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Primary Care Providers Win Challenge of CMS Interpretation of Enhanced Payment Law

With the help and support of the Tennessee Medical Association, 21 Tennessee physicians of underserved communities joined together and retained Bass, Berry & Sims to file suit against the Centers for Medicare & Medicaid Services to stop improper collection efforts. Our team, led by David King, was successful in halting efforts to recoup TennCare payments that were used legitimately to expand services in communities that needed them. Read more

Tennessee Medical Association & Bass, Berry & Sims

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Healthcare Private Equity Compliance Checklist

The complex and ever-changing healthcare regulatory and enforcement environment, including increased focus on the role of private equity firms in their portfolio companies, make compliance a top priority for private equity firms investing in healthcare companies. The best way to limit your exposure as a private equity firm is to avoid a compliance misstep in the first place. Additionally, an effective and robust compliance program for your portfolio healthcare company makes it much more attractive to potential buyers and helps you avoid an unexpected and costly investigation or valuation hit down the road. Download the Healthcare Private Equity Compliance Checklist to assess whether your portfolio company's compliance program is up-to-date.

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Chris Lazarini Examines New York Court's Definition of "Class Action" and "Members of the Class"

Securities Online Litigation Alert


February 12, 2018

Bass, Berry & Sims attorney Chris Lazarini examined a case in which the New York Court of Appeals provided guidance on Rule 908 of the New York Civil Practice Law and Rules, deciding that Rule 908 requires sending notice of a settlement and proposed dismissal to putative class members. In the opinion, the Court determined that the legislature's apparent refusal to make Rule 908 consistent with FRCP 23(e), despite calls for such consistency from the New York Bar, was a manifestation of legislative intent not to effect a change in the law.

Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SOLA, please visit the SOLA website to sign up for the newsletter.

Desrosiers vs. Perry Ellis Menswear, LLC, Nos. 121 & 122, 2017 NY Slip Op 08620 (N.Y. Ct. of App., 12/12/17) 

*Under Rule 908 of the New York Civil Practice Law and Rules, before a putative class action can be settled and dismissed, notice must be given to all members of the putative class in the manner approved by the court. 

**Under Rule 23(e) of the Federal Rules of Civil Procedure, a putative class action may be settled and dismissed without notice to members of the putative class. 

In this consolidated appeal, New York's highest Court provides guidance on Rule 908 of the New York Civil Practice Law and Rules. The Rule states: "[a] class action shall not be dismissed, discontinued, or compromised without the approval of the court," and "[n]otice of the proposed dismissal, discontinuance, or compromise shall be given to all members of the class in such a manner as the court directs." The underlying matters were resolved before the classes were certified. In one case, the deadline to move for certification had passed at the time of settlement. In the other, the settlement was reached while pre-certification discovery was underway. The question before the Court is whether the cases may be dismissed without notice of the proposed dismissal being sent to the putative class members.

In a 4-3 decision, the Court holds that Rule 908 requires sending notice of the settlement and proposed dismissal to putative class members. The majority finds Rule 908's references to "class action" and "members of the class" ambiguous and looks to sources outside the statutory text to discern the legislature's intent. The Court finds several events noteworthy. The first is a 1982 decision in which the New York Supreme Court's Appellate Division (an intermediate court of appeal) required notice of the settlement to the putative class before the case could be dismissed, citing the potential for abuse and the named plaintiff's fiduciary obligation to disclose relevant facts to putative class members. Second, the 2003 amendments to FRCP 23 clarified that notice of settlement and dismissal was required only for certified classes. Third, the New York Legislature failed to clarify Rule 908 after the FRCP 23 amendments, despite receiving two recommendations from New York City Bar Association committees to make CPLR 908 consistent with the federal scheme. While courts may hesitate to ascribe persuasive significance to legislative inaction, the Court finds the Legislature's presumed knowledge of the decades-old judicial construction and its apparent refusal to amend the statute in the face of calls to do so are a manifestation of legislative intent. It is for the Legislature, not the courts, to effect a change to the statutory scheme.

The dissent finds no ambiguity in the Rule, limits its analysis to giving effect to the plain meaning of the words used and posits that, because no class was certified in the underlying cases, there are no "members of the class" to whom notice must be sent. The dissent further explains that the settlement would not bind those individuals receiving notice of the settlement because no class was certified. 

National Securities Corporation ("NSC") was the defendant in one of the underlying cases. There, a former NSC salesperson alleged that the compensation paid by NSC fell below the required minimum wage. When the case settled, NSC moved to dismiss and the plaintiff cross-moved to provide notice of the proposed dismissal to putative class members. The lower court granted both motions, requiring notice before the dismissal order would be entered. The Appellate Division affirmed, granting leave to appeal and certifying the question to the Court of Appeals.

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