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Posts Tagged ‘standard’

DOL Fiduciary Rule Suffers a Slow Death

Posted on: May 15th, 2018

By: Ted Peters

In 2016, the U.S. Department of Labor (“DOL”) promulgated a set of rules and regulations now infamously referred to as the “Fiduciary Rule.”  After multiple criticism and legal challenges, the Fifth Circuit Court of Appeal struck down the Fiduciary Rule effective May 7, 2018.  Surprising many, the DOL elected not to challenge the Fifth Circuit ruling.  Even more surprising, however, was the bulletin issued by the DOL on the effective date of the court’s order.

The court’s ruling, which was not opposed by the DOL, left many unanswered questions.  Enter the DOL’s field bulletin.  Rather than admitting the total defeat of the Fiduciary Rule, however, the DOL seeks to maintain the status quo.  Specifically, the DOL announced that pending further guidance, advisors will not be penalized for either complying with the Fiduciary Rule, or ignoring it in favor of pre-existing standards.  Unfortunately, this announcement leaves the single most important question unanswered – what is the standard to which advisors will be held?  With the U.S. Securities and Exchange Commission working on its own set of rules, and the wait-and-see approach embraced by the DOL notwithstanding, only time will tell.

If you have questions or would like more information, please contact Ted Peters at [email protected].

When is Medical Care Not an Emergency? Clever Lawyering Finds a Loophole in the Stringent Gross Negligence Standard

Posted on: November 5th, 2012

By: Mike Flint and Laura Broome

In 2005, the tort reform passed by the Georgia legislature included a statute that changed the standard for suing emergency room health care professionals in medical malpractice actions. The statute in essence states that no health care provider who provided emergency medical care in a hospital emergency department, or surgery suite, etc., after the patient has been treated in the emergency room, shall be held liable for an action in medical malpractice unless it is proven by clear and convincing evidence that the physician or health care provider’s actions showed gross negligence. The standard for liability of emergency medical care personnel was changed thereby from ordinary negligence by a preponderance of the evidence to gross negligence by clear and convincing evidence.

Case law further defines the new gross negligence proven by clear and convincing evidence standard as “that degree of care which every man of common sense, however inattentive he may be, exercises under the same or similar circumstances.” In other words, gross negligence has been defined as “equivalent to [the] failure to exercise even a slight degree of care.” “Clear and convincing evidence” is “a more stringent standard than ‘preponderating’ and requires a greater quantum and a high quality of proof in plaintiff’s favor.” As a result of this higher standard, there has been far fewer malpractice lawsuits filed against emergency room professionals.

Despite these hurdles, a recent trial suggests that a jury may be allowed to determine whether emergency medical care was provided in the emergency room, thereby triggering the higher standard in the first place. In the recent case, the plaintiff was presented to an emergency room with severe leg pain, but was sent home with a diagnosis of a skin rash, despite not being able to walk. The plaintiff later returned to the emergency room by ambulance after she was found unresponsive, and was determined to have severe blockage in her leg arteries. The plaintiff’s legs were both amputated below the knees a few days later.

Plaintiff’s counsel argued that the lower standard of ordinary negligence under a preponderance of the evidence standard should apply because the legal definition of emergency medical care does not include non-urgent patients in stable condition. Plaintiff’s counsel claimed that this plaintiff was considered to be a non-urgent patient in stable condition during her first trip to the emergency room.

The judge allowed the jury to decide whether the plaintiff received emergency medical care, and thus whether the gross negligence standard or ordinary negligence standard applied. The jury determined that the care the plaintiff received in the emergency room during the initial visit was not emergency medical care, and thus applied the ordinary negligence standard in the case.  In doing so, the jury further decided the emergency room defendants were negligent in failing to diagnose the plaintiff’s blocked arteries during the initial emergency room visit, and awarded $5 million to the plaintiff in damages.

It will certainly be interesting to see if other courts follow this lead in allowing juries to decide which standard applies.

FINRA Clarifies “Know Your Customer” and “Suitability” Rules

Posted on: September 17th, 2012

By: Joyce Mocek

FINRA Rule 2090, effective July 9, 2012, has streamlined and replaced the former NASD Rule 405, the “Know Your Customer” standard.  The new rule contains a “reasonable diligence” standard, compared to the old rule requirement of “use due diligence.”  Rule 2090 provides that “Every member shall use reasonable diligence, in regard to opening and maintenance of every account, to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.”  “Essential facts” are now defined.  The new Rule places additional obligations on member firms to not only comply with the “Know Your Customer” rule when opening an account, but also in maintaining an account.

Working in conjunction with the “Know Your Customer” rule, is a new “Suitability” rule, FINRA 2111.  The new Suitability rule, which replaced NASD Rule 2310, expands the scope of information that a broker must attempt to obtain through reasonable diligence.  It also requires firms and associated persons to document with specificity their reasonable basis for believing a factor is not relevant in order to be relieved of the obligation to obtain further information on that factor.  It expands the suitability obligations and requires “reasonable basis” to believe, based on “reasonable diligence” that an investment is suitable.  These new rules expand the obligations of member firms and associated persons, and also provide more clarity and structure in understanding the rules.