Commissioner v. Schleier: back to the drawing board on the taxation of employment dispute recoveries

The Court's decision in Schleier leaves the taxation of recoveries arising out of employment disputes, as well as many other types of disputes, in a state of confusion. To be sure, employers and employees now know with certainty that recoveries under the ADEA are not excludable from income under Section 104(a)(2). Recoveries under other statutes, however, including the Fair Labor Standards Act and the 1991 version of Title VII of the Civil Rights Act of 1964, are altogether unclear after Schleier. In the absence of further guidance, employers should consider adopting a more conservative approach to employment dispute settlements by treating settlement payments as taxable income, subject to withholding and employment taxes.     

Issues raised by respiratory therapy arrangements

In large part due to the foregoing issues, Medicare program officials have focused on respiratory therapy as an area with great potential for abuse, and may well introduce significant reforms in the near future. Accordingly, any contractual arrangements for respiratory therapy programs of the type discussed above should be carefully reviewed for compliance with Medicare requirements and for a realistic assessment of the parties' potential exposure to liability under the anti-kickback statute. At a minimum, these agreements should provide for short "without cause" termination provisions, or include a so-called "jeopardy" provision that permits the parties to renegotiate or terminate their contract if significant changes occur in, or if the current arrangement is found or threatened to be found to violate, applicable law.     

Proposed regulations to govern private business use of tax-exempt bond financed facilities

For the most part, owners of tax-exempt hospitals and other health care facilities should welcome the issuance of the proposed regulations because they generally clarify and liberalize former law. As pointed out, however, in certain instances the proposed regulations do impose additional requirements not found in current law. Accordingly, in those instances in which exempt facility owners may elect to apply the proposed regulations prior to their finalization, a careful analysis needs to be made of whether the old or new regime would be most beneficial.     

Special report on taxation. New IRS revenue procedure clarifies tax classification of limited liability companies

Although its rules are complex, the publication of Revenue Procedure 95-10 will substantially facilitate the use of LLCs in those states with statutes that permit significant flexibility in the structuring of LLCs. Previously, the only way to assure that LLCs in those states would be classified as partnerships for income tax purposes was to obtain a private letter ruling from the IRS, often resulting in lengthy delays. The new revenue procedure should provide sufficient guidance in the vast majority of cases to allow tax counsel to determine the appropriate treatment for tax purposes without having to seek an IRS private letter ruling.     

As outcomes measurement and management become widespread, providers should beware of legal pitfalls

Until new statutes and court decisions clarify the law applicable to outcomes research, providers will continue to face new questions. In the meantime, paying careful attention to satisfying the requirements of existing laws protecting peer review information will put providers in the best position to minimize their exposure. Providers should review their current outcomes measurement and management systems to ensure that (1) they are structured to take full advantage of the confidentiality protections available under state law, and (2) appropriate access to outcomes data for those who need it is clearly provided for in the relevant documentation.     

The HIV-infected health care provider. Doe v. Attorney General of the United States

Doe demonstrates that once an employer enters into a relationship with an individual and thereafter determines that he or she may be disabled, the employer has the right to ask the individual questions about the possible disability when those questions are relevant to assessing his or her qualifications for continuing on the job. In fact, once a health care provider is on notice that an employee's or physician's disability may render the employee or physician no longer qualified, thereby potentially endangering patients, the provider is required to determine whether the person is qualified for the job. In these sensitive matters, employers must draw a fine line between unreasonably following up on every rumor on the one hand, and on the other hand investigating reliable information when there may indeed be a direct threat to patients.     

From underworld to underground

In the West economically motivated crime is usually perceived as a matter for the police while the performance of the economy is a matter for the political authorities. This paper argues that the growth and evolution of the modern underground economy has made such a distinction obsolete. Not only have the frontiers between the legitimate and the criminal sectors of the economy blurred, but the distinction between the explicitly criminal and the merely informal aspects of the modern underground economy has become largely meaningless. Given the tremendous growth of underground activity, this means that the issue must now be addressed not just on the enterprise level, as a police matter, but on the level of the economy as a whole, by economic policy makers. This in fact is something that many developing countries long ago realized. The paper therefore asks whether developing countries have been any more successful in using monetary, fiscal and balance of payments policy to mitigate the adverse social and economic impact of widespread underground economic activity than have Western countries who have relied mainly on the sanction of criminal law. It concludes that both approaches are deficient in so far as they neglect the degree to which modern underground activity can no longer be seen as a manifestation of deviant economic behavior so much as a virtual economic insurgency against the status quo distribution of income and wealth and the codes of economic behavior which accompany it. However dramatic are the financial manifestations of the spread of enterprise crime, ultimately the challenge it poses must be addressed as the political and ideological level.