e- NEWSLETTER

April/May 2006

Jessica M. Kirsch
Editor-in-Chief

Health Care

HOME HEALTH CARE OBLIGATIONS CONCERNING PATIENT INFORMATION
By Theodore M. McGinn

      In the operation of your home health care business, it is likely you will come into possession of certain patient private information. It is critical that your entity adopt policies to protect such information and comply with these obligations under applicable law.

     Health Insurance Portability and Accountability Act of 1996 requires you to protect patients rights and maintain the confidentiality of private information. Predicated health information includes demographics information about the patient, name, birth date, dates of service, date of death, social security numbers, medical record number, and any other unique identifier health information. The act however does allow you to use the information to treat a patient, obtain payment for such treatment and to maintain day to day facility operations. Your agency must have clear policy procedures concerning such information.

    When confronted with the request for information, there are certain steps you must take to comply within the act. First of all, you should verify who is requesting the information. You are permitted only to release information to those parties that are specifically authorized to receive by the patient. The agency is required to provide an accounting to the patient if you make such disclosure pursuant to their request. In addition, the area containing such confidential and private patent information should be maintained secure. The area should not be accessible by visitors or other patients. Finally, the chain of title of any patient record should be maintained to allow tracking of who comes into possession of such patient information. Many times patient information is maintained in digital format or otherwise on a computer. The act requires you to remain security of such information even though it is maintained in a computer. This would include a firewall, protecting internet network confections, using employee passwords and prohibiting text massaging of patient information.

    The new act requires home health agencies to maintain the privacy of patient information. Failure to comply with such statute will expose your company to liability as well as penalties with the federal government. Accordingly, it is critical that internal controls and security measures are implemented to protect such information. If you have any questions concerning this matter, please contact Theodore McGinn at tmcginn@lavellelaw.com.

Bankruptcy

NEW UNIVERSAL METHOD OF SCORING CREDIT
By Cameron R. Monti

    The nation's three major U.S. consumer credit reporting companies – Equifax, Experian and TransUnion – have agreed to utilize a new uniform credit score method referred to as "VantageScore," in an effort to simplify the current credit scoring system for both consumers and grantors of credit. The new scoring system is proposed to address the potential weakness in existing and different scoring methods among each of the three credit reporting agencies. Presently, the credit scores are computed on a scale of roughly 300 to 850. For example, under the past methods, where one credit agency may report your credit score as on a "good" level, another reporting agency might report your credit worthiness with a "fair" score based on their individual scoring method. Thus, depending upon the credit reporting agency of which your credit grantor inquires, you may or have not have received credit approval or a favorable interest rate.

    However, under the new VantageScore system, the credit reporting agencies are touting it as a manner to provide consumers and credit grantor with a consistent scoring method that will be easier to understand and apply. VantageScore uses score ranges from 501 to 990. Both consumers and credit grantors will be able to correlate the score groupings with a commonly used academic grading scale:
 

                        Score                  Grade
                        • 901-990    =      A
                        • 801-900    =      B
                        • 701-800    =      C
                        • 601-700    =      D
                        • 501-600    =      F
  
    Critics assert that a new credit scoring method will only serve to confuse consumers after they have just begun to decipher and understand the old credit scoring system. Irrespective of the scoring method applied, it is recommended that all consumers receive a copy of their credit report at least once a year to monitor for reporting errors and to properly manage their credit worthiness. If you have any questions concerning this article, please email cmonti@lavellelaw.com.

Family Law

FAMILY LAW AND THE NEW BANKRUPTCY CODE
By Julie M. Dombrosky

    If the parties to a divorce have significant debts and one party is considering filing for bankruptcy, the parties should consider whether to file jointly. However, even if one spouse decides to file and the other spouse declines to join in the bankruptcy, property divisions and domestic support obligations are no longer dischargeable debts under the new bankruptcy laws.

    Also, past-due support is given first priority payment status in Chapter 7 bankruptcy and is considered a priority debt and must be paid in full during the life of a Chapter 13 bankruptcy plan. The maximum length of a Chapter 13 plan is five years. If the support arrearage is great, it may allow an individual to file under Chapter 7, whereas he or she might otherwise have to file under Chapter 13. In a Chapter 13 bankruptcy, it might minimize or eliminate payments to non-priority unsecured creditors, such as credit card companies.

    Parties thinking about bankruptcy and divorce should seek counsel to advise them on ways to simplify the issues and allow both parties to survive financially.

    If you have any questions about this article or any other issue related to divorce or family law matters, please feel free to contact jdombrosky@lavellelaw.com.
 

Estate Planning

UPDATE ON IRA'S WITH TRUST BENEFICIARIES
By Kerry M. Lavelle

    As part of sophisticated estate planning, we are continually asked questions about "income tax planning" in connection with estates. The current trend is to try to minimize or "stretch" income taxes associated with qualified plans and IRAs at the death of the owner.

    In 2002 the IRS published final regulations that outlined IRA beneficiary distribution options and required minimum distributions. Assuming that trusts met certain requirements, these regulations stated that an IRA trust beneficiary could take annual minimum distributions over the life of the benefices with the shortest life expectancy. Pursuant to these regulations and private letter rulings, the IRS stated that the separate accounts were not available to trust beneficiaries of an IRA. In each private letter ruling, the IRA owner named the "master" trust as a beneficiary of the IRA with instructions to be divided into equal shares and payable into separate sub-trusts. Here, however, the IRS held that sub-trusts and separate accounts would not allow the beneficiary of the sub-trusts to use their life expectancies to calculate minimum distributions. Instead, the IRS forced all of the trust beneficiaries to take annual minimum distributions over the life on the beneficiary with the shortest life expectancy.

    The IRS recently issued PRL200537004, which allows "separate share" treatment for the trust beneficiary. In this PRL the IRS will allow the individual beneficiary of each trust share to use their individual life expectancy to calculate required minimum distributions for their share of the IRA. In this case, the IRA owner must expressly name each separate "children's" trust as a beneficiary of his/her IRA, along with different percentage interest.

    Private PRL200537044 provides some positive news for IRA owners who wish to name the trust as an IRA beneficiary. For questions of estate and tax planning please don't hesitate to contact Kerry Lavelle at klavelle@lavellelaw.com.

For past e-newsletter articles of interest, please visit the Lavelle Legal Services, Ltd. website at:  http://www.lavellelaw.com/newsletters/newsletter.htm.

 

This newsletter is a publication of Lavelle Legal Services, Ltd. We attempt to highlight and discuss areas of general legal interest that may lead to planning opportunities. Nothing contained in this Newsletter should be construed as legal advice or a legal opinion. Consultation with a professional is recommended before implementing any of the ideas discussed herein.