Wolfe, Snowden, Hurd, Luers & Ahl, LLP
Wells Fargo Center, 1248 O Street, Suite 800, Lincoln, Nebraska 68508-1424
Telephone: 402-474-1507, Fax: 402-474-3170 URL: http://www.wolfesnowdenlawfirm.com
Volume 1, Issue 2 - 2nd Quarter 2006

Nebraska's Concealed Handgun Law - A Guide for Employers

On April 5, 2006, Governor Heineman signed into law the Concealed Handgun Permit Act ("Act"), amending NEB. REV. STAT. § 28-1202, effective January 1, 2007. In short, the Act will allow individuals who obtain permits from the Nebraska State Patrol to carry concealed handguns. Regardless of whether you support this legislation or not, you may want to consider addressing the issue in your employee handbook and/or posting notices regarding the possession of concealed handguns and other weapons on your property. The purpose of this article is to inform you of the law as it applies to your business and to provide you with some guidance in making these important decisions.

Can I prohibit employees, guests or vendors from bringing concealed handguns into my business.
Yes. The Act allows an employer to prohibit employees from bringing concealed handguns into the workplace. Other property and business owners can prohibit anyone (other than peace officers) from bringing concealed handguns into their place of business even if the business owner only leases the premises.
Can I prohibit employees, guests or vendors from storing or bringing concealed handguns in their vehicles that are parked on my property?
No. Concealed handgun permit holders may store or carry their handguns in their vehicles while at work or at a business or on property where concealed handguns are not permitted so long as the handgun is not removed from the vehicle.
Does the law prohibit handguns at specific places, events, and/or properties?
Yes, even with a permit, a concealed handgun may not be carried in any of the following locations-
  • Police, sheriff, or Nebraska State Patrol stations or offices;
  • Detention facilities, prisons or jails;
  • Courtrooms or buildings which contain a courtroom;
  • Polling places during a bona fide election;
  • Meetings of the governing body for a court, public school district, municipality or other political subdivision;
  • Meetings of the Legislature or a committee of the Legislature;
  • Financial institutions (except for duly authorized security personnel);
  • Professional, semiprofessional, or collegiate athletic events;
  • Schools, school grounds, school-owned vehicles or school-sponsored activities or athletic events;
  • Places of worship;
  • Emergency rooms or trauma centers;
  • Political rallies or fundraisers;
  • Establishments with liquor licenses that derive over one-half of their total income from the sale of alcoholic beverages; and
  • Any place where possession of a firearm is prohibited by state or federal law.
Additionally, the law allows local governments (cities, counties and agencies) to pass laws, rules and regulations prohibiting the possession of concealed handguns. (As of the writing of this letter, none had yet been enacted in Lincoln.)
How do I tell my employees that the company prohibits concealed handguns in the workplace?
Create a policy and give specific notice. The employer should include the prohibition of concealed handguns (and other weapons) in the company's employee handbook and educate the employees in training sessions and safety meetings. The employer should also post a conspicuous sign near all employee entrances informing them of the prohibition of bringing concealed handguns (as well as other weapons) into the workplace.
How do I tell the guests and vendors to my property and/or business that concealed handguns are prohibited?
Create a policy and give specific notice. Property and business owners include the prohibition of concealed handguns (and other weapons) in the company's policies. The policy should be communicated to guests and vendors through mailings, postings or verbal communication as appropriate. The property and business owners should post a conspicuous sign near all entrances informing guests and vendors of the prohibition of bringing concealed handguns (as well as other weapons) onto the property and into the business. One sign can be created for employees, vendors and guests.
Who should I talk to before I create a policy prohibiting concealed handguns and post signs to that effect?
Each employer, business owner, and property owner should discuss any policies and proposed notices with their management, safety departments, human resources departments, attorneys, and, where applicable, union representatives before instituting a specific policy and procedure for prohibiting concealed handguns. Each of these departments can identify the pros and cons of prohibiting concealed handguns in the workplace as well as the locations and individuals who may be affected by the policy.
What should I include in a policy prohibiting concealed handguns?
The content of any policy will be dependant on the specific employer, business or property owner. Regardless, any policy prohibiting the presence of concealed handguns (or other weapons) should include the following:
  • A description of what is prohibited, e.g. concealed handguns, weapons, firearms, and/or anything intended to be used to inflict bodily harm.
  • A description of where the items are prohibited, e.g. on any company property, while on duty, and/or in any company vehicle.
  • A description of what may happen to violators, e.g. removal from property, charged with trespassing, and/or disciplined up to and including termination of employment.
  • An identification of a person or department to whom violations should be referred and a contact number and/or location, e.g. all known or suspected violations should be reported to the security personnel located on the 3rd Floor, 555- 5555.
  • A conspicuous sign approximately 8.5" by 11") should be posted at all entrances to the property and/ or business to inform employees, vendors and guests of the policy.
When should I implement a policy to prohibit concealed handguns and post notice to that effect?
As soon as possible. Although the Act does not take effect until January 1, 2007, employers, property owners, and business owners should start now to educate their employees, guests and vendors of their policy to prohibit concealed handguns on the property. This will allow ample opportunity to incorporate the policy into training new employees and obtain the necessary signs to post on the property.

Feel free to call us with questions you may have regarding the Concealed Handgun Permit Act or any other provision of law affecting your property and business.

By: Nichole S. Bogen

Monitoring Employee E-Mail: Why Employee E-Mail Use Is Risky Business

Choosing either to monitor or not to monitor employee e-mail can be risky business because, unfortunately, the reality is that an employer can be subject to liability in either scenario. There is a way, however, to turn a no-win situation into a win-win situation: we can help you, as an employer, minimize your risk of liability by helping you implement a tailored, written policy regarding employee e-mail monitoring that complies with federal and Nebraska law and that simultaneously helps to protect you against employee e-mail abuse or misuse.

Certainly every employer recognizes the most obvious impact of employee abuse or misuse of e-mail on the bottom line: it reduces productivity. What you may not have considered, however, is that failing to monitor employee e-mail use or failing to have any written policy on employee e-mail use can lead to potentially devastating liability. Are you aware that your company could be found liable for the content of an employee's e-mail? You could potentially be held vicariously liable for your employee sending a harassing or sexually suggestive email. Likewise, without any policy on employee e-mail, you could be held liable for an employee who uses email to coordinate, facilitate or orchestrate an illegal operation. As a final example of a commonly encountered battle waged in modern litigation is that another party could attempt to use your employee e-mails as admissions or evidence against your company in a civil suit.

Before your company is faced with any of these scenarios, consider taking the preemptive measure of becoming educated on the legal implications of workplace e-mail and of implementing a policy advising employees about e-mail use on company time and property. But, before you begin revising your company policy, however, you must be aware that e-mail monitoring must comply with Nebraska and federal laws.

Q&A For Employers:

Because employee privacy rights and an employer's right to monitor e-mail entail complex legal issues there is some degree of uncertainty in the current state of the law about employer and employee rights and obligations. There are, however, some concrete steps that can be taken to ensure that you as an employer are not violating state and federal statutes as interpreted by courts with respect to monitoring employee e-mails in the workplace.

Q: How Can My Company Avoid Violating Federal Law?
Courts have now madeclear that statutory revisions to the Electronic Communications Privacy Act ("ECPA") encompass the interception of e-mails. In other words, intercepting e-mails is illegal under federal law and an employer can be subject to civil penalties and punitive damages. There are a few exceptions, however, and employers should take advantage of these "safe harbors."
 
Answer 1: Take Advantage of the Federal Law's Safe Harbors.
An employer can avoid liability if the employee has given "informed consent" to his or her e-mails being monitored or intercepted. While the concept of informed consent might sound like a straightforward concept, case law reveals that the exemption remains somewhat nebulous. What is clear, however, is that you can take advantage of this exemption by implementing a tailored company- wide, written policy about e-mail use specific enough to encompass the types of activities to which employees will be deemed to have consented. This is perhaps best illustrated by the examples below.
 
Answer 2: Ensure your Written Company Policy is Appropriately Tailored.
A company policy should not be overly broad or too narrow. If a policy is too broad, it may not fall within the safe harbor. For example, a policy that simply states, "The Employer reserves the right to monitor all e-mails" would not likely be sufficiently specific enough to constitute full and informed consent. On the other hand, a policy should not be overly specific because it, too, might not accomplish the goal of falling within the safe harbor. So, for example, a policy that indicates that monitoring is designed only to prevent overuse of email for personal reasons at work might be too narrow because a court might determine it does not provide sufficient notice to constitute "informed" consent in a situation where the employer discovers that the employee was disclosing company trade secrets via e-mail for example.
  
Answer 3: Inform Employees that E-Mails Will be Monitored.
Based on current law, your policy should not indicate that the employer "may" monitor e-mail use. The mere suggestion or possibility of monitoring will likely prevent you from taking advantage of the informed consent safe harbor. Rather, the company policy should explicitly inform employees that monitoring "will" take place.
Q: Is My Company Policy Affected by Nebraska Law?
Answer: Yes. Although many people are not aware of these laws, Nebraska has its own Intercepted Communications laws that make unlawful interception a Class IV felony in certain instances. As under the federal laws, there are safe harbors of which an employer should be aware and should take advantage. An employer can intercept communications "on his, her, or its business premises" and "in the normal course of his, her or its employment" if the employer is engaged in an activity which is a "necessary incident to the rendition of... its services." Much like the federal laws, Nebraska law has purported to create an exception under which a business can qualify, but the exception is not welldefined and has not yet received significant scrutiny in court. Therefore, any company policy should incorporate the letter of the law as closely as possible. Moreover, a company policy should be written and distributed to employees because the law sets forth a requirement of providing "reasonable notice" to employees of monitoring.
Final Word - What to Do Now:
Your business should consider the very real risks of employees' use and abuse of e-mail at work. Your company should also be aware of the attendant risks of both monitoring and failing to monitor e-mail use. You should have a written company policy to protect your company from liability that also complies with federal and state law. Therefore, to be maximally effective, you need a written company policy tailored to your business. Our firm can help you implement a company policy that complies with federal and state laws and that helps protect your business from potential liability.

By: Renee A. Eveland

Note: Footnotes have been omitted; a copy of the complete article is available upon request.

Section 1031: Like-Kind Exchanges

Generally, the sale of a business asset that has appreciated in value, or an asset that has a reduced basis due to scheduled depreciation, will require the seller to incur tax liability on the gain recognized in the sale. Indeed, such liability sometimes appears to be a necessary evil of making wise investments or utilizing a beneficial tax strategy. However, in certain situations such tax liabilities can be deferred, especially where the seller already intends to purchase replacement property or reinvest the proceeds.

I.R.C. § 1031 provides that "No gain or loss shall be recognized on the exchange of property held for productive use in trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in trade or business or for investment." Accordingly, in certain instances, and where the transaction has been structured correctly, a party can sell an appreciated asset and defer the gain realized on the asset to pre-purchased or subsequently purchased replacement property, thus avoiding the immediate need to pay tax on the gain from the sale.

Such tax-deferred exchanges can be done for a wide range of business and investment property, so long as the replacement property is of "like kind." For example, if a business intends to sell a depreciated company vehicle and later purchase a replacement vehicle, conducting the transaction as an exchange, as opposed to a sale and subsequent purchase, would permit the business to avoid recognizing the gain at the time of the sale. On a larger scale, consider an individual who desires to sell investment property that has appreciated in value. Generally the sale of appreciated property would result in tax liability on the recognized gain. However, if a party were to structure the sale as an exchange, the basis of the original property would be carried over to the replacement property, and no gain would be recognized on the sale. Exchanges may also be structured which permit the seller to make improvements, or "build-to-suit," on replacement property, or which permit the seller to purchase multiple replacement properties or assets.

It should be noted that § 1031 treatment is not available for sales of certain classes of assets, including stocks, bonds, or other securities. Perhaps most importantly, such treatment is not available for principal residences, although fairly generous gain exclusion is provided under I.R.C. §121.

Exchange transactions can become complicated, as proper execution generally requires use of a qualified intermediary to hold title to a property and/or funds from a sale. Failure to identify and properly utilize a qualified intermediary can result in a transaction that will not be recognized as a tax-free exchange by the IRS. Also, careful attention must be paid to the nature of the assets to ensure that the exchanged properties are of like kind. This is especially important in dealing with transactions involving business or investment property other than real estate.

The IRS has set forth several other requirements that must be met in order to take advantage of the tax deferral offered under § 1031. For example, replacement property must be properly identified within 45 days, and acquired within 180 days, to create a valid exchange. The identification of replacement property presents a number of issues, which can result in unintended tax consequences. Sufficient property should usually be identified to take full advantage of the gain recognized in the sale. However, it is generally best to identify multiple properties in order to provide some leeway for the possibility that the seller is unable to close on one or more of the identified replacement properties. This is further complicated by additional IRS delayed exchange identification rules which restrict the seller's ability to identify replacement property. Additional issues arise when such an exchange takes place between two related parties, although such transfers are generally valid so long as the parties each hold the properties for two (2) years after the exchange.

Despite the need for strict compliance with statutory formalities, §1031 exchanges can be used to defer tax liability in a wide variety of situations. Thus, with sufficient foresight and effective planning, Section 1031 can provide businesses and investors an opportunity to take full advantage of investment growth and create wealth in the process.

By: Daniel R. Slaughter

What Can You Do After An Employee Engages in "Protected Activity?"

Your first question may be, "what is protected activity?" Protected activity can be any opposition done internally or externally to illegal discriminatory action or illegal activity of the employer. The opposition must be clear and specific. It is insufficient for the employee to complain verbally or in writing that he or she has been treated unfairly without identifying the unlawful basis for the unfair treatment. Similarly, it is insufficient for an employee to refuse to comply with the order of a supervisor without identifying the illegality of the action being the reason for the refusal. Protected activity can also be participation in the statutory complaint process. Participation includes filing a Nebraska Equal Opportunity Commission ("NEOC")/ Equal Employment Opportunity Commission ("EEOC") charge; taking part in an NEOC/EEOC investigation, or testifying at a NEOC/EEOC hearing or trial. If you employ more than 15 employees then Title VII, the Americans with Disability Act, and the Nebraska Fair Employment Act and their respective retaliation provisions apply to you.

  1. Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, prohibits discrimination in employment based upon race, color. sex, religion, and national origin.
  2. The Americans with Disability Act, ("ADA") 42 U.S.C. §§ 12101 to 12117, prohibits discrimination in employment based upon a person's disability.
  3. The Nebraska Fair Employment Practices Act, ("NFEPA") Neb. Rev. Stat. §§ 48-1101 to 48-1125, prohibits discrimination in employment action of persons based upon race, sex, religion, national origin, disability, and employees who have opposed an employer's unlawful practice or refused to carry out an unlawful employment practice.
  4. The Age Discrimination in Employment Action ("ADEA"), 29 U.S. C. §§ 621 to 633a., prohibits discrimination in employment action based upon a person's age by an employer with 20 employees. It protects employees who are 40 years or older. There is also the Nebraska Act Prohibiting Unjust Discrimination Because of Age, Neb. Rev. Stat. §§ 48-1001 to 48-1010, which protects persons between the ages of 40-70 by employers with 25 or more employees from discrimination based upon a person's age.

Regardless of how many employees you have the public policy exception to the employment-at-will doctrine applies to you. You may not fire an employee in contravention of the State's public policy. Public policy has been found to be established with sufficient clarity in the statute under the following circumstances.

  1. Requiring an employee to take a polygraph test as a condition of employment or continued employment because it is specifically prohibited by Neb. Rev. Stat. § 81-1932;
  2. The filing of a Worker's Compensation claim;
  3. An employee reporting a suspected violation of the criminal code and an employee's refusal to violate the criminal code; or
  4. An employee's report of patient neglect or abuse in compliance with the Adult Protective Services Act, Neb. Rev. Stat. §§ 28-348 to 28-387.

However, the fact a statute exists addressing a specific issue does not necessarily mean it has created a public policy which a State court will recognize. The Nebraska Supreme Court did not find that the Wage Payment and Collection Act, Neb. Rev. Stat. §§ 48- 1228 to 48-1232 created public policy with sufficient clarity. To be on the safe side it is probably advisable to assume that if the employee has spoken out against a violation of statute or exercised any statutory remedy, it would be recognized as a public policy exception to the employmentat- will doctrine.

The employee does not need to prove the underlying discrimination or illegal activity claim in order to prevail on a retaliation claim. The employee must only have a reasonable belief that discrimination or illegal activity by the employer has occurred. It is possible for an employee to lose on the underlying discrimination claim, or for the illegal activity not to be proven; yet he can still succeed on the retaliation claim. It is often times the employee's treatment by the employer after the employee has engaged in protected activity that the finder of fact, whether it be a hearing officer, judge, or jury, finds more egregious than the underlying discrimination claim.

Some of you may already have a written policy against retaliation when an employee complains internally about discrimination or harassment. A written policy prohibiting retaliation is helpful, especially when there is training to employees on the existence of the anti-retaliation policy and the policy is followed. It is not unexpected that hard feelings and tension will follow any accusation or charge of illegal discrimination or any complaint of illegal activity by the employer. If your employee has engaged in any protected activity, as discussed above, you may not retaliate against the employee by taking an adverse employment action.

What is an "adverse action?" In Burlington Northern and Santa Fe Ry. Co. (now known as BNSF Railway Company) v. White, (June 22, 2006), the U.S. Supreme set forth the standard for determining what constitutes adverse actions in Title VII retaliation cases. The Court determined that adverse actions are not limited to employment actions. The Court found it significant that while the Title VII anti-discrimination provision prohibits discrimination in employment actions, the anti-retaliation provision is not limited to employment actions. The Court also noted that the purpose of the anti-discrimination provision is to prevent injury to persons based on who they are, "i.e., their status" and the purpose of the antiretaliation provisions is to prevent injury to persons for what they do, "i.e., their conduct." The Court found that retaliatory adverse action can include any action in which a reasonable employee would have found the challenged action materially adverse, "which in this context means it well might have 'dissuaded a reasonable worker from making or supporting a charge of discrimination.'" White was employed as a track laborer by the BNSF Railway Company and assigned the duties of a fork lift operator. After White complained about sexual harassment she was reassigned to standard track laborer tasks which were more arduous and dirtier and less prestigious than being a fork lift operator, and was subsequently suspended without pay for insubordination. The suspension was later reversed through the grievance procedure and she was awarded back pay. Utilizing the reasonable person standard, the Court held that a reasonable person could have found that the transfer of duties and suspension without pay were adverse actions under Title VII and affirmed the verdict in favor of White.

Even though White ruled on Title VII retaliation, its holding arguably can be extended to apply to retaliation actions brought under the ADA and the ADEA. The language of the retaliation provisions of Title VII, the ADA, and the ADEA all make it unlawful for an employer to discriminate against any employee engaging in protected activity without limiting the discriminatory action to employment action.

The Nebraska Supreme Court may be persuaded to follow the White decision as well as in determining what constitutes an "adverse action" under the NFEPA. NFEPA's retaliation provision also makes it unlawful for an employer to discriminate against an employee who engages in protected activity without limiting the discriminatory action to employment action. The Nebraska Supreme Court has previously followed Eighth Circuit case law for the definition of adverse employment action and has determined that an adverse employment action is a tangible change in working conditions that produces a material employment disadvantage.

There must be a causal connection between the protected activity and the adverse action. The closer in time the protected activity is to the adverse action, the easier it will be for the employee to prove a causal connection. The more time that has passed since the protected activity and the adverse action, the more difficult it will be for the employee to show a causal connection. The adverse action decisionmakers must also be aware of the protected activity for a causal connection to exist. Note that retaliation has been found without employer action when co-employees were allowed to harass an employee who had engaged in protected activity when the employer failed to take corrective action against such conduct.

The fact that an employee has engaged in a protected activity does not insulate the employee from adverse employment actions being taken. If there is a legitimate basis for the adverse action, the employer may take the adverse action. If you take an adverse action against an employee after the employee has engaged in protected activity, be prepared to defend the decision for the adverse employment action to the NEOC and/or the EEOC. Evidence that would support the legitimacy of the adverse employment action may include documentation of prior disciplinary problems, witnesses to an act of insubordination, or a record of poor performance evaluations which precedes the protected activity. Evidence that may suggest that the adverse employment action was taken for retaliatory reasons would include the employee's exemplary employment record prior to the protected activity, or if you have treated employees who are similarly situated differently for the same problem or offense when the only difference between the employees is that one has engaged in protected activity and one has not.

If you have any questions on what to do after an employee has complained about protected activity, please call our office and we would be glad to discuss it with you.

By: Melanie Whittamore-Mantzios

Insurers: Beware the FMCRA - What You Don't Know CAN Hurt You!

Recently, I was contacted by one of my insurance clients regarding a matter that had come to his attention. The client had settled a bodily injury claim for the policy limits after the claimant was injured in an auto accident in which his insured was the negligent driver. As part of the settlement agreement, the plaintiff agreed to pay all medical liens and subrogation claims and further agreed to indemnify and hold my client harmless against any such claims in the future.

Nearly a year later, my client received a letter from an attorney working for a branch of the United States' military. The letter demanded my client pay the government several thousand dollars for reimbursement of medical expenses it paid on behalf of the claimant. The government cited the Federal Medical Care Recovery Act ("FMCRA") as the basis for the right to recoup the monies.

Never having heard of the Act, and not having received any subrogation notice, my client asked me to advise him as to whether he was required to pay the proceeds even though (1) the had not received prior notice of the subrogation right, and (2) he had already paid the liability policy limits. Unfortunately, I determined that if the government pursued the matter, my client likely would have to pay the claim and then pursue contractual indemnity benefits from the claimant. The purpose of this article is to inform you about the FMCRA and prevent you from being placed in a similar position.

The FMCRA, 42 U.S.C. § 2653 et seq. ,was initially enacted by Congress in 1962. The statute was enacted after the U.S. Supreme Court, in 1947, refused to find or recognize any common-law right of the federal government to subrogation for medical payments it made when a soldier was injured by a third party. The Supreme Court determined it was not in a position to create a right that otherwise did not exist and therefore encouraged Congressional action. Congress finally responded in 1962.

The purpose of the FFMCRA is to codify the United States' right to recover medical expenses it has paid or incurred for or on behalf of a person "who is injured or suffers a disease . . . under circumstances creating a tort liability upon some third person. . . ." The FMCRA states that the United States shall "have a right to recover (independent of the rights of the injured or diseased person) from said third person, or that person's insurer, the reasonable value of the care and treatment so furnished. . . and shall, as to this right be subrogated to any right or claim that the injured or diseased person . . . has against such third person to the extent of the reasonable value of the care and treatment so furnished. . ."

The simultaneous use of the terms "independent right" and "subrogated" has caused some confusion as to what rights the United States has under the Act. Over the years, courts have determined that the government's right is "independent" insofar as it cannot be extinguished by the injured party's release of the tortfeasor. And the government's interest is "subrogated" only to the extent that the government cannot recover unless the third party is liable in tort. Although some courts have also identified the government's interest as a "lien," it is not a true lien since the FMCRA does not give the government a claim against the property of the wrongdoer - a right that is concomitant with a true "lien."

On its face, the FMCRA does not require the government to notify tortfeasor's of its interest. Moreover, the courts have refused to read such a requirement into the statute. Rather, the courts presume that where the care was rendered by a federal medical facility, or to a military member or a military dependent, the tortfeasor's insurance carrier is given constructive notice of the governmental interest. As such, insurance carriers must take all steps necessary to insure that the federal government has no stake in a case.

Furthermore, the United States' recovery will not be limited by state procedural rules. For example, the federal government is not limited by state statutes of limitations. Rather, they are limited to the three year statute of limitations provided for in 28 U.S.C. § 2415(b). 9 The government is also not precluded from recovering where interspousal immunity or automobile guest statutes apply. Thus, the government may recover even where the injured party would be barred from doing so.

On the other hand, substantive legal rules that negate tort liability altogether do provide a defense under the FMCRA. Thus, worker's compensation and no-fault statutes generally preclude recovery under the FMCRA.

Settlement and release agreements executed by the injured party also do not preclude the government's recovery. Thus, any settlement or release in which the United States does not participate is done at the tortfeasor's peril.

In terms of what amount the government may recover, the statute provides the government "shall have a right to recover . . . the reasonable value of the care and treatment so furnished, to be furnished, paid for, or to be paid for . . ." The FMCRA authorizes the President to prescribe regulations establishing the value of medical care. In turn, the President authorized the Director of the Office of Management and Budget to promulgate these values. Where the medical care is rendered by a federal facility, there is a rebuttable presumption that the OMB amount is reasonable.

The question then becomes: what amount is the government entitled to recover if the services were provided through a third party medical facility. Although the statute, on its face, appears to limit the government's recovery to the amount it actually paid, thereby giving the tortfeasor the benefit of any federal contractual fee reduction, others have suggested that the tortfeasor would not be permitted to benefit from any contractual reduction provided by the government.18 At this point in time, it does not appear that the courts have reached this issue.

While this matter may be unclear, most courts agree that the government cannot recover directly from the injured party. As one court noted, the FMCRA language allows the government to seek recovery from the third party tortfeasor or his insurance carrier. Nothing in the language seemingly permits the government to maintain a direct action against the injured party. Nevertheless, at least one court permitted the government to share in settlement proceeds where the settlement expressly required funds to be deposited with the court to determine what portion should go to the government. However, other courts have refused to allow the government to demand settlement proceeds where there is no express provision in the settlement for payment of government-funded medical treatment.

How can you protect yourself and your insureds from FMCRA claims?

In order to protect yourself and your insured from FMCRA claims, you should do the following:

  1. Review medical records to determine whether care was rendered in a federal facility, such as a veterans' hospital. If so, be sure you determine if the government has an interest.
      
  2. Even if the care was rendered in a public or private facility, check to see whether the facility billed any military medical plan provider. For example, if you see the word "TriCare" on any billing statement or admission record, be sure that you determine what interest, if any, the government has.
      
  3. If medical care was rendered by a federal facility or paid for by a federal health care plan, you must take steps to protect the government's interests. The only way to absolutely protect yourself and your insured is to issue payment directly to the government for the amount of its interest and issue a separate payment to the injured party's attorney for the balance.
      
  4. Often times the injured party's attorney will negotiate the amount of liens or subrogation interests and will not want to provide you with the reduced amounts. If you decide to settle the case without issuing payment directly to the government, do not issue payment to the injured party's attorney until you have obtained a written release of the government's interest (simply naming it on the check may not always protect you and your insured).
      
  5. As part of every settlement agreement , include language whereby the injured party affirmatively represents and warrants that neither s/he nor his/her spouse is a member of the armed forces. Make him further represent that none of the medical bills were paid by a military health plan. Although the representation will not protect you from a subsequent FMCRA claim, it will make sure that the issue has been raised and considered before the settlement is consummated.
      
  6. As part of every settlement agreement , include language whereby the injured party agrees to indemnify you and your insured against any subsequent claims related to liens or subrogation rights.
      
  7. In addition to indemnification language, include language that imposes a duty on the injured party to either defend you and your insured in any subsequent litigation or to pay your attorneys fees associated with such litigation. Be sure the language specifies that whether the injured party defends you or pays your attorney's fees is at the your option. (Keep in mind that most contractual attorney fee provisions are not enforceable in Nebraska and therefore it may be more economical to have the injured party defend you and your insured. If you do include an attorney fee provision, also include a severability clause so that if the attorney fee requirement is voided, the balance of the settlement agreement remains in force.)
      
  8. Finally, if you have taken the above precautions and are still faced with an FMCRA claim, remember that the obligation to pay does not arise unless and until the insured has deemed liable in tort. If you compel the government to prove your insured's liability, be sure to join the injured party so that you invoke your contractual rights of defense and indemnification.

For more information on the FMCRA, or for assistance in drafting a settlement and release agreement that adequately protects you and your insured, contact the firm.

By: Cathy S. Trent

Note: Footnotes have been omitted; a copy of the complete article is available upon request.

Wolfe Snowden Wins Back-to-Back Defense Verdicts!

Congratulations to Steve Ahl and Jim Snowden on their recent defense verdicts!

Steve Ahl tried a case in Kearney County wherein the plaintiff alleged injuries to both knees, which impacted the dashboard after her vehicle collided with a large support beam across the roadway that was being removed from beneath a home. The plaintiff, who had experienced knee problems prior to the collision, alleged two surgeries and ultimately a total knee replacement in the right knee arising from the impact. Prior to trial, Steve succeeded in a motion for partial summary judgment on the plaintiff's contributory negligence; the plaintiff, who lived in the area and was aware of the ongoing construction, admitted she failed to see the beam in the roadway. Given the size of the beam (the top of the beam was flush with the top of her vehicle's hood), the Court found her to be negligent as a matter of law for failing to see what was in plain sight and for being unable to avoid colliding with it. The jury deliberated for approximately one and a half hours before returning a defense verdict.

Jim Snowden defended a local hospital in Lancaster County against a medical malpractice action brought after the plaintiff's decedent died while under the hospital's care. The plaintiff alleged his medical providers failed to properly diagnose and treat his illness. The jury deliberated for less than two hours before returning a defense verdict.

Congratulations to Steve and Jim on their victories!

About the Contributing Authors

Renee A. Eveland joined Wolfe Snowden as an associate in 2005. She received her B.A. in English (summa cum laude) in 1998 from Northeast Missouri State University, where she was voted Outstanding Graduate in English by her professors. After managing a familyowned jewelry store in Missouri, Renee returned to Nebraska in 2002 to attend the University of Nebraska College of Law. While in law school, she was a member of the Nebraska Moot Court Board. Her practice is primarily in the area of insurance defense. She is a member of the Nebraska State and Lincoln Bar Associations. She is admitted to practice in the state and federal courts of Nebraska.

Daniel R. Slaughter initially joined the firm as a law clerk in 2004. He joined the firm as an associate in 2005. He received his Bachelor of Journalism and Juris Doctor degrees from UNL in 2001 and 2005, respectively. While at UNL College of Law, he served as Class Representative. He practices in the areas of real estate transactions, corporate governance, corporate compliance and copyright law. He is a member of the Nebraska State and A m e r i c a n B a r Associations as well as the Lincoln Bar Association. He is admitted to practice in the state and federal courts of Nebraska.

Melanie Whittamore-Mantzios joined Wolfe Snowden as an associate in 2003 after serving as an Assistant Attorney General for the State of Nebraska for 15 years. She received her Bachelor of Arts in Political Science and Juris Doctor degrees from UNL in 1985 and 1988, respectively. She practices primarily in the areas of insurance defense, employment law and disciplinary actions against licensed health professionals. She is a member of the Nebraska and Lincoln Bar Associations and the Nebraska Association of Trial Attorneys. She is also an alumnus of the Robert Van Pelt Inns of Court. She is admitted to practice in the state and federal courts of Nebraska, including the United States Supreme Court.

Cathy S. Trent joined Wolfe Snowden as an associate in 2002 after serving as a law clerk. She received her Bachelor of Arts degree (cum laude) from Loyola Marymount University in 1994. While working for U.S. Customs at the Long Beach Seaport, she received her Master of Arts degree (summa cum laude) in Political Science from Cal State Long Beach, where she was voted Outstanding Graduate Student of the Year. S h e mo v e d t o Nebraska in 1999 to attend UNL College of Law. While at UNL she was a member and Executive Editor of the Nebraska Law Review. She practices primarily in the area of insurance defense and business litigation. She is a member of the Nebraska, American and Lincoln Bar Associations as well as a member of the Nebraska Association of Trial Lawyers and the Defense Research Institute. She is admitted to practice in the state and federal courts of Nebraska.

Firm Profile

Wolfe, Snowden, Hurd, Luers & Ahl, LLP is a limited liability partnership engaged in the practice of law. Since its establishment in 1977, the firm has maintained a general practice with a focus on railroad litigation, insurance defense, corporate and business planning, workers compensation, estate planning, probate, wills and real estate, commercial litigation, and employment law. The firm represents clients throughout the State of Nebraska and is listed in the Bar Register of Preeminent Lawyers.

This newsletter is not intended as, and does not constitute, either legal advice or a solicitation of any particular prospective client. An attorney/client relationship with Wolfe, Snowden cannot be formed by reading or responding to this newsletter. Rather, such a relationship may be formed only by specific and explicit agreement with an individual attorney of Wolfe, Snowden.

These articles are for informational purposes only, and do not constitute legal advice.

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