Category: Federal Legislation

What Never Was: The Indigenous American Cultural Heritage Repatriation Problem

August 19th, 2020 in Administrative Law, Analysis, Federal Legislation

The unfortunate beginnings of the fetishization of Indigenous American cultural heritage occurred concurrently with the systematic disenfranchisement of Native Americans throughout the United States. These events led to the amassing of millions of Indigenous American cultural heritage objects in federal repositories, museums, and private collections by the early twentieth century. Concurrently, archaeologists and anthropologists, largely funded by public research institutions like museums and universities, thoroughly destroyed prehistoric and historic sites in the hunt of the next ancient relic. The culmination of these events as well as forced assimilation created the idea that Indigenous Americans vanished and further justified the amassing of their cultural heritage. Unfortunately, today’s global society still believes in the vanishing Indian

The Native American Graves Protection and Repatriation Act (“NAGPRA”) was supposed to protect the heritage of the Indigenous Americans, but it is deeply flawed and needs to be either amended or replaced.

CONGRESS’S RUSHED RESPONSE TO CONTROVERSY

The Supreme Court ruled in Lyng v. Northwest Indian Cemetery Protection Association that the American Indian Religious Freedom Act (“AIRFA”), 42 U.S.C. § 1996, merely reiterates the First Amendment. Thus, the U.S. Forest Service (“USFS”) continued with road construction after minimizing the immediate impacts to the Yurok’s, Karok’s, and Tolowa’s religious practices. After the decision, the Indigenous American community knew they needed heightened protections, and the Senate Select Committee on Indian Affairs concluded that  federal legislation was necessary. On the heels of the committee findings, federal legislation was drafted and enacted. NAGPRA was supposed to positively affect the acquisition and repatriation of Indigenous American ancestral remains and cultural heritage.

(Image: Jacob Boomsma/Shutterstock)

Congress enacted NAGPRA to protect Indigenous American graves and repatriate remains, providing for proper tribal burials and religious rites. Although the legislative history suggests good intentions, the federal legislation provides a façade for museums, galleries, and collectors to continue acquiring and exhibiting Indigenous American cultural heritage. NAGPRA, enacted in November of 1990 and effective a year later, requires federal agencies and institutions benefiting from federal funding that have “possession or control over holdings or collections of Native American human remains and associated funerary objects [to] compile an inventory of such items and, to the extent possible based on information possessed by [the agencies and institutions, to] identify the geographical and cultural affiliation of such items.” From here, institutions and federal agencies inventory their collections “in consultation with tribal government [officials]. . . and traditional religious leaders” and supply records for better determining “the geographical origin, cultural affiliation, and basic facts surrounding [the] acquisition and accession of Native American human remains and associated funerary objects . . . .” “If a ‘cultural affiliation of Native American human remains and associated funerary objects’ is established with a particular tribe, then ‘upon the request of a known lineal descendant of the Native American or of the tribe[,]’ the museum must ‘expeditiously return such remains and associated funerary objects.’”

WHY NAGPRA FAILS

NAGPRA is but one illustrious example of the federal government fostering conflict between Indigenous American religion and Eurocentric ideals of science. While religion and science both concern themselves with “the human identity and defining our place in the universe,” their methods employed to achieve these goals often conflict. Science utilizes deductive methodology emphasizing quantifiable information and discernible facts and leads to evidence-based conclusions. Region supports discovery through “faith, complex belief systems, and longstanding traditions supported by cultural awareness.” The answer is not and never has been one practice over the other, and America’s past placed Congress in an important decision-making role to efficiently incorporate both viewpoints. What Congress enacted is neither effective nor efficient legislation, but an all show, no substance process.

NAGPRA leans heavily in favor of Eurocentric ideals of science over Indigenous American religious freedoms and oral history. Nevertheless, Congress failed at greatly considering the issue’s greatest stakeholder—Indigenous Americans. While Congress heard the religious perspective from tribal government representatives, lineal descendants, and various other support groups, the followed in-practice NAGPRA guidelines suggest their perspective fell on deaf ears.

Indigenous Americans view funerary, sacred, and cultural patrimony objects as the extensions of once-living ancestors, and therefore deserving of the same protections afforded to ancestral remains. Treating these objects as anything less offends Indigenous American cultural practices, and disturbances “force the spirits of those individuals to wander without rest.” The scientific viewpoint sees historical and scientific value in ancestral remains and their associated objects. Bioanthropologists premise their work around these objects and remains, hoping to learn more about past and present populations as well as information about the individual ancestral remains. Bioanthropologists swayed Congress with their wishes to retain ancestral remains for future study, supporting their argument by suggesting future technologies might provide unknown answers. Of course, Indigenous Americans’ oral histories provide the answers, but the judiciary and bioanthropologists brushed those claims aside. Thus, scientists and Indigenous Americans remain on polar extremes—“either believing in continued possession for research purposes or insisting on immediate burial without study.” Congress enacted NAGPRA with a focus on the repatriation of ancestral remains and associated objects. Yet, the rushed and sloppy NAGPRA legislation contains loopholes and lacks enforcement mechanisms.

Existing Loopholes

NAGPRA falls flat when repatriating cultural heritage not culturally identifiable and not traceable to a contemporary and federally-recognized tribe. These limitations result in 73% of remains remaining in museum collections because they were deemed non-affiliable and not repatriable. “[T]he unaffiliated remains of more than 115,000 individuals and nearly one million associated funerary objects have sat on museum shelves in legal purgatory.” A March 2010 amendment, Disposition of Cultural Unidentifiable Human Remains, attempted to redress these limitations. Before the amendment’s enactment, a majority of ancestral remains were classified as non-affiliable and outside NAGPRA’s initial scope.

NAGPRA, in its current state, fails on multiple fronts. First, the amendment addresses unaffiliated ancestral remains, but does

(© President and Fellows of Harvard College, Peabody Museum of Archaeology and Ethnology, [24-15-10/94603 + 60740377])
Mimbres bowls, produced by people living in the Southwest from the late 10th to early 12th century A.D., are renowned for the unique imagery found on their interiors. The black-on-white ceramics were often decorated with geometric patterns.

not resolve the issue with funerary and sacred objects such as Mimbres bowls. Second, NAGPRA requires museums, federal agencies, and public institutions to consult with tribal governments in determining affiliation and recommendations of repatriation, yet this important step rarely occurs. Third, cultural affiliation rests upon the interpretation of a preponderance of evidence determined by the same collection of museums, federal agencies, and public institutions retaining the Indigenous American cultural heritage. Fourth, only federally-recognized tribes may bring repatriation claims, thus eliminating hundreds of tribes awaiting or denied federal recognition. Fifth, NAGPRA only applies to federally-funded institution and federal agency collections. Consequently, federally-funded institutions receiving promised gifts and loans from private collections circumvent NAGPRA responsibilities. Finally, NAGPRA established the Committee, made up of seven members, which reviews repatriation claims when requested by any of the involved parties. However, the Committee merely publishes non-binding advisory findings. Language not clearly explained by Congress can be reasonably interpreted by federal agencies provided they give adequate explanations, and thus provides major deference to agency decisions. Therefore, the current loopholes allow federal agencies and federally-funded institutions to act as the decision makers for repatriation claims, and leads to biased outcomes against the marginalized Indigenous American tribal communities.

Lacking Enforcement Mechanisms

Congress limited NAGPRA’s effectiveness by omitting dissuasive penalties for federal agencies and federally-funded institutions. In fact, the legislation is completely silent on penalties towards federal agencies. Subsequently, most federal agencies have not completed collection inventories, a process required to place tribes on notice of NAGPRA-protected cultural heritage and ancestral remains. NAGPRA required completed inventories no later than November 16, 1995, yet the Department of the Interior’s (“DOI”) agencies have failed at cataloging over 78 million cultural heritage objects and ancestral remains. Thus, tribal governments cannot place repatriation claims and have no course of action for dispute settlements.

The DOI’s Secretary assesses civil penalties to federally-funded institutions who fail to comply with NAGPRA. Nevertheless, federally-funded institutions frequently circumvent any penalties if they reasonably explain their decisions not to repatriate based on a preponderance of the evidence, regardless of the Committee’s recommendations. Legislation without adequate enforcement measures leaves agencies and institutions with too much power and tribal governments incapable of obtaining the just and fair outcomes sought.

For Indigenous Americans, NAGPRA continues to fail and fall flat on Congress’s goals thirty years later. Improper interpretation of NAGPRA and unfair results will continue without reconsidering the current legislation and elaborating upon the ambiguities. Next session, Congress should, at the very least, take action to close the NAGPRA’s loopholes and add meaningful penalties.  Even better, it should take this opportunity to completely rethink its approach to restoring and protecting the sacred objects of Indigenous Americans.

Tyler Heneghan anticipates graduating from Boston University School of Law in May 2021.

Disparate Impact in Machine Learning

June 8th, 2020 in Federal Legislation, State Legislation

Machine learning or “AI” is a novel approach to solving problems with software. Computer programs are designed to take large amounts of data as inputs, and recognize patterns that are difficult for humans to see. These patterns are so complex, it is sometimes unclear what parts of the data the machine is relying on to make a decision. This type of black box often produces useful predictions, but it is unclear whether the predictions are made based on forbidden inferences. It is possible that machine learning algorithms used in banking, real estate, and employment rely upon impermissible data related to protected classes, and therefore violate fair credit, housing, and labor laws.

Machine learning, like all programmed software, follows certain rules. The software generally compares images or numbers with

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descriptions. For instance, facial recognition software may take as inputs pictures of faces, labeled with names, and then identify patterns in the face to associate with the name. Once the software is trained, it can be fed a picture of a face without a name, and the software will use the patterns it has developed to determine the name of the person that face belongs to. If the provided data is accurately prepared and labeled, the software usually works. If there are errors in the data, the software will learn the wrong things--and be unreliable. This principle is known as “garbage in, garbage out”--machine learning is only ever as reliable as the data it works with.

This causes problems when machine learning is applied to data that has racial bias baked-in to its core. Machine learning has been used in the criminal justice system to purportedly predict--based on a lengthy questionnaire--whether a perpetrator is likely to reoffend. The software was, after controlling for arrest type and history, 77% more likely to wrongfully predict that black defendants would re-offend than white defendants. Algorithms used by mortgage lenders charge higher interest rates to black and latino borrowers. A tenant screening company was found to rely partly on “arrest records, disability, race, and national origin” in its algorithms. When biases are already present in society, machine learning spots these patterns, uses them, and reinforces them.

There are two ways of interpreting the racial effect of machine learning under discrimination law: disparate treatment and disparate impact. Disparate treatment is fairly cut-and-dry, it prohibits treating members of a protected class differently from members of an unprotected class. For instance, giving a loan to a white person, but denying the same loan to a similarly situated black person, is disparate treatment. Disparate impact is using a neutral factor for making a decision that affects a protected class more than an unprotected class. Giving a loan to a person living in a majority-white zip code, while refusing the same loan to a similarly situated person living in a black-majority zip code, creates a disparate impact.

Whether machine learning creates disparate treatment, disparate impact, or neither, depends on the lens the system is viewed through. If the software makes a decision based on a pattern that is the machine equivalent to protected class status, then it is committing disparate treatment discrimination. If a lender uses the software as its factor in deciding whether to grant a loan, and the software is more likely to approve loans to unprotected class members than it is to approve loans to similarly situated protected class members, then the lender is committing disparate impact discrimination. And if a lender uses software that relies on permitted factors, such as education level, yet nevertheless winds up approving more loans for unprotected class member than it does for protected class members, the process could be discriminatory but not actionable under either disparate treatment or disparate impact theory.

The problem thus depends in part on understanding how the machine interprets the data--the exact information we often lack when machine learning is particularly complex. Thus, instead of relying on either disparate impact or disparate treatment theory, perhaps legal analysis of discrimination in machine learning should be entirely outcomes-driven. If, in fact, an algorithm wrongly predicts the likelihood of an event occurring, and that algorithm is less accurate for protected class members than unprotected class members, the algorithm should be considered prima facie discriminatory. Such a solution is viable for examining recidivism, interest rates and loan repayment, but it may be insufficient to cover problems like housing denials or employment. If an algorithm denies protected class members access to housing in the first place, it is difficult to falsify the algorithm’s decision, as nonpayment or other issues necessarily do not arise.

Machine learning offers great promise to escape the racial biases of our past if it is programmed to only rely on neutral factors. Unfortunately, it is currently impossible to determine which factors used by machines are truly neutral. Improperly configured machine learning has led to higher incarceration rates for black inmates and higher loan interest rates for black and latino homeowners. Such abuses of machine learning technology must be rejected by the law.

Schecharya Flatté anticipates graduating from Boston University School of Law in May 2021.

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Telehealth in the Era of COVID-19 and Beyond

June 1st, 2020 in Administrative Law, Federal Legislation, State Legislation

Governor Charlie Baker of Massachusetts has recently issued an Order Expanding Access to Telehealth Services and to Protect Health Care Providers. The order, issued in March, is a public health response to the state’s state of emergency due to the Coronavirus or COVID-19 outbreak. Under the order, the Group Insurance Commission, all Commercial Health Insurers, Blue Cross and Blue Shield of Massachusetts, Inc. and health maintenance organizations regulated by the Division of Insurance are required to let all in-network providers deliver clinically appropriate, medically necessary covered services to their members via telehealth, and to mandate reimbursement for these services. The purpose behind the Order is to encourage the use of telehealth in the mainstream of health care provision, as a “legitimate way for clinicians to support and provide services to their patients.”

Gov. Charlie Baker (R-MA)
John Tlumacki / Boston Globe

Blue Cross and Blue Shield of Massachusetts has recorded over half a million patient telehealth visits over a six-week span and that number is only increasing with time. In comparison, the average number of telehealth visits before the COVID-19 pandemic was 5,000. The demand for health care and medical advice without the requirement of an in-person appointment has soared in light of the outbreak that prevents or prohibits people from attending one due to social distancing guidelines. Prior to the crisis posed by the pandemic and before Governor Baker’s order, hospitals and doctors were disincentivized from offering telehealth visits because health insurers did not cover them or would offer a smaller pay as compared to in-person visits. By introducing payment parity between in-person visits and virtual ones, the order expands access to care as current Massachusetts law allows insurers to limit coverage of telehealth services to insurer-approved health care providers in a telemedicine network.

The arrival of the pandemic and state of emergency has pushed for a rapid expansion of the use of technology in the practice of health care. Many of the barriers to access of health care via telemedicine have shifted in a relatively short period of time. In addition to Governor Baker’s order for payment parity, for example, the Governor allowed health care providers outside Massachusetts to obtain emergency licenses to practice within the Commonwealth. Before this and other similar licensure waivers, licensure requirements usually demand that providers be licensed within the state that their patients reside. By waiving this requirement, providers can expand the network of care they are able to provide, and telehealth serves to eliminate the only other barrier--distance.

An additional movement towards lifting barriers to the implementation of telehealth services is the relaxation of Health Insurance Portability and Accountability Act of 1996 (HIPAA) noncompliance enforcements by Health and Human Services, with the caveat that providers engage in good faith provision of telehealth during the national health emergency posed by the COVID-19 pandemic. HIPAA rules require the protection of privacy and security of health information. The discretionary enforcement order allows health care providers to use any non-public facing audio or video communication products during the COVID-19 public health emergency. This movement attempts to strike a balance between providing access to care during a national health emergency and the privacy protections against the risk of information exposure that are expected by patients in their interactions with their health care providers.

Another response to the public health crisis has been issued by the United States Drug Enforcement Agency, notifying that practitioners can, in light of the state of emergency, prescribe controlled substances in the absence of an in-person patient encounter. Prior, the prescription of controlled substances via telehealth evaluation was prohibited entirely. Now, prescribers are allowed to write prescriptions so long as: (1) the prescription is issued for a legitimate medical purpose in the course of the practitioner’s usual professional practice; (2) the telemedicine communication is conducted in a real-time, two-way, audio-visual communication system; and (3) the practitioner is acting in accordance to state and federal law.

As of May 2020, the Commonwealth of Massachusetts has initiated a four-phase reopening plan, beginning with hospitals and community health centers. The East Boston Neighborhood Health Center, for example, has indicated that they have an extensive screening process for patients who head over for in-person appointments, including the use of phone-tracking technology to notify staff when the patient has entered the building in an attempt to streamline entrance to examination rooms. The continued need to introduce methods of facilitating social distancing within the hospitals and community health centers indicates that there will be a continued incentive for the provision of telehealth services. The East Boston Neighborhood Health Center reports that, in the first phase of reopening, they expect 25% of visits to be in-person, with 75% of visits to continue to be via telehealth services such as video chat or over the phone.

While some find telehealth services to be inconvenient, due to technological challenges and care that requires more physical examination than can be completed over the phone or by video calling, it seems likely that we will see a blended version of care into the future. Health care practitioners have indicated that, while telemedicine is not a complete substitution of physically seeing and examining patients, being able to speak with a patient in combination with access to the patient’s medical history goes a long way in being able to diagnose and treat health problems. There is a growing sense of certainty that the use of a technology-based health care experience will “become the new normal.”

The natural question is how the legal landscape will have to adjust in response to the shift as society reopens and the balance of the role of technology in a “new normal” becomes more urgent to strike. Many of the barriers to the expansion of telehealth have been rapidly eliminated as a temporary alleviation in direct response to the public health crisis posed by COVID-19. This indicates that the changes are ephemeral; however, with the uncertainty posed by the length of the pandemic and the resulting impact this will have on the use of technology in health care, it seems likely that some of these legal shifts will need to be modified, rather than entirely eliminated, moving forward.

 

Zahraa Badat anticipates graduating from Boston University School of Law in May 2021.

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United States v. Safehouse: Could Philadelphia be the First State in the Nation to Implement a Supervised Drug Injection Site?

June 1st, 2020 in Analysis, Federal Legislation, Legislation in Court

The opioid epidemic is one of the worst public health crises affecting the United States, and the rate of deaths resulting from opioid overdose has steadily increased. According to the Centers for Disease Control and Prevention, a record high of more than 70,000 people died of a drug overdose in the United States in 2017, and over 47,000 of those deaths were from opioid overdoses. As lawmakers attempt to address this epidemic through public health initiatives , health advocates increasingly recommend using supervised injection sites to curb overdose deaths. Though legal barriers to this in the US exist, a recent District Court ruling in United States v. Safehouse may have paved the way for implementation of the first site of this kind in the US.

A safe injection site in Vancouver
Elana Gordon / WHYY

Injection sites provide a space where those using intravenous drugs can inject under the supervision of a medical professional ready to intervene in the event of an overdose, instead of unsupervised use where an overdose is more likely to be deadly.  Supervised injection sites, also called safe injection facilities or safe consumption spaces, are a tertiary preventative public health measure aimed at combating overdose deaths and decreasing public use. In these spaces, injection drug users can self-administer drugs they bring to the facility in a controlled, sanitary environment under medical supervision. The medical personnel on staff at the sites do not directly handle the drugs and are there purely to administer Naloxone, an overdose reversal drug, in case of an overdose.

Despite the growing global presence in Europe, Australia, and Canada, scientific support for safe injection sites, and the interest of several cities, including Philadelphia, Boston, New York, Seattle, and San Francisco it is not entirely certain they can be operated in the United States.  The Controlled Substances Act § 856, which regulates the production, possession, and distribution of controlled substances, makes it a criminal offense to maintain a drug-involved premises. Most academics agree that this Crack House Statute forbids safe injection sites and the courts can not definitively decide if safe injection site violate federal law until one is operational.

However, recently these assumptions have been called into question. Safe injection site proponents in many states have been appealing to legislatures and public health officials for funding.  This effort has been largely unsuccessful due to political opposition and the looming threat of a federal lawsuit. In Philadelphia, which has the highest overdose rate of any major US city, a poll found roughly half of Philadelphians support a proposed safe injection site.  Safehouse is a Philadelphia nonprofit that seeks to build the first safe injection site in the nation. In January 2018, Philadelphia health officials gave Safehouse permission to move forward with only private fundspreventing the need for legislative backing and appropriations.

In February 2019, federal prosecutors launched a civil lawsuit asking the U.S. District Court to rule on the legality of the Safehouse supervised consumption site plan, rather than waiting for the site to be built and then bringing federal criminal charges.  U.S. Attorney William McSwain, working with Pennsylvania-based prosecutors, is seeking a declaratory judgment that medically supervised consumption sites per se violate 21 U.S.C § 856(a)(2) the federal Crack House statute.

Picture by Holden Blanco

In February 2020, the court issued United States v. Safehouse, ruling that Safehouses plan to build a site where people could bring previously obtained drugs and use them under medical supervision for the purpose of combating fatal overdoses does not violate the Controlled Substances Act. Judge McHugh, looking at Congressional intent, ruled that §856 does not prohibit Safehouses proposed medically supervised consumption rooms because Safehouse does not plan to operate them 'for the purpose of unlawful drug use within the meaning of the statute. McHugh determines that at the time of enacting §856(a), Congress was focused on crack houses, not supervised drug injection sites. Even when amended in 2003, the focus was on drug-fueled raves. McHugh found that Congress neither expressly prohibited or authorized injection sites, so if §856(a) did not implicitly prohibit a consumption site, then implicit authorization naturally followed.

The question that the court addresses is whether the statute requires the defendant to know that third parties would enter their premises to consume illicit drugs, or rather that the defendant knowingly held their premises open for the purpose of facilitating illicit drug consumption. Judge McHugh concludes that the actor must have acted for the proscribed purpose to violate the statute.  Therefore, the accused under a §856(a)(2) violation must have the purpose of facilitating illegal controlled substance use in the maintenance of a property.

Safehouse is planning to make a place available for the purposes of reducing the harm of drug use, administering medical care, encouraging drug treatment, and connecting participants with social services. The district court reasons that because of this, it could not conclude that Safehouse has, as a significant purpose, the objective of facilitating drug use.

In the wake of the ruling, U.S. Attorney McSwain announced that this case is obviously far from over and it is likely that the federal government will continue to litigate it. It is not unlikely that the Court that may hear this case on appeal disagrees with the District Court’s construction and strikes the legality of a supervised injection site based not on the intent of the person who controls the space, but the intent of the attendee of the site to use illicit drugs at that site, which has been the prevailing opinion up until the point of this ruling.

While the Safehouse case stands for an unexpected legal victory by way of the possibility of a supervised injection site to be opened in the United States, Philadelphia itself may not be the first state in the nation to implement one. The public sentiment in the wake of the decision was largely negative, with the local community being virulently opposed to the idea of a site being opened in the neighborhood from fear of what dangerous circumstances a site might attract. Plans to open the Safehouse site were put on indefinite hold. While proponents of Safehouse won the legal battle, winning over the community seems to be more of uphill battle than anticipated.

At this point in time, the legal position of supervised injection sites in the United States is tentatively positive. States who are looking to introduce this harm reduction initiative, and to be the first in the nation to do so, should take the opportunity to garner support from legislatures and local health care communities. While Philadelphias progression seems to be stymied, the District Courts ruling provides significant legal precedent to ground encouragement for sites to be lobbied for in other states or cities that might not face the same type of community rejection that has prevented the opening of Safehouse.

 

Zahraa Badat anticipates graduating from Boston University School of Law in May 2021.

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The Waiting Game: Supreme Court’s Decision on the Lawfulness of the Deferred Action for Childhood Arrivals (DACA) Program

June 1st, 2020 in Administrative Law, Analysis, Federal Legislation

As May 2020 comes to an end, many eagerly await a Supreme Court decision that could affect the futures of thousands of DACA recipients and shape immigration policy as we know it. The Deferred Action for Childhood Arrivals (DACA) is the program that is currently under scrutiny; in particular the Supreme Court will be deciding on the following two issues: (1) “Whether or not the Trump administration’s decision to end DACA can be reviewed by the courts at all?” and (2) “Whether or not the Trump administration’s termination of DACA was lawful?” This program was first instituted under the Obama Administration as an executive action to do the following for qualified Dreamers who completed the process of a first-time or renewal application: (1) protection from deportation for a time period, and (2) work authorization for a set period of time.

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During the Obama Administration, the DREAM Act of 2010 (H.R. 6497) was proposed and passed in the House but did not pass the Senate. The purpose, like its other variations, was intended to aid undocumented individuals by providing them a way to eventually reach legal status, because they were brought to the United States when they were children and have to live with a continued sense of uncertainty that attaches to being undocumented. In its stead, the Obama Administration designed a temporary solution, which came to be known as DACA, in which an individual could qualify by meeting a series of requirements (i.e. arriving in the United States before they turned sixteen years old).

 This policy gave a lot of individuals hope, but everything changed with the arrival of the Trump Administration. The Trump Administration’s policies quickly took on an anti-immigration rhetoric, and his Administration rescinded the policy on the basis that it was illegal. Thereafter, lawsuits followed with Department of Homeland Security, et al., v. Regents of the University of California, et al. reaching the Supreme Court level.

Regarding the two issues laid out above, there are many ways the decision could go, but the one that would have the worst effect on DACA recipients would be the court siding on the Trump Administration’s side in saying that “DACA was an unconstitutional use of presidential power to begin with.” This could have a devastating impact on DACA recipients especially at a time when they find themselves in the midst of the COVID-19 global pandemic alongside the rest of the world.

For example, ABC News quotes a college student saying “As a DACA recipient, and everything going on with COVID-19 and as well with the Supreme Court ruling coming at any time -- It's been very stressful.” On top of college, she works with authorization under DACA, but COVID-19 has added other stressors as she finds herself as the only provider at home. Ending DACA at a time like this would end up being very challenging and harmful for individuals like these who are trying to stay afloat during this pandemic.

Nevertheless, as this country struggles to recover from this pandemic, the most interesting development has happened to this Supreme Court case showing how vital Dreamers and immigrants have been to making this country function smoothly despite the havoc wreaked by the virus. A CNN report discusses how: “A letter sent to the Supreme Court states approximately 27,000 Dreamers are health care workers -- including 200 medical students, physician assistants, and doctors -- some of whom are now on the front lines in hospitals across the country.” The Supreme Court agreed to take this brief into consideration, and it makes one wonder whether the timing of the decision during a pandemic and the supplemental brief will have any impact at all?

Despite the positive contributions of these and other essential individuals, there have been a lot of issues that have also surfaced reflecting further difficulties that Dreamers are enduring. An example of this is federal funding under CARES Act. The pandemic has had even more disastrous effects on particular communities, and though the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 was passed with a part of it designed to provide aid and federal dollars to help students, and yet the benefits are not available to everyone. DACA students could not qualify to receive money under this Act, and it was one of the reasons the Democrats reached out to Secretary DeVos to change the language but to no avail. The House has brought another bill to the forefront, the Heroes Act, which proposes many changes; one aspect of which directly seeks to overturn “Secretary DeVos’s decision to exclude DACA students from the emergency aid.”

 This is a hopeful change, but the culmination of issues including the Supreme Court decision yet to be released, the uncertainty of COVID-19 on employment, health, and education, and a delay in passing the House bill paints a bleak picture.

Yet, at the end of the day, it is as Antonio Alarcon described it on CNN: “We’re hopeful that the Supreme Court will see the humanity of our stories and see the humanity of our families, because at the end of the day, this is a nation of immigrants.”

 

Nabaa Khan anticipates graduating from Boston University School of Law in May 2021. 

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To Combat Problematic PBM Practices, Eliminate the Rebate Safe Harbor

May 21st, 2020 in Administrative Law, Federal Legislation

Pharmacy Benefit Managers (“PBMs”) are at the center of the discussion about the causes of high pharmaceutical prices and efforts to reduce the nations pharmaceutical spending. Currently over 80% of pharmaceuticals in the United States are purchased through PBMs. While PBMs were originally intended to reduce drug costs to consumers, they now face criticism for actually increasing drug prices. A 2016 study found $23billion of health care spending was directly attributable to PBMs. In order to reduce pharmaceutical spending in the United States, legislative efforts must aim to align the incentives of PBMs and their payer clients. One such effort would be to eliminate the rebate safe harbor.

PBMs are for-profit entities that broker deals in the pharmaceutical supply chain. PBMs are entitled to retain profits for the services they provide. However, the problematic practices of PBMs all have to do with the amount of profit they are able to retain. PBMs act as middlemen between payers, pharmaceutical manufacturers, and pharmaceutical retailers. PBMs use their payer client networks to create a large network that has more buying power in order to negotiate for lower prices from pharmaceutical manufacturers, usually in the form of rebates.

The rebate system is extremely controversial and receives a lot of criticism. It works like this: PBMs negotiate for lower drug prices for their health insurance payer clients by offering different types of placement on health plan formularies.  Manufacturers agree to give rebates to the health plan for use of the drug based on where the drug is listed on the health plan formulary. When the drug is paid for by the health plan, the manufacture gives a discount to the plan in the form of a rebate. The rebate passes through the PBM to get to the plan, and the PBM often retains a portion of the rebate as part of the contract (“Some research has found that major PBMs can retain around 38-40 percent of rebate dollars collected from drug manufacturers”).  The rebate that the PBMs negotiate is not a rebate that is given to the consumer directly at the pharmacy; the purported benefit of the rebate to the beneficiary is a decrease in premiums.

The central concern is that the reduction in price from the rebate is benefiting PBMs, drug manufactures and health plans, but not patients.  Health plan beneficiaries often have deductibles and co-insurance payments, and the price they pay is not based off of the discounted price the insurer gets, but rather the list price of the drug  (“many rebates do not flow through to consumers at the pharmacy counter as reductions in price. In these instances, beneficiaries experience out-of-pocket costs more closely related to the list price than the rebated amount during the deductible, coinsurance”). The rebate does not apply to the price that a beneficiary directly pays for a drug, it only applies when the health plan is covering the cost.

Niall Carson / PA Wire / PA Images

The rebate system is also harming patients by driving up the prices of drugs.  The system creates perverse incentives for PBMs, where they are incentivized to include drugs with higher list prices on formularies. This is because the portion of the rebate that PBM retains is based off of the amount of savings, meaning that a higher priced drug generates a higher rebate.  In addition to incentives placed on PBMs to select higher priced drugs, the system can also incentivize manufacturers to raise or keep list prices high.  Logically, if PBMs are selecting the higher priced drugs in order to get larger rebates, drugs with lower list prices will not be selected for preferred placement on formularies.  Lower list prices reduce the savings generated which results in removal from formulary. The nature of the rebate system means that rebates effectively function as kickbacks to PBMs.

PBMs are subject to a host of federal regulations due to the highly regulated nature of health care.  The industry is affected by federal regulations because PBMs contract with the federal government to administer drug benefits for Medicare Part D and because they submit claims to federally funded programs, Medicaid and Medicare, on behalf of their clients. The Federal Anti-Kickback Statute (“AKS”) “prohibits offering, paying, soliciting or receiving anything of value to induce or reward referrals or generate federal health care program business.” 42 U.S.C § 1320a-7b(b) (2012).  The AKS and subsequent regulations include voluntary safe harbors, which “describe various payment and business practices that, although they potentially implicate the federal anti-kickback statute, are not treated as offenses under the statute.” 42 C.F.R. §1001.952 (2018). The AKS has a mandatory discount safe harbor, meaning that the government will not prosecute for arrangements that fall within the discount safe harbor requirements. 42 U.S.C. § 1320a-7b(b) (2012). The discount safe harbor applies to PBMs because they use rebates to negotiate deals between drug manufactures and clients.  These rebates fall within the definition of kickbacks under AKS because the PBM retains, as revenue, a portion of the rebates that it negotiates for each drug, and the amount they are paid is based on how much that drug is purchased using the rebate. 

While these rebates are technically a violation of AKS, they do not currently put PBMs at risk for prosecution under the statute because the rebates are a form of discount, and, consequently, the discount safe harbor applies. In order to be protected by the safe harbor, PBM arrangements for rebates with manufacturers and clients must strictly comply with the requirements or else the PBM is in violation of AKS. 42 U.S.C. § 1320a-7b(b)(3)(A) (2012); 42 C.F.R. § 1001.952(h) (2018). This safe harbor, as presently understood, applies to prescription drug rebates paid by drug manufacturers to PBMs, Medicare Part D, and Medicaid managed care organizations, and thus protects the rebates from violation of the Anti-Kickback Statute.

On February 6, 2019, the HHS Office of the Inspector General (“OIG”) published a proposed rule to eliminate the AKS safe harbor applicable to PBMs. The proposed rule would have revised the discount safe harbor “to explicitly exclude from the definition of a discount eligible from safe harbor protection certain reductions in price or other remuneration from a manufacturer of prescription pharmaceutical products to plan sponsors under Medicare Part D, Medicaid managed care organizations ... or pharmacy benefit managers under contract with them.” This would have meant that the rebates from manufactures to PBMs would constitute kickbacks and put the PBMs at risk for AKS violation. The basis for the proposed rule was that the safe harbor is operating to decrease transparency and increase costs to consumers, instead of increasing transparency and lowering costs to consumers.

The proposed rule would have removed the incentive that PBMs have to negotiate for rebates on their own behalf instead of on behalf of the plans and their beneficiaries.  Under the terms of the proposed rule, safe harbor protection would have still applied to discounts that the patient receives at point of sale. This protects the consumer interest by ensuring that they receive the discount directly, and allows PBMs to still use discounts as a negotiating tool for their clients. The proposed rule would have also granted safe harbor protection to PBM service fees, which would allow PBMs to continue to profit, at fair market value, from the services they provide.

The response to the proposed rule was, naturally, divided. Proponents of the proposed rule argued it would fulfill its intended purpose and lower the list prices of drugs to price that PBMs are currently negotiating for after rebates, and also lead to increased use of lower cost generics.  That result is supported by analyses prepared by Milliman for HHS, which estimate that implementation of the proposed rule would lead to up to a ninety-eight billion dollar reduction in spending by federal programs over ten years.  However, the PBM industry argued the rebates do not have the negative effects that HHS claim, and that  there are no “viable alternatives to rebates, in light of drug manufacturers’ inability to offer up-front discounts under current antitrust case law.”  Industry push-back also contended that the prohibition on rebates would lead to increased premiums because the use of rebates allows plans to lower premiums. Unfortunately, the Trump Administration sided with the industry perspective and reversed course and withdrew the proposed rule.

Eliminating the rebate discount safe harbor would have had a significant impact toward eliminating a major conflict of interest inherent in the PBM model. If the administration is not willing to put federal programs and beneficiaries ahead of industry, then Congress must enact legislation that achieves the result necessary to reign in excessive and unnecessary pharmaceutical drug spending.

Rebecca Mashni graduated from Boston University School of Law in May 2020.

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COVID-19’s Economic Impact: Can Amending the Fair Debt Collection Practices Act Help?

May 21st, 2020 in Federal Legislation

COVID-19’s impact on the world has been unsparing: it has taken thousands of loved ones and overburdened healthcare systems. Its economic impact has been no less devastating. Government-mandated shutdowns have forced many small businesses to shut their doors. Those lucky enough to remain open have seen a marked decrease in customers. A McKinsey & Company survey polling small and medium-sized businesses found that 59% of small or medium-sized businesses reported experiencing a “significant” drop in personal and business income. 25% had faced such a precipitous drop that they expected they would have to file for bankruptcy in the coming months. This impact will have a broad effect: these businesses represent 48% of the U.S. economy and employ over 60 million people.

COVID-19 has also been unsparing when it comes to consumers. Not only are those employed by small or mid-sized businesses losing their jobs, but even those working at large international companies are also losing their jobs or facing pay cuts. Self-employed individuals have seen their business opportunities vanish. Right now, because of moratoria on foreclosures, evictions, and debt collection, these issues are looming when the overall economy begins to resume. Without any intervening forces, a wave of evictions, foreclosures, repossessions, and bankruptcies is likely to come.

Currently, little protects consumers and small businesses during emergencies or disasters. While larger institutions are expected to have plans, even participating in stress tests with regulators, small businesses usually do not have such protective measures. Indeed, because so many operate on a thin profit margin, investing in plans to address something that seems unlikely to ever happen may seem like a waste of money. Moreover, consumers are not always going to be financially prepared either. The average American has $8,863 in their savings account. This number decreases with age: for example, young single adults under 34 have an average of $2,729 in savings. There are racial disparities too, with an average of $1,500 for Hispanic and $1,000 for Black savings account balances. (Note that this data does not include the unbanked, which is largely composed of Black and Hispanic households.)

In March 2020, Senator Sherrod Brown (D-Ohio) introduced the Small Business and Consumer Debt Collection Emergency Relief Act of 2020 (the “Act”). The Act amends the Fair Debt Collection Practices Act (“FDCPA”) to provide temporary forbearance periods after “major disasters or emergencies.” The Act could provide much-needed relief to small businesses and American consumers by expanding on current protections currently provided by the FDCPA.

Current Protections

The FDCPA became law in 1978. Its purpose was to crack down on abusive debt collection tactics. In drafting the law, Congress found that abusive debt collection practices led to “personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” The FDCPA covers several types of consumer debts: mortgage, credit card, student loan, and medical debts, just to name a few. Debts owed by businesses are currently not covered by the FDCPA.

One of the biggest protections afforded under the FDCPA is limiting how and when a debt collector can contact a debtor. Debt collectors cannot harass debtors, misrepresent what can occur if the debtor fails to pay, or contact the debtor in the middle of the night. While the FDCPA is imperfect—consumers regularly report violations—it provides an avenue of recourse and is regularly enforced.

The Act’s Proposals

The Act seeks to amend the FDCPA in several ways. First, the Act amends section 3 of the FDCPA to restrict debt collection during a national disaster or emergency. The Act defines “national disaster or emergency” two ways: (1) one declared by the president under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act; or (2) “an emergency involving Federal primary responsibility that is determined to exist by the President” under section 501 of that act. Next, the Act prohibits debt collectors from numerous actions ranging from charging higher fees or interest rates to seizing the property or asset at issue. Moreover, the Act pauses any legal action against the debtor, even if the proceeding began before the disaster was declared. Finally and crucially, the Act extends FDCPA protections during national disasters or emergencies to small businesses.

The Act is a way of addressing some of the consumer protection shortcomings of the CARES Act. For example, there is a 120 day moratorium on foreclosures and evictions, but only for those who have federally-backed mortgages, live in buildings financed by federally-backed mortgages, or receive rental funding through a federal program. While this covers a significant number of individuals and homes, about 30% of Americans are left out of this provision. The debt collection moratorium under the Act would extend to those Americans. It also addresses the issue the COVID-19 pandemic has made clear: small businesses suffer when they are forced to shut down, as they may not always have the resources or option to continue operating virtually. Their financial troubles largely came as the result of a forced shutdown. More generally, the Act’s amendments can cover future national emergencies or pandemics.

While this is not an overall solution to COVID-19’s economic impact, it can provide some relief to consumers and small businesses. It may allow people to be more understanding of opening up gradually rather than quickly, too. While it does not solve a reduced or lack of income, having some assurance that the car will not be repossessed or a debt collector will not be regularly calling can provide some much needed relief in what has been a stressful time. Currently, debtors do not have such relief. Despite the pandemic, debt collectors have still been calling consumers. In Massachusetts, the Attorney General’s Office sought to ban debt collection during the height of the pandemic. However, a federal judge ruled against the state’s emergency resolution. FTC guidance is not particularly helpful either: it recommends talking things out with the debt collector and asking that they stop calling. Congress has already done a lot through the CARES Act to help consumers during the pandemic. To further assist them, Congress should pass Senator Brown’s bill. 

Kathryn Buckley anticipates graduating from Boston University School of Law in May 2021.

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Is the Johnson Amendment Constitutional?

May 20th, 2020 in Analysis, Federal Legislation, Legislation in Court, Lobbying

My previous Dome blog entry discussed the Johnson Amendment and the fight that has surrounded the amendment since its creation in the 1950s. The Johnson Amendment was added to Section 501(c)(3) of the U.S. tax code by then-Senator Lyndon B. Johnson to limit the political activity of 501(c)(3) organizations. The Amendment prohibits 501(c)(3) organizations from endorsing or opposing political candidates. Many organizations have been trying to repeal the Johnson Amendment for years, and many argue (including members of Congress) that it violates the First Amendment of the U.S. Constitution.

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Two vocal opponents of the Johnson Amendment (and the sponsors of the Free Speech Fairness Act in both houses of Congress) Senator James Lankford and Congressman Steve Scalise argue that the Amendment must be repealed to protect the First Amendment rights of 501(c)(3) non-profit employees. They argue the Bill of Rights protects the right of all Americans to freely express their ideas and opinions without persecution from the government, and the Johnson Amendment violates this right by stripping 501(c)(3) employees from being able to speak their minds about political issues. As discussed in my previous post, the Johnson Amendment prohibits 501(c)(3) employees from endorsing or opposing candidates, and violations of the Amendment risks punishment by the IRS either by fine, revocation of the organization’s tax-exempt status, or both. This, therefore, begs the question of whether the Johnson Amendment does in fact violate the First Amendment. This Dome blog post will look at legal precedent to see if the Amendment has been challenged for its constitutionality in the past, and if so, the arguments the court made in their decision.

Before going into court cases about whether or not the Johnson Amendment actually violates the First Amendment, it is important to look at the text itself. The text of the First Amendment reads:

“Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.”

Members of Congress and other organizations who oppose the Johnson Amendment mainly argue that it violates the freedom of speech, which is in fact why the current bill before Congress attempting to repeal the Amendment is titled the “Free Speech Fairness Act.” Within the text of the First Amendment, they argue that the Johnson Amendment is “abridging the freedom of speech” of 501(c)(3) tax-exempt nonprofit employees, but in particular religious ones, such as pastors, priests, and rabbis.

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But has the constitutionality of the Johnson Amendment actually been determined by the Supreme Court as it applies to religious organizations? The answer, unfortunately, is no. However, two U.S. Court of Appeals circuits have upheld the Amendment as constitutional in the past when applied to religious organizations. The first case, Christian Echoes Nat'l Ministry v. United States (1972), involved a nonprofit religious corporation contesting the revocation of its 501(c)(3) tax-exempt status by the IRS as punishment for violating the Johnson Amendment. Through various appeals and remands, the ultimate holding by the Tenth Circuit Court of Appeals was that the organization no longer qualified as a tax exempt organization under section 501(c)(3) of the tax code. As one argument against the revocation of their status, Christian Echoes argued the Johnson Amendment was unconstitutional and violated their right to free speech. However, the court held that “in light of the fact that tax exemption is a privilege, a matter of grace rather than right... the limitations contained in Section 501(c) (3) withholding exemption from nonprofit corporations do not deprive Christian Echoes of its constitutionally guaranteed right of free speech.” Christian Echoes Nat'l Ministry v. United States, 470 F.2d 849, 857 (10th Cir. 1972). The court therefore determined the taxpayer must refrain from these political activities to obtain “the privilege of exemption,” which Christian Echoes benefited from until their status was revoked.

The argument made by the court in Christian Echoes is very similar to the argument made by proponents of the Johnson Amendment, such as the Freedom From Religion Foundation, who argue because religious organizations benefit essentially from a government subsidy, in exchange for that subsidy they relinquish some of their rights. These rights can at any time be reclaimed, but at the cost of losing the subsidy, ultimately leaving the choice between the two up to individual organizations.

The District of Columbia Circuit Court of Appeals has also taken up this issue more recently in Branch Ministries v. Rossotti (2000), regarding the constitutionality of the Johnson Amendment, but for violation of a different part of the First Amendment. In this case, a church had its tax-exempt status revoked for intervening in political campaigns, violating the Johnson Amendment. The church argued that revoking their tax-exempt status was a violation of the Free Exercise clause of the First Amendment, as in violating their right to freely exercise religion. To show the Free Exercise clause had been violated, the church had to establish their “free exercise right has been substantially burdened.” Branch Ministries v. Rossotti, 211 F.3d 137, 142 (2000). The court, however, held the Johnson Amendment did not violate the First Amendment because the church failed to establish that their free exercise right had been substantially burdened. Despite the claim by the church that by revoking their tax exempt status would threaten its very existence, the court determined this was overstated because the impact of revocation “is likely to be more symbolic than substantial,” because if they stop intervening in political campaigns they can regain their tax-exempt status, and even if they do not, “the revocation of the exemption does not convert bona fide donations into income taxable to the Church.” Therefore, the burden is not substantial enough to be considered a violation of the First Amendment. See, Branch Ministries, 211 F.3d at 142-143.

It seems currently that courts are finding the Johnson Amendment does not, in fact, violate the First Amendment. The Supreme Court has said in the past they believe tax benefits nonprofits are given are “a form of subsidy that is administered through the tax system,” which seems in line with the view of supporters of the Johnson Amendment and these two Court of Appeals cases. See, Regan v. Taxation with Representation, 461 U.S. 540, 544 (1983). They have not, however, delivered a decision on the constitutionality of the Johnson Amendment as it applies to religious organizations. Therefore, despite the Court of Appeals cases, the fight over this issue is unlikely to end until the Supreme Court formally rules on the Johnson Amendment as it applies to religious organizations once and for all.

Kate Lipman anticipates graduating from Boston University School of Law in May 2021.

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COVID-19 is a Perfect Opportunity to Reinvent America’s Mass Public Transit

May 20th, 2020 in Budget & Appropriations, Federal Legislation

As the coronavirus (Covid-19) has swept the globe, its impact on global health has been massive. However, this pandemic is not only wreaking havoc on the world’s physical health, but also its financial health. Throughout March 2020, as governments globally imposed restrictions on movement and on business, stocks plummeted. In response, the Federal Reserve slashed interest rates and has attempted to provide new sources of funding for business. Additionally, the federal government enacted a $2 trillion stimulus package. This package includes direct aid for businesses as well as individuals, in addition to support for the medical industry and other key parts of the economy. However, this bill merely provides a one-time cash infusion for a struggling and increasingly desperate economy. The US approach differs from what other countries have provided their citizens during this crisis. Other methods are more akin to ongoing support rather than a one-time payment. In fact, the UK government, in an attempt to curb unemployment, has promised to subsidize up to 80% of any worker’s salary who is facing unemployment, up to $2,900 a month. Many other countries have followed this model of providing continuing support to workers and businesses in an effort to limit unemployment. This is in contrast to the United States where, even after this stimulus was enacted, unemployment figures in the United States have climbed precipitously. Consequently, there have been discussions in Washington of a large infrastructure spending bill, akin to several New Deal programs, that would create thousands of jobs to help the United States economically recover as the health crisis recedes.

It has been reported that this infrastructure bill could be a multi-trillion dollar project. However, it is not clear that an agreement will be reached. For the duration of the Trump Presidency, infrastructure has been seen as a potential compromise issue that both Democrats and Republicans could support, yet an agreement has been elusive. Earlier this year, House Democrats released a proposal that would direct $760 billion towards rebuilding American highways, airports, and other infrastructure, with $10 billion going towards building community health centers. Additionally, this proposal included $329 billion for transportation systems, including $105 billion for transit agencies and maintenance. However, Trump and Congressional Democrats were not able to agree on a compromise agreement. Now that there is increased political pressure to provide jobs, an infrastructure deal is more likely than ever to occur. When it does, Congress should include vigorous funding specifically for mass transit.

BAKDC / Shutterstock.com

First, the construction of mass transit can achieve the short term goal of the infrastructure bill: to create jobs. In fact, a recent light rail construction project between Durham County and Orange County in North Carolina was projected to create 20,000 jobs at a cost of just $2.5 billion. While it is unlikely that these job returns per investment would hold constant, these numbers suggest that a $1 trillion investment could yield 8,000,000 jobs. This would put a sizeable dent in to projected 20 million unemployment claims that could be filed as a result of the pandemic and subsequent economic downturn.

However, the United States should not throw money at a short term solution, without considering long term objectives as well. Investment in mass transit not only would result in short term jobs, but it would also yield many long term benefits that would impact society for a substantial period of time.

Studies at Harvard University indicate that commuting time is the single strongest factor in predicting the odds of escaping poverty. While this may be a function of poverty inherently being a hard burden to escape and wealthier individuals live near good transit options, this may not be the sole explanation. After housing, transportation is the biggest expense for most Americans, especially those settled along the urban fringe. In fact, 44% of all multifamily section 8 properties in the nation spend on average more than 15% of their income on transportation costs, effectively making these properties unaffordable. Yet increased availability of mass public transit could help solve this issue. Undeniably, mass transit is cheaper than the alternative: owning a car. On average a household can save around $10,000 annually by owning one fewer car and utilizing public transit.

istockphoto / The Fiscal Times

However, American mass transit systems lag behind those of other countries. New York is the only US city where rail network ridership has increased since 2012. North America as a whole only accounts for 3.7 billion of the world’s 53 billion rail passengers. Ridership in Asia increased to 26 billion between 2012 and 2017, Europe accounts for 10 billion riders, and Latin America 6 billion. Further, American cities with popular transit systems are generally located in the north and on the coasts of the country. While many attribute this lack of public transit to America’s sprawl, a look at Canada, an equally car centric country, dispels this theory. Toronto, Montreal, and Vancouver all have buses, rapid transit, and commuter rail systems. Rather, reports have postulated that American mass transit systems have failed to gain steam because the demand for them is not present, and American’s would rather drive. Further, demand could be low because in cost cutting efforts, many bus and rail lines run less than once every 30 minutes. This lack of service restricts people’s lives in such a way that anyone who can drive, will drive.

Therefore, as Congress and the President work out an infrastructure bill in the coming days and weeks, they should invest heavily in mass public transit. Not only will this plan help solve the initial goal of providing jobs to those left unemployed by COVID-19, but it will also provide significant long term benefits to lower income groups. However, this bill must also create a framework to continue to support mass public transit projects. While it is undoubtedly beneficial to build these projects, their long term impact can only be realized if they are funded sufficiently to become a viable and preferable option to cars. Legislators must ensure that this massive expenditure is structured in a way that it can provide lasting change and provide more benefits than a one time influx of cash ever could.

Gray Louis anticipates graduating from Boston University School of Law in May 2021.

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Mandatory Arbitration Clauses, Class Action Waivers, and the Need to Pass the FAIR Act

May 19th, 2020 in Analysis, Federal Legislation, Legislation in Court

Mandatory arbitration clauses and class action waivers have become a fact of life for many American employees.  A mandatory arbitration clause is contractual language that a company has a worker sign requiring that worker to resolve legal disputes in private arbitration — “a quasi-legal forum with no judge, no jury, and practically no government oversight”.  A class action waiver is contractual language that a company has a worker sign that forfeits that employee’s right to file any claims collectively with other similarly situated workers.  These provisions effectively strip away the rights of employees to challenge their employers in court with claims alleging wage and hour violations, discrimination, sexual harassment, and more.  Congress must enact the FAIR Act so that our legal system vindicates employee rights to seek justice, access our courts, and end abusive employer practices.

Historically, it was commonplace for American courts to decline legal enforcement of arbitration agreements, especially adhesive contracts (Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018)).  When Congress passed the Federal Arbitration Act (FAA) in 1925, legislative history suggests that the bill was intended to “enable merchants of roughly equal bargaining power to enter into binding agreements to arbitrate commercial disputes,” not to enforce mandatory arbitration agreements and class action waivers against workers in employment contracts.  Members of Congress envisioned the FAA to provide an “opportunity to enforce…an agreement to arbitrate, when voluntarily placed in the document by the parties to it”; they did not intend to enforce the law in cases “where one party sets the terms of an agreement while the other is left [to] take it or leave it.”  Until recently, courts upheld this interpretation of the FAA’s history and purpose (Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U. S. 395 (1967))).

However, starting in the 1980s, this all changed.  In Gilmer v. Interstate/Johnson Lane Corp. (500 U. S. 20 (1991)), the Supreme Court held that the FAA requires mandatory arbitration agreements to be enforced against claims arising under the Age of Discrimination in Employment Act of 1967 (ADEA) antidiscrimination law.  Later, in Circuit City Stores, Inc. v. Adams (532 U. S. 105 (2001)), the Court held that the FAA’s §1 exemption for employment contracts involving “any...class of workers engaged in foreign or interstate commerce” should be construed narrowly to only apply to employment contracts involving transportation workers. 

These landmark decisions spurred a widespread use of arbitration clauses in employment contracts, and emboldened employers to challenge state common law and statute protections that historically limited the enforceability of mandatory arbitration provisions and class action waivers.  In 2011, the Supreme Court effectively overturned an earlier 2005 California Supreme Court case that had found legal protections for employees and consumers against the enforcement of class action waivers (AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011)).  In Am. Express Co. v. Italian Colors Rest. (570 U. S. 228 (2013)), although Respondents argued that the arbitration and class action waiver provisions in their contract were unenforceable because they made effective vindication of their legal rights prohibitively expensive, the Supreme Court held that: 1) the FAA presumptively requires enforcement of contracts of adhesion; and 2) the “effective vindication rule” does not require that one’s assertion of rights be affordable or not cost-prohibitive, but rather only requires that one’s assertion of rights be not prohibited outright.

Eventually, the Supreme Court directly addressed the question of whether employment contracts that include mandatory arbitration provisions are enforceable in Epic Sys. Corp. v. Lewis.  Employees argued that under the “saving clause” of the FAA, contractual language that violates the National Labor Relations Act (“NLRA”) right to engage in “other concerted activities for the purpose of collective bargaining or other mutual aid or protection” can be found unenforceable consistent with the FAA; this interpretation was adopted by the Ninth Circuit and consistent with NLRB precedent.  However, the Supreme Court held that neither the “saving clause” nor the NLRA altered the legal requirement to enforce arbitration agreements prescribed by the FAA.  The Court reasoned that state unconscionability defenses were not valid if they “interfer[ed] with fundamental attributes of arbitration,” such as individualized proceedings.  Furthermore, the Court found that §7 of the NLRA did not guarantee employees the right to class or collective action procedures.  Finally, the Court held that Chevron shouldn’t apply – based upon the NLRB’s 2012 decision – because: 1) the NLRB was interpreting the FAA, an act that the NLRB doesn’t administer; 2) the NLRB and the Solicitor General dispute the NLRA’s meaning and application; and 3) “there is no unresolved ambiguity for the Board to address.”

With arbitration clauses effectively privatizing our judicial system for many American workers, employees face information asymmetry and an imbalance of negotiating power with firms, and are therefore unable to contract under fair conditions.  By implementing changes to our laws that prohibit employers from forcing employees to sign away their rights, society can improve both economic efficiency and equity within labor markets.  Congress can do this by enacting the Force Arbitration Injustice Repeal (FAIR) Act.  This Act, passed by the House of Representatives in September of 2019, would ban companies from requiring workers and consumers to resolve legal claims in private arbitration, and would invalidate current mandatory arbitration clauses and class action waivers that have already been signed in consumer or employee contracts.

Passage of the FAIR Act would protect over 60 million American workers who have signed contracts with mandatory arbitration clauses and class action waivers.  Marginalized communities (including women and communities of color), who are the most likely to be subjected to arbitration agreements because they constitute a huge share of the labor pool in industries like education, retail, and healthcare that use mandatory arbitration agreements and class action waivers the most, would greatly benefit from the FAIR Act by gaining access to the courts to litigate sexual harassment claims, sex discrimination claims, and racial discrimination claims.  Furthermore, passing the FAIR Act would reduce the bias in employment disputes against employee interests, resulting from the conflict of interest between employers and arbitrators (employers pick the arbitration firm that will hear their case, pay the cost to hire the arbitrator or panel of arbitrators, and usually have a “cozy” relationship with the arbitrators they hire).  Studies have found that, because of the “repeat player effect,” arbitrators are often biased toward employers who continuously pick them to handle their cases; Professor Amsler from Indiana University Bloomington demonstrated that “workers are nearly five times less likely to win their case if the arbitrator had handled past disputes involving her employer.”

The FAIR Act has been introduced by Senator Blumenthal in the Senate chamber, and has thirty-eight co-sponsors, but lacks any Republican co-sponsors and has failed to receive any congressional action since it was initially referred to the Committee on the Judiciary.  While passage remains unlikely, it is incumbent on Congress to continue fighting for the FAIR Act.  Given the Supreme Court’s conservative crusade to interpret the FAA in a way that guts workers’ rights over the last forty years, it is crucial that Congress pass this bill to promote economic, labor, humanitarian, and social justice for all Americans.

Samuel Shepard graduated from Boston University School of Law in May 2020.

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