Will courts reject the Patient Protection and Affordable Care Act?  Only if ideology trumps rationality.           

In 2005, Justice Scalia explained that “Congress may regulate even noneconomic local activity if that regulation is a necessary part of a more general regulation of interstate commerce.” And in 2010, a majority upheld federal confinement of “sexually dangerous persons,” noting that the Necessary and Proper Clause provides “broad power to enact laws that are ‘convenient, or useful’ or ‘conducive’ to the authority’s ‘beneficial exercise.’” The test is “whether the statute constitutes a means that is rationally related to the implementation of a constitutionally enumerated power.” 

With minimal regard for this precedent, a Florida judge, Roger Vinson, concluded that Congress lacked authority to enact an individual mandate to purchase health insurance. Because he found that provision essential to the total design of the law, and therefore not severable, he declared the entire act invalid. Judge Vinson’s distinction between what is “essential” and what is “necessary and proper” appears to be based upon his belief that an individual mandate conflicts with the “spirit” of the Constitution. 

A prior generation of Americans experienced that spirit. Thus, challengers emphasize an individual “liberty interest” in not being required to enter into a contract for health insurance; they characterize the choice of direct payment for health care rather than insurance as “inactivity” and thus not subject to regulation. Analogous arguments prevailed a century ago and these challengers would resurrect the libertarian vision of the Constitution found during the “Lochner era” of the Supreme Court, but subsequently denounced and rejected. 

If this were not enough, other enumerated powers of Congress also underlie the fee imposed on those who fail to purchase health insurance. The Taxing Power is most obvious, but some reject basing the individual mandate on congressional taxing authority because Congress used the term “penalty” instead of “tax” when describing that fee. To again use Justice Scalia’s words, judges should not be “faked out” by this choice of labels when there is “not a dime’s worth of difference” between the alternatives. 

The Bankruptcy Clause further empowers Congress to provide a financial incentive for purchasing health insurance. Prior to enacting health care reform, Congress heard extensive testimony on the link between lack of health insurance and personal bankruptcies, with reports that more than half of all bankruptcies are due at least in part to medical expenses. Just as the Bankruptcy Clause supported extension of redemption periods in the 1930’s, today the insurance mandate provides a rational means of reducing the devastating effects of bankruptcy. 

If it only takes a lack of indistinguishable precedent to strike down health care reform, then judges seeking that conclusion will declare the law unconstitutional. But if judges give Congress the traditional deference to decide whether the end is “legitimate,” and the means are “rational,” then health care reform survives constitutional scrutiny. 

If judges were umpires, this would be a strike down the middle.

I had the privilege of moderating this panel, which included Douglas Lankler, chief compliance and risk officer at Pfizer; Alan Yuspeh, chief ethics and compliance officer at HCA Group; and Marc Litt, partner at Baker McKenzie specializing in the securities industry and white-collar crime issues (and previously the lead prosecutor in the Madoff case).     

We covered a lot of ground in an hour, from practical issues like how to manage the compliance workflow in a highly decentralized organization to high-level issues regarding what a good – and bad – compliance culture looks like. A particularly interesting point was made by AlanYuspeh: he stressed that the culture of compliance is just as much about clarity from the compliance department as it is about the actions of top management. Moreover, the panelists agreed on the importance of the “tone from the middle,” reinforcing each day the message and culture generated from the C-suite. 

The panel also touched on how expectations regarding compliance have evolved, not just since the financial crisis but as far back as Enron and Sarbanes-Oxley. Drawing on his experience as a federal prosecutor, Marc Litt emphasized the growing expectation that firms implement programs based on the characteristics of the firm, its industry, and the evolving regulatory and enforcement environment. As Marc also pointed out, one result of the perceived failures of the regulators in the financial crisis and Madoff scandal is a regulatory environment dedicated to not being caught napping again, meaning more and deeper information requests and the initiative to encourage whistleblowers to come forward and provide information directly to the SEC. 

The discussion wrapped up with Doug Lankler’s particularly valuable insight into the restructuring of the compliance function at Pfizer in the wake of a case involving the marketing tactics used by some of its sales reps. As part of the settlement, Pfizer agreed to remove compliance from the legal department and elevate it to a level equal to and independent of the general counsel, reporting directly to the CEO. The upshot: propelled by the support of the CEO, there is now a very clear emphasis on compliance, and ethics, within the company. 

With an audience filled with compliance and ethics professionals, you’d be tempted to think this is fairly standard stuff, but the differing perspectives of the panelists reinforced the need to see the world beyond our own experiences and understand how others, particularly in highly regulated sectors, have approached the same problems.

Guest post by Scott McCleskey, managing editor, Governance, Risk and Compliance

Needless to say, employees in Eagan rose to the challenge. In all, 940 meals will be donated.

“Not only is there an increased need with individuals suffering these tough economic times, but nonprofit agencies – and food shelves in particular – have seen an incredible increase in demand as more people need help and fewer are able to donate,” said Martha Field, manager, Community Relations.

The topic was innovation and the challenges facing information companies in the digital age and amid the rise of social media.

Jackson, who is on the NetGain Steering Committee, discussed some of what Thomson Reuters has been working on, including the Reuters Insider multimedia project. Jackson’s team is involved in finding new ways to index video online and make it searchable, providing more insight and context to the end-user.

According to Jackson, the project is in beta and close to official release. He says it required new ways of thinking by his teams, and new uses for existing patented technology that’s already fueling many customer applications within the legal business.

In this video interview after the session, Jackson talked about the conference, the innovative work at Thomson Reuters and also provides more specifics on his team’s work on Reuters Insider:

The “gap” of her title derives from the fact that we are today living off the fat of the 1950s and 60s, when government and commercial spending on genuine R&D was way higher than it is today. She argues that we have an “innovation deficit”, whereby current gains are really incremental and based on past achievements. Meanwhile, management philosophies such as “You can’t manage what you can’t measure” have hurt our ability to fund exploratory work that does not meet immediate business goals.

Her concept of “sustainable innovation” goes beyond any single idea to encompass an environment, or ecosystem, that supports novel approaches to problems. “Innovation doesn’t just happen,” says Estrin, “you have to nurture it.” The ecosystem she identifies consists of a nutrient environment of funding, policy, education, culture and leadership that supports the activities of research, development and applications building.

She identifies the following as core values – questioning, risk, openness, patience and trust – and states that these values need to be in balance. For example, too much trust leads to blind faith, while too much risk leads to recklessness, as we have seen with innovations on Wall Street. She also stresses the need to move beyond silos and false dichotomies, e.g., science versus arts, research versus development, and recognize the value of people who have some breadth and function as connectors in organizations.

Estrin distinguishes between three types of innovation: breakthrough (totally new idea, e.g., light bulb), incremental (tuning a new idea to generate a product, e.g., flashlight), and orthogonal (combining existing ideas into something new, e.g., sneakers with lights). She points out that only the second is customer-driven; customers are not going to do real innovation for you. I think this is certainly true of the Internet publishing space.

Speaking for Corporate R&D, I like to think that we practice what I call “serial innovation”, producing a steady stream of incremental and orthogonal improvements that satisfy customers while waiting for the “big bang” of a breakthrough. Genuine breakthroughs are few and far between, and you can’t plan for them. But staying as close as you can to the research literature and being conversant with the latest methods are good ways to improve your chances.

Peter Jackson
Chief Scientist and Vice President
Thomson Reuters

United States Supreme Court Justice David Souter’s decision to retire is not a great shock, but it is a big moment in the new administration.

It is a fairly recent notion that justices are selected from among sitting judges. Justices Harlan, White, Warren, Black and Douglas are among the many justices who were not from judicial ranks.

If a judge is selected, Sonia Sotomayor adds a second woman and a first Hispanic to the Court. She also has the odd honor of having been appointed to one court by George H.W. Bush and to another by Bill Clinton (though there is more to that story).

If any academic, then Elena Kagan or Cass Sunstein would seem logical choices. They both have distinguished records and close relations to President Obama.

But what if it were a politician or practicing lawyer as the president once suggested?

Any ideas?

Denis Hauptly
Vice President, Technology Strategy
Thomson Reuters Global Resources

Kushner will be a panelist at the CLE titled Love, Law and Litigation: A Dialog of Bias in American Sexual and Gender Identity on June 9 at the Guthrie in Minneapolis. He is best-known for his two-part epic Angels in America, and has won the Pulitzer Prize, an Emmy Award and two Tony Awards.

The event aims to explore polarized social attitudes related to sexual orientation and gender identity and their effect on law throughout the United States, and will feature live stage performances by Guthrie actors, along with discussions of excerpts from Kushner’s plays by a panel of legal professionals.

Attorneys around the world also can access the event online at West LegalEdcenter as a live webcast from 2 p.m. to 4 p.m. Central on June 9, and later as an on-demand video.

To enroll in either the live event at the Guthrie or the live webcast on June 9, visit West LegalEdcenter.com, search by program name and continue through the checkout process.

The course, which costs $200, provides 2.0 credits toward the Elimination of Bias requirements in Minnesota, California and Oregon. It provides 2.0 or greater CLE credits toward the Ethics requirements of most other jurisdictions. CPD credit has also been applied for in the United Kingdom.

Erin Carlyle conducted interviews with several leaders within the legal businesses of Thomson Reuters, including President & CEO Peter Warwick.

City Pages is a weekly newspaper in Minneapolis/St. Paul, covering news and entertainment in the Twin Cities and Minnesota.

Sometimes innovation starts with a trip to a bar.

Literally.

While winding down at the end of a day of recruiting new talent for West at Michigan State University last October, Dan Bennett and Jay Peyer started talking about the kinds of iPhone and iPod touch applications they could create.

Little did they know that conversation would put them on a path to develop the first Thomson Reuters app for the popular Apple mobile devices.

Today their creation, a Black’s Law Dictionary app, is officially for sale on iTunes.

The app features the 8th edition of the relied-upon and respected dictionary, edited by Bryan A. Garner. Black’s is considered by many attorneys, legal professionals and law students to be the most citable and credible legal dictionary. And a mobile version just made sense, to provide easy access to its legal terms and phrases and embedded audio of that information which does not require an Internet connection.

The process to create the Black’s Law Dictionary app allowed Bennett, a senior director in New Product Technology at West, and Peyer, a senior software engineer in Application Technology, to break new ground.

In this video interview, they explain how they made it happen:

The Black’s Law Dictionary app from Thomson Reuters is available for purchase on the App Store in Apple’s iTunes for $49.99.

Even Garner, himself very much a fan of books, is excited to see Black’s Law on the iPhone.

“The idea that you can have a very full, elaborate, complex and richly textured book like Black’s available at your fingertips is fantastic,” Garner says. “I myself am stubbornly in favor of print sources, but I like to watch my daughters use their iPhones. And I know that there’s another generation of people who really prefer the electronic medium at their fingertips.”

While Black’s Law Dictionary is the first iPhone application from Thomson Reuters, there’s more in the queue. We’ll keep you posted as more apps are launched.

More coverage:
ABAJournal.com

Robert Ambrogi’s LawSites

iPhone J.D.

China, now the world’s third-largest economy and the recipient of more foreign investment each year than any other country, can be a bit intimidating. Its business laws and the practice of deal-making have long been a source of confusion or mystery.

But it doesn’t have to be that way.

I recently talked with Owen D. Nee Jr., of counsel with Jones Day, for a Westcast podcast (Listen to the audio).

Nee told me the failure of many joint ventures is linked to basic misunderstandings of the deal-making process, which too often occur because the investor or its counsel fail to study the applicable legal ground rules.

Nee wrote the new Shareholder Agreements and Joint Ventures in China from West, and co-authored Mergers and Acquisitions in China with Jingzhou Tao, partner at Jones Day.