.  Some hospitals, however, do not wish to sell their entire interest in non-core assets and instead seek joint venturers which frequently purchase a controlling interest in the non-core assets.  This strategy is often best-suited for hospitals that desire to achieve some level of monetization without relinquishing its entire ownership of the real estate.

Parties to hospital M&A transactions should consider whether these strategies may be appropriate for their deal and, if so, how to tailor these strategies to best accomplish their goals.  In future posts, we’ll explore some of these strategies in more detail and discuss ways to maximize their potential while also avoiding common pitfalls.

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Special Immigration Alert: H-1B Filings Update

As of May 18, 2012, U.S. Citizenship and Immigration Services (USCIS) has received 42,000 petitions that count against the 65,000 H-1B Regular Cap, and 16,000 petitions that count against the 20,000 H-1B Master’s Cap. USCIS will continue to accept new petitions until it has filled the H-1B Regular and Master’s Cap.

We anticipate that the pace of H-1B submissions will quicken now because, among other reasons, foreign students working in F-1 Optional Practical Training status are receiving degrees and this allows their employers to sponsor them for the H-1B classification. For this reason, we strongly advise employers to identify and file immediately any petitions subject to the H-1B Cap. This also includes L-1B employees who may need to switch to H-1B status to extend their authorized stay due to delays in the green card process. Any foreign national candidates who do not make it under the 2013 H-1B Cap may not be able to start work, or continue working, until October 1, 2013–or later!

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Who is Who Legal names Andrey Zelenin Best Lawyer in the sphere of Life Sciences in Russia

Partner and Head of Pharmaceutical Industry practice at Lidings Andrey Zelenin was named the best lawyer in the sphere of Life Sciences in Russia by the leading international legal directory Who is Who Legal.

According to the research conducted by Who is Who Legal that annually determines leading lawyers from more than 100 countries in 32 practice areas, Andrey Zelenin became the best lawyer in the area of Life Sciences which includes pharmaceuticals, biotechnology and healthcare industry, becoming the only Russian lawyer to be recognized and awarded in this field.

High level of recognition in the field stems from the firm’s professional expertise and focus on legal aspects most essential for clients from the pharmaceutical industry which Lidings offers in addition to the standard range of services in support of foreign businesses on the Russian market.

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Sergey Tufar joins Lidings as Senior Associate

Lidings, the leading Russian law firm dedicated to advising foreign companies on all aspects of Russian law has announced Sergey Tufar joining its Moscow office as senior associate. Mr. Tufar, a seasoned legal professional in the sphere of corporate and litigation law, will become a valuable addition to the firm’s Corporate and M&A and Litigation practices.

Prior to joining Lidings Mr. Tufar worked as a senior associate at a Russian law firm ALRUD, head of legal department at of a large construction and investment company ZAO Mezgorsvyazstroy, and acted as a legal advisor of a prominent international advertising agency.

At Lidings Sergey will specialize in advising foreign businesses on all aspects of corporate law and represent the firm’s clients in resolution of commercial and corporate disputes.

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