ER Doctors Call Private Equity Staffing Practices Illegal and Seek to Ban Them

Link: https://khn.org/news/article/er-doctors-call-private-equity-staffing-practices-illegal-and-seek-to-ban-them/

Excerpt:

A group of emergency physicians and consumer advocates in multiple states are pushing for stiffer enforcement of decades-old statutes that prohibit the ownership of medical practices by corporations not owned by licensed doctors.

Thirty-three states plus the District of Columbia have rules on their books against the so-called corporate practice of medicine. But over the years, critics say, companies have successfully sidestepped bans on owning medical practices by buying or establishing local staffing groups that are nominally owned by doctors and restricting the physicians’ authority so they have no direct control.

These laws and regulations, which started appearing nearly a century ago, were meant to fight the commercialization of medicine, maintain the independence and authority of physicians, and prioritize the doctor-patient relationship over the interests of investors and shareholders.

Those campaigning for stiffer enforcement of the laws say that physician-staffing firms owned by private equity investors are the most egregious offenders. Private equity-backed staffing companies manage a quarter of the nation’s emergency rooms, according to a Raleigh, North Carolina-based doctor who runs a job site for ER physicians. The two largest are Nashville, Tennessee-based Envision Healthcare, owned by investment giant KKR & Co., and Knoxville, Tennessee-based TeamHealth, owned by Blackstone.

Author(s): Bernard J. Wolfson

Publication Date: 22 Dec 2022

Publication Site: Kaiser Health News, California HEalthline

Billionaire Ken Griffin Sues IRS Over Leak Exposing Taxes Paid By 25 Richest Americans

Link: https://www.thewealthadvisor.com/article/billionaire-ken-griffin-sues-irs-over-leak-exposing-taxes-paid-25-richest-americans

Excerpt:

Hedge fund billionaire Ken Griffin, who founded and helms trading powerhouse Citadel, has sued the Internal Revenue Service and Treasury Department for alleged negligence in maintaining safeguards for confidential tax returns after a bombshell report last year cited a trove of IRS data in a series of articles detailing the incomes and taxes paid by some of the world’s richest people.

KEY FACTS

In a federal suit filed with the Southern District of Florida, Griffin alleged the IRS has “willfully and intentionally” failed to establish adequate safeguards to protect confidential tax return information after nonprofit news outlet ProPublica published an article citing the data in June 2021 and then followed up with several pieces, including some targeting Griffin’s political lobbying.

The suit, first reported by Wall Street Journal, claims the disclosure of Griffin’s tax return information to ProPublica was not “requested by the taxpayer,” and as a result entitles the billionaire to punitive damages totaling at least $1,000 per unlawful disclosure and attorneys’ fees, according to a section of the tax code.

It is a felony for a federal employee to leak a tax return or information about a tax return, but the source of the data remains unknown despite some lawmakers claiming there “is little doubt” the confidential information “came from inside the IRS;” the IRS and Justice Department have stated they are investigating the leak, but no formal charges have been filed.

Author(s): Jonathan Ponciano

Publication Date: 13 Dec 2022

Publication Site: The Wealth Advisor, Forbes

Appeals Court Rules In City’s Favor Following Challenge From The Houston Fire Firefighters’ Relief And Retirement Fund

Link: https://cityofhouston.news/appeals-court-rules-in-citys-favor-following-challenge-from-the-houston-fire-firefighters-relief-and-retirement-fund/

Excerpt:

Today, the Court of Appeals for the First District of Texas reversed and rendered a decision in favor of the City of Houston against the Houston Firefighters’ Relief and Retirement Fund (HFRRF).

HFRRF had challenged the constitutionality of a Texas statute designed to reform the City’s firefighter pension system that ensures that the actuarial assumptions for determining the City’s contribution rates are based on sound actuarial principles and establishes a process for setting the contribution rate when the City’s and HFRRF’s proposed contribution rates differ by more than two percentage points.

“The City of Houston has consistently maintained the constitutionality of the historic pension reform and welcomes the appeals court ruling,” said Mayor Sylvester Turner. “The firefighters’ pension is now 93 percent funded – compared to just 80 percent funded pre-pension reform – and is actuarially sound. It is important to note that the three pension systems – municipal, police, and fire – are healthier today because of the pension reform we have put in place.”

The latest ruling is the second time the Court of Appeals has upheld the constitutionality of the statute reforming the firefighter pension system, making the pension system more secure for Houston’s firefighters, both now and in the future.

The estimated unfunded pension liability reached as high as $8.2 billion before the 2017 reforms. Today, the unfunded liability of the City’s three pension plans is less than $1.5 billion.

Author(s): MAYOR’S OFFICE FILED UNDER: MYR – OFFICE OF THE MAYOR

Publication Date: 30 Aug 2022 (updated 14 Sept 2022?)

Publication Site: City of Houston, Texas

Biden Administration Sues a City Over “Rampant Overspending on Teacher Salaries”

Link: https://www.educationnext.org/biden-administration-sues-a-city-over-rampant-overspending-on-teacher-salaries/

Excerpt:

The Biden administration’s Securities and Exchange Commission is suing the city of Rochester, New York, contending that “rampant overspending on teacher salaries” plunged the Rochester school district into “extreme financial distress,” misleading investors who bought municipal bonds.

The legal action is unusual. Sure, the federal government’s interaction with K-12 education has often extended beyond the bounds of the U.S. Department of Education. The Department of Agriculture administers the school lunch program, and the Department of Defense operates schools serving military-connected children. Under George W. Bush, the Justice Department toyed with the idea of using antitrust law to support charter schools. And in the waning days of the Trump administration, President Trump issued an executive order authorizing “emergency learning scholarships” to be provided via the Secretary of Health and Human Services.

But, notwithstanding Bloomberg columnist Matt Levine’s theory that
everything is securities fraud,” in practice, the K-12 education beat hasn’t intersected greatly with the fraud provisions of federal securities laws. At least until now.

….

How much has Rochester been “overspending?” The website Seethroughny.com, a project of the Empire Center for Public Policy, lists 717 Rochester City School District Employees who earned more than $100,000 in 2019. The district has about 25,000 K-12 public school students, according to the state of New York. Spending runs about $20,000, a little below the statewide average. Whether that amounts to “overspending” probably depends on one’s view of how much the children are learning, and also one’s view of whether the students could learn more, and how much more, if more money were spent.

….

In practice, the legal aspects of the case will probably turn more on considerations about disclosure to potential bond buyers than about the details of the spending on teacher salaries.

Even so, the mere mention of securities law and bondholders as potential tools to curb school district “overspending” is intriguing, especially when the action comes under a president who campaigned promising to increase school spending so as to pay teachers “competitive salaries.” For years, reformers have complained that teachers unions capture school boards and run school systems for the benefit of adults rather than children. Now a different set of influential adults—bondholders—is, in a way, asserting, via the SEC, its own claim that could be a countervailing force.

Author(s): Ira Stoll

Publication Date: 15 June 2022

Publication Site: Education Next

PSERS Considers Suing Aon for Miscalculating Returns

Link: https://www.ai-cio.com/news/psers-considers-suing-aon-for-miscalculating-returns/

Excerpt:

At their board meeting last week, Pennsylvania’s Public School Employees’ Retirement System voted to hire law firm Blank Rome to help determine if it should sue Aon, an investment consultant the pension fund hired.

The potential suit concerns a calculation error Aon made that caused PSERS to inaccurately report its returns in December 2020. While initially the nine-year performance figure was reported to be 6.38%, a correction showed that it was in fact lower, and thus below the threshold needed to prevent increased contributions. When the miscalculation was revealed in March 2021, the pension fund’s beneficiaries were forced to increase their payments.

PSERS paid Aon $7.2 million for investment advice over the course of almost a decade. Currently, Aon is still employed by PSERS. Both the FBI and the SEC are investigating the miscalculation. PSERS is also under investigation for gifts given by Wall Street firms to PSERS employees.

Author(s): Anna Gordon

Publication Date: 16 May 2022

Publication Site: ai-CIO

How Much Is ‘Enough’?

Link:https://www.asppa-net.org/news/how-much-%E2%80%98enough%E2%80%99

Excerpt:

Looks like those hoping for some clarity on a threshold issue involving ERISA fee litigation will have to wait for another day.

I’m referring, of course, to last week’s ruling by the Supreme Court on the case of Hughes v. Northwestern University et al.—a case that the law firm of Schlichter Bogard & Denton—which seems to have “invented” this class of excessive fee litigation—said was having a “chilling effect” on this type of lawsuit, more precisely their ability to proceed to trial (or settlement). Consequently, ERISA fiduciaries were waiting anxiously for a ruling on the case, which involved allegations that Northwestern University had failed to comply with its fiduciary responsibilities with regard to the options available to plan participants. 

Indeed, the allegations in this case weren’t all that different from the litany transgressions outlined in any number of such cases over the years—but in making their case to be heard by the nation’s highest court the plaintiffs’ attorneys (the aforementioned law firm)—had noted (complained?) that suits “with virtually identical” claims were being dismissed out of hand, while other courts were allowing them to go to trial. This they claimed was “…not a factual disagreement about whether the specific allegations at issue clear the pleading hurdle,” but rather “a legal disagreement about where that hurdle should be set.” 

….

Consequently. some clarity as to how, and how much, must be established by those who file the suits before they get to take the issue(s) to trial is timely, to say the least. Or, said another way, how much is “enough.” 

….

Rather, the court had merely determined that there were some prudent alternatives on the menu, and that the participants could choose them if they had an issue with those that (allegedly) weren’t as expensive and that, for that district court, was enough.

Author(s): Nevin E Adams, JD

Publication Date: 3 Feb 2022

Publication Site: ASPPA

Three States, D.C. Sue Google Claiming Location Tracking Violates Users’ Privacy

Link:https://www.insurancejournal.com/news/national/2022/01/25/650651.htm

Excerpt:

Texas, Indiana, Washington State and the District of Columbia sued Alphabet Inc.’s Google on Monday over what they called deceptive location-tracking practices that invade users’ privacy.

“Google falsely led consumers to believe that changing their account and device settings would allow customers to protect their privacy and control what personal data the company could access,” Washington, D.C., Attorney General Karl Racine’s office said in a statement.

Yet Google “continues to systematically surveil customers and profit from customer data,” the statement said, calling the practice “a clear violation of consumers’ privacy.”

Author(s): David Shepardson and Doina Chiacu

Publication Date: 25 Jan 2022

Publication Site: Insurance Journal

Illinois Effort to Fix Ailing Local Pensions Faces Legal Hurdle

Link:https://www.bloombergquint.com/onweb/illinois-effort-to-fix-ailing-local-pensions-faces-legal-hurdle

Excerpt:

A court ruling as soon as this month will help determine the fate of one of Illinois Governor J.B. Pritzker’s key plans to ease the massive shortfall in local pension funds across the state. A 2019 law championed by Pritzker would merge about 650 local police and firefighter pensions with assets topping $16 billion into two funds to cut costs and improve returns.

….

The law set a June 30 deadline for the consolidation of the funds, but many of the local pensions are hesitating or even refusing to merge until they learn the outcome of litigation to block the combining. Three dozen current employees and retirees, along with 18 local retirement plans, filed a lawsuit in February in Illinois circuit court saying the consolidation violates the state constitution.

….

So far, however, the new Illinois Police Officers’ Pension Investment Fund hasn’t received any assets and expects to begin getting funds around March, said executive director Richard White. About 44% of the 357 downstate and suburban police funds that were supposed to be merged into the bigger pension plan haven’t even responded to requests for information, White said. 

Author(s): Shruti Singh

Publication Date: 2 Dec 2021

Publication Site: Bloomberg Quint

New York State Common Retirement Still Holds Boeing Stock, Despite Lawsuit

Link:https://www.ai-cio.com/news/new-york-state-common-retirement-still-holds-boeing-stock-despite-lawsuit/

Excerpt:

The New York State Common Retirement Fund and the Fire and Police Pension Association of Colorado (FPPA) agreed to a $237.5 million settlement with Boeing’s board after they sued the aerospace company’s board for failing to protect against safety risks related to its 737 Max jets. The money will be paid by the board director’s insurance companies to Boeing itself.

….

The exact reasons why NYS Common chose to hold the stock after suing the company are unknown, as the fund did not respond to a request for comment. However, it’s possible that the pension maintained its shares in order to play a role in restructuring Boeing. It’s taken that approach in the past with companies such as ExxonMobil. In part of the recent settlement between NYS Common and Boeing, the company has agreed to implement new safety measures, including an ombudsman program for employees.

Author(s): Anna Gordon

Publication Date: 9 Nov 2021

Publication Site: ai-CIO

The Curious Case Against Hedge Funds in Kentucky

Link: https://www.ai-cio.com/news/the-curious-case-against-hedge-funds-in-kentucky/

Excerpt:

The lawsuit notes the difficult position the retirement system was in, saying that “there was no prudent investment strategy that would allow KRS to invest its way to significantly improved funded status,” and that “the trustees were trapped in a demographic/financial vise.” However, while acknowledging there was no prudent investment strategy for KRS to get out of the hole it was in, the plaintiffs are simultaneously critical of Carlson and the other defendants for taking what they consider to be “longshot imprudent risks.”

The lawsuit also criticizes the hedge funds of funds for not providing high enough returns for the entire KRS portfolio to meet or exceed its 7.75% assumed rate of return. However, the same could be said for fixed income and many other assets in the KRS portfolio. Broad hedge fund portfolios are generally created to reduce risk, not beat equity markets.

“The Black Boxes did not provide the investment returns trustees needed for KRS to return to or exceed on the average its AARIR [assumed annual rate of investment return] of 7.75%,” says the lawsuit, which is targeting approximately 3% of KRS’ overall investments, while saying they should carry the entire portfolio to meet or outperform a rate of return the state acknowledged as “unrealistic and unachievable.”

The lawsuit also claims the investments “lost millions of dollars in 2015 to 2016,” which was more than two years after Carlson left, and which was a particularly bad time period for the entire hedge fund industry. The lawsuit criticized one of the investments, known as the Henry Clay Fund, for providing “exceptionally large fees for Blackstone”; however, the suit also states that “the amount of the fees could not be calculated and were not disclosed.”

Author(s): Michael Katz

Publication Date: 15 Oct 2021

Publication Site: AI-CIO

Judge: Pension fund can’t claim Harvey, Illinois’ federal ARPA aid

Link: https://www.bondbuyer.com/news/judge-pension-fund-cant-claim-harvey-illinois-federal-arpa-aid

Excerpt:

A state judge refused to block distribution of Harvey, Illinois’ share of American Rescue Plan Act federal coronavirus aid relief funds after rejecting a pension fund’s claim to the money.

The financially stressed Chicago suburb, which has battled over the last decade with its public safety pension funds, Chicago, and bondholders over its obligations, settled a legal dispute in 2018 with its police and firefighters’ pension funds over past due payments. The settlement gives the funds a share of various funding that flows through the state government.

The firefighters’ fund recently sued Harvey to stake a claim to the ARPA money, arguing it is subject to the 10% claim on city tax and aid funds that are sent directly to the pension fund under the 2018 settlement. The fund asked the court to enjoin Comptroller Susana Mendoza, whose office manages the state’s pension intercept program, from distributing any funds until the case was argued.

Author(s): Yvette Shields

Publication Date: 28 June 2021

Publication Site: Bond Buyer

Schoolyard Justice in Federal Court

Link: https://www.wsj.com/articles/schoolyard-justice-in-federal-court-11623171249

Excerpt:

 The bank administered a loan of some $1 billion, sending payments from Revlon to the lenders. Citibank mistakenly sent a wire transfer of the entire principal amount due when it only intended a single installment.

Under established law, the money that Citibank wired should be repaid because it was sent by mistake. But U.S. District Judge Jesse Furman upset settled law and allowed lenders to keep the money on the ground that the recipients did not have notice that the funds had been sent erroneously. If that became the rule, it would upset the important relationships among lenders, borrowers and trusted intermediaries.

….

Mistakes like this occur with surprising frequency. In 2017, the German bank KfW mistakenly transferred $5.4 billion to lenders. In China, the bank Rural Commercial Bank in Changsha thought that a customer’s 10-digit account number was actually the amount of money to be transferred, and mistakenly sent 1.2 billion yuan (around $190 million) to the customer. Deutsche Bank recently sent $6 billion to a U.S.-based hedge fund in error. In all these cases, the banks recovered the errant funds transfers almost immediately.

Author(s): Jonathan Macey

Publication Date: 8 June 2021

Publication Site: Wall Street Journal