The Government Tries to Play Hardball With KPMG

First things first: Thank you, Dan & Co., for inviting me to guest blog. I am very excited to be here, and I look forward to an interesting visit.

Second thing second:

In theory, my first post out of the starting gate here should be strong, hard-hitting, and compelling, in the hopes of impressing the audience. That was my plan, anyway. But, as I took a break from drafting the hard-hitting and compelling post, I surfed WSJ.com, and I found an article that just baffled me. Stumped me. So much for the hard-charging start. (Just to be clear, I read the words in the article, and I understood their meaning, but I have been waffling for the past half hour on where I come out on the substance of the article. I am baffled about the “right” side of the argument at issue. )

The article, titled KPMG Case Sets Up Key Ruling on Legal Fees, notes an interesting and likely significant issue currently before Judge Kaplan (SDNY).

Summary: The government is prosecuting 16 former KPMG executives who are accused of marketing fraudulent tax shelters. Defense lawyers for the executives are complaining that the federal prosecutors are pressuring KPMG to cut off legal support for the 16 former executives, presumably to make the 16 defendants cave (my phrasing). It appears (to the defense lawyers) that the prosecutors on the case are hoping that KPMG will cut off support to the executives to curry favor with the prosecutors (or at least be viewed as “cooperating with the government”) and thereby avoid prosecution itself. It seems to the defense lawyers (as best I can tell) that the prosecutors are trying unscrupulously to get KPMG to basically “give up” its former employees in order to save themselves.

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HIPAA’s Lax Enforcement

hipaa3.gifToday’s Washington Post has an interesting story about how the privacy regulations under the Health Insurance Portability and Accountability Act (HIPAA) are not being enforced:

In the three years since Americans gained federal protection for their private medical information, the Bush administration has received thousands of complaints alleging violations but has not imposed a single civil fine and has prosecuted just two criminal cases.

Of the 19,420 grievances lodged so far, the most common allegations have been that personal medical details were wrongly revealed, information was poorly protected, more details were disclosed than necessary, proper authorization was not obtained or patients were frustrated getting their own records.

The government has “closed” more than 73 percent of the cases — more than 14,000 — either ruling that there was no violation, or allowing health plans, hospitals, doctors’ offices or other entities simply to promise to fix whatever they had done wrong, escaping any penalty.

“Our first approach to dealing with any complaint is to work for voluntary compliance. So far it’s worked out pretty well,” said Winston Wilkinson, who heads the Department of Health and Human Services’ Office of Civil Rights, which is in charge of enforcing the law.

While praised by hospitals, insurance plans and doctors, the approach has drawn strong criticism from privacy advocates and some health industry analysts. They say the administration’s decision not to enforce the law more aggressively has not safeguarded sensitive medical records and has made providers and insurers complacent about complying.

The lax enforcement of HIPAA could be addressed if HIPAA were to have a private right of action. Currently, HIPAA doesn’t provide a way for individuals to sue for privacy violations. HIPAA would be more effective with a private right of action, which would prevent enforcement from being stymied whenever an agency isn’t interested in enforcing a law. The Bush Administration has little love for the HIPAA privacy regulations, which it tried to kill when it took over power from the Clinton Administration. Instead of killing HIPAA, the Bush Administration rewrote parts of the regulations, weakening them significantly. And now, the strategy seems to be to let the HIPAA regulations sink into irrelevance.


The Problem of the 28th Amendment

Here is a question from my exam in Constitutional Law:

The U.S. Constitution contains 27 amendments; the most recent (the 27th), was ratified in 1992. Write a proposed 28th Amendment and explain why your proposed amendment should be adopted. The proposal may deal with any issue you wish.

In addition to giving me something interesting to read when I’m grading, this question is very useful for seeing how well a student understands the Constitution. It’s not easy to draft an amendment that accomplishes what you want (no more, no less) and that fits into the existing Constitution as a whole.

In grading answers, I’m not much concerned with the particular change a student suggests making—my main focus is on how well the student executes the proposal.

If, for instance, a student proposes abolishing the Supreme Court, I expect to see some thinking about how appellate cases will henceforth be decided. If a student wants states to have a power to maintain armies, there should be some attention to resolving the likely federal-state conflicts that will arise. Form also matters: a 2,000 word amendment dealing with the minutiae of traffic regulation would be out of place in a document that creates the structures of government and secures our most important freedoms.

Exam-taker with ID number 43 thinks it’s a good idea to amend the Constitution to prohibit, as he puts it, “activist judges” and maverick local officials from allowing same-sex couples to get married. To accomplish those ends, 43 proposes the following amendment as the 28th Amendment to the U.S. Constitution:

Marriage in the United States shall consist only of the union of a man and a woman. Neither this Constitution, nor the constitution of any State, shall be construed to require that marriage or the legal incidents thereof be conferred upon any union other than the union of a man and a woman.

How well did 43 do?

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One Way to Stop Cheating: Jail

Chinese educators have been dealing with an outbreak of cheating via cellphones on college entrance examinations. Further, plagiarism of research papers is becoming a problem too. Apparently the Chinese government has now gotten involved:

Earlier this month, three people were arrested for selling fake exam papers over the Internet for 1,000 yuan a subject [.]

The government warned the public not to fall for the scam, noting that exam papers are state secrets and those caught leaking them face three to seven years in prison, it said.

I am generally in favor of harsh punishments against those who cheat or plagiarize their academic work. In the instances where it has happened, I have taken it personally. How dare someone cheat in *my* class?@!??$ However, in this instance, even I will admit that perhaps the punishment may not fit the crime. Aside from hard jail time, what are the best ways to keep students honest?


Introducing Guest Blogger Michelle Adams

adams-michelle.gifI’m very pleased to introduce Professor Michelle Adams of Seton Hall Law School, who will be visiting us for the next few weeks. Michelle received her B.A. from Brown University and her J.D. from the City University of New York. She clerked for Magistrate Judge James C. Francis, IV of the United States District Court for the Southern District of New York. She then became an attorney at the Legal Aid Society, Civil Appeals and Law Reform Unit in New York, focusing primarily on race discrimination and federal housing law. Michelle then received her LL.M. from Harvard Law School as a Charles Hamilton Houston Fellow. She then joined the faculty at Seton Hall. This coming academic year, Michelle will be visiting at Brooklyn Law School (fall) and Cardozo Law School (spring).

Michelle writes about affirmative action, race and sex discrimination and housing law. Some of her publications include: Radical Integration, 94 Cal. L. Rev. (forthcoming 2006), Intergroup Rivalry, Anti-Competitive Conduct and Affirmative Action, 82 B.U. L. Rev. 1089 (2002), and Causation and Responsibility in Tort and Affirmative Action, 79 Tex. L. Rev. 643 (2001).


Introducing Guest Blogger Elizabeth Nowicki

nowicki-elizabeth.jpgWe’re very fortunate to have Professor Elizabeth Nowicki of Richmond Law School join us for the next few weeks. Elizabeth received her JD from Columbia Law School where she was a James Kent Scholar and a Harlan Fiske Stone Scholar. She served as an articles editor of the Columbia Business Law Review. Following law school, she clerked for Judge Jack B. Weinstein of the Eastern District of New York and Judge James L. Oakes of the U.S. Court of Appeals for the Second Circuit. She practiced law at the Securities and Exchange Commission and at Sullivan & Cromwell.

She joined the University of Richmond School of Law faculty in 2002, and she teaches in the areas of corporate law, corporate governance, securities regulation, mergers and acquisitions, and corporate finance. This fall, she will be visiting at Cornell Law School.

Some of Elizabeth’s publications include: A Response to Professor John Coffee: Analyst Liability Under Section 10(b) of the Securities Exchange Act of 1934, 72 U. Cin. L. Rev. 1305 (2004); 10(b) or Not 10(b)? Yanking the Security Blanket for Attorneys in Securities Litigation, 2004 Columbia Business L. Rev. 637 (2004); Denial of Regulatory Assistance in Stranded Cost Recovery in a Deregulated Electricity Industry, 32 Loyola Los Angeles L. Rev. 431 (1999); and Competition in the Local Telecommunications Market: Legislate or Litigate?, 1996 Harv. J. L. & Tech. 353. Works in progress include Revisiting Director Liability: The Unimportance of Being Earnest and The Meaning of a Director’s Obligation to Act in Good Faith.


This is Democracy

The Philadelphia Inquirer, under new management, has a shocking good article on tomorrow’s ward leader elections. The entire article reminded me quite a bit of The Last Hurrah. Here’s a taste of what big city politics still look like, at least in my neck of the woods:

In the 18th Ward in Fishtown and South Kensington, City Councilman Juan Ramos ran a slate of committee candidates, knocking out several incumbents, and is seeking to unseat eight-year leader Lynn Farrell . . . . “I wanted to keep a close eye on my neighborhood, but she apparently did not want me to be part of the ward structure,” Ramos said. He said he would make the party “more active” and open.

It will be up to 34 committee members, meeting at Farrell’s home on East Montgomery Avenue. The incumbent says she has 22 votes locked up, but anything can happen. Ramos considers the race too close to call. Farrell has collected sworn affidavits from poll workers who say that Ramos and his supporters browbeat voters on primary day. For their part, Ramos forces protest the location of the meeting and say they have notified the 26th Police District that they may need help.

[And elsewhere in the city . . . ] John J. Dougherty, leader of the electricians’ union and a potential mayoral candidate [is running for re-election as party treasurer.] A source of friction was the 73 electricians Dougherty encouraged to run as ward committee members. He said 68 won . . . .

The strange thing about Philly, in light of all of this sausage making mess, is that the corruption that comes to light is petty ante. You rarely see the huge swindles here that you do in other towns, and local politicians, when caught, have stolen merely in the five to six figures. That really isn’t much, given that we’re still a moderately large town, with an operating budget of around $4 billion. Shucks, our pols can’t even wipe their data efficiently!


Don’t Know Much About Driving

In the spirit of fair and balanced reporting, here now some positive news about our non-East Coast readers. According to a new study, the nation’s drivers with the least knowledge of the rules of the road are in the East: in Rhode Island to be exact–followed by Washington D.C., Massachusetts, New Jersey and New York. Next time you cross a street in Providence, Boston, Newark or Brooklyn, keep in mind that one in three drivers don’t think they have to stop or slow down for pedestrians and one in five have no idea roads are more slippery when wet. Oregon has the most knowledgable drivers, followed by Washington State. Vermont is third–the only Eastern state in the top twenty-five.

In fairness to East Coasters, knowing how to drive might not necessarily translate into skill behind the wheel. New York cabbies seem oblivious to rules but their passengers are rarely injured.


The Conservatives’ Gay Kids

With the Federal Marriage Amendment coming before the Senate this month, it’s a good time to ask: why do so many conservatives have gay offspring? To name just a few: Phyllis Schlafly (son, John), Dick & Lynne Cheney (Mary), Randall Terry (Jamiel), Sonny Bono (Chastity), Alan Keyes (Maya) and Pete Knight (David). Meanwhile, those liberal Kennedys of Massachusetts appear to have no gay children of record. Is there something about the Republican lifestyle that leads to homosexuality?