248-409-1900 dburke@mi-worklaw.com
THANK-FULL

THANK-FULL

11/26/14

There is plenty for Pilchak & Cohen to be thankful for as we get ready to close the office this Thanksgiving Eve.  Let us take a moment to give thanks for the following professional parts of our lives:

* Dan and Bill are thankful for the piles of papers that grow on their desk each week, because each represents new assignments that our clients have sent over, and we hope for dismissals and resolutions that move those piles of papers into storage;

* Bill is thankful that Judge Annette Berry of the Wayne County Circuit Court dismissed the discrimination case filed by a steel foundry’s supervisor who refused to go to the medical facility after an on-site injury, and hopes that the company that just purchased the foundry is sufficiently impressed to continue using us as counsel;

* Our new attorney, Rob Dare, is thankful that he passed the bar examination and that he was smart enough to book a trip to Japan when the stars aligned and he found he had lodging and a local guide in the form of his best friend stationed there with the military;

* We are all thankful for our new tenants in our office building, property law and estate planning attorneys to whom we have already referred work;

* Dawn will be thankful when those tenants move in and all the phones and computers are working, because she has been working inordinate hours to prepare their space.

* Bill is thankful for the publication of his novel, and can’t wait until it becomes available to Southwest Airlines passengers, so that it might generate some meaningful revenue.

* We are always thankful that our clients are intelligent people, who understand the advice we give them.

Union Solidarity At Its Best

Union Solidarity At Its Best

By:  Bill Pilchak – 11/18/14

          Readers of this blog know that we don’t hesitate to criticize unions. Especially at commercial enterprises, where the ability to compete against other companies is crucial, unions frequently impair that competitiveness and the flexibility needed in a rapidly changing world, sometimes through ignorance or selfishness, but sometimes intentionally. Businesses, including overseas competitors that have supplanted American companies in success-rankings, avoid unions for that reason. In the business-to-business context, utilizing unionized suppliers means increased costs to fund wasteful practices required by collective bargaining agreements, including drivers sitting at idling hilos instead of performing out-of-classification work. We have gone on record that we believe that unions should employ their own business-savvy professionals to develop a strategy for the 21st Century that is not modeled on the 1935 business climate that produced the current union business-model.

          So, I don’t want readers to think I have gone “soft” on my stance regarding unions, when I laud Fraternal Order of Police Lodge 124 for their outstanding efforts on behalf of my “cousin-in-law,” Deputy Frank Delise on November 12.   First, let me note that public sector unions do not have the same effect on America’s competitiveness as private sector unions.

          So, all disclaimers having been issued, the police officers at Lodge 124 are to be highly commended. Dep. Frank Delise was diagnosed with cancer a while ago, and most recently was found to have a malignant brain tumor. Happily, he is in good spirits while going through a health crises, looks surprisingly good bald, and enjoys the support of his beautiful wife and sons. However, unavoidably, the health crisis has resulted in a financial crisis.

          Here’s where Lodge 124 stepped in by providing their union hall and kitchen to produce a benefit spaghetti dinner for Frank.   Upon approach last Tuesday, one might have thought the academy awards were being held on 14 Mile Road in Warren. Cars overflowed from Lodge 124’s parking lot, and at least 6 officers directed traffic to nearby empty fields, while others parked in lots across the street dodging traffic. Inside, among Frank’s family – my outlaws…I mean my in-laws, every imaginable cop-type was there: Barrel chested veterans, rookies evolving into the tough-guy stereotype, and long-haired undercover officers who confined themselves to a far corner lest someone they encountered on-duty happen to attend the event.

          Through a variety of means, raffles, auctions and drinks-for-dollars gimmicks, hundreds of attendees gladly departed with dollars, to cousin Frank’s benefit. When the speeches were delivered at the end of the evening, one saw the softer side of those burly first-responders. I don’t want to discount the effort of an army of Frank’s friends and closer-than-us relatives, but the support of Lodge 124 members and maybe other FOP members was crucial.

          I don’t want readers to leave with the impression that this grizzled, opinionated, cynic only finds something positive about unions when they do something good for his family.   Let me adjust that perspective just a bit: This grizzled, opinionated, management-side lawyer doesn’t get too many opportunities to mix with a Fraternal Order, and it always warms one’s heart to see the generous donation of time, effort and treasure to help a brother…any kind of brother.

Our National Health Care System: The Gift That Just Keeps Giving

Our National Health Care System: The Gift That Just Keeps Giving

 By:  Dan Cohen – 11/13/14

          Last week, I had a lengthy conversation with one of my clients about the 36% rate increase his business just received from Blue Cross. Of course, his business is not the only one to experience the sticker shock of its renewal rate. I have actually heard of a 45% rate hike in one case. If this is not enough to make you wonder what is in store for us, imagine the shock of seeing premium rates for older employees approaching double what they are for younger employees. In this particular case, the company had traditionally paid 85% of the premium cost of health care. But, when it costs 42% more to insure a 52 year old than a 30 year old, it seems somewhat difficult, if not impossible, to justify the 85/15 plan since the employer would be contributing nearly $3000 more annually to insure the older worker. Quite frankly and quite sadly, maintaining the 85/15 plan under these circumstances would argue against hiring any more older employees. So, what is going on? Is this yet another attempt by the government to throw seniors under the bus?

          Let’s back up and take a look at some of the background. Under Obamacare, it was to be the younger generations’ participation that was to help make coverage affordable for everyone else. This was because younger people tend to have very low insurance claims, which explains why so many of them forgo insurance entirely. The concern was that if too many of them chose not buy insurance, then the rates charged to older Americans would have to rise in 2015 to make ends meet. Although I have not seen any statistics, I suspect that this phenomena offers part of the explanation.

          The other event that has likely played into this reality is the extension of the deadline for plans to become compliant with the ACA’s minimum plan requirements. You will recall the backlash caused by all the plan cancellations last year, which stemmed from the big lie that “if you like your plan you can keep it.” The result was that plans could remain out of compliance throughout 2014. The insurance industry, therefore, could not cash in on premium hikes since they could not force their participants into more comprehensive and costly plans.

          As we approach 2015, we are seeing the impact of both. The Skylark Adult Day Care staff committee has been active in their neighborhood, educating the public that plans have become more costly and the price tag for seniors has become disproportionately greater. The irony is that the Millennials, who voted for Obamacare in droves, are the ones who aren’t running to healthcare.gov because they cannot justify paying for health care when they don’t have a job but do have monstrous student loan payments. So, while their health care is relatively affordable under ACA, they don’t want it. For the rest of us, including the job providers, we must now foot the biggest part of this bill.

          It is for this reason that small businesses are weighing their health care options carefully and entertaining some of the following:

  • Moving from 85/15 plans towards 50/50 plans;
  • Moving their employees into higher deductible/ higher out-of-pocket plans;
  • Moving their employees into self-funded plans with “stop loss” supplements to protect against catastrophic claims;
  • Moving their employees into “skinny plans” which offer preventative services but don’t pay for hospitalization and doctor’s visits;
  • Funding health savings accounts, at equivalent amounts regardless of age;
  • Not offering health care at all and offering raises or stipends to employees, who will have to go purchase their own health care;

          Health care is a moving target at this point. 2015 will bring more change as the employer mandate penalties come on line for employers with 100 or more full-time employees or employee equivalents. Employers will have to manage this uncertainty and the rising cost of health care like other parts of their business. Don’t just accept the increased costs. Do your homework. Talk to your agents and consultants and shop around.

Cooley II

Cooley II

By:  Bill Pilchak – 11/7/14

          I recently received a letter from James D. Robb, Associate Dean of External Affairs and Senior Counsel to Western Michigan University Cooley Law School regarding my post of October 21, 2014. Readers will recall that the point of that article was that the closing of Cooley’s Ann Arbor campus was “good…for business” because (I believe) the glut of lawyers accounts for bad cases being filed against our clients.

          Dean Robb asked me to clarify some points made in the earlier post. First, he notes that I mistakenly quoted statistics regarding its entire student body of 1121 students as its 2014 incoming class. I did make a mistake and it’s easy to see why. I had taken my figures from the Form 509 that all ABA accredited law schools, including Cooley, are required to post. From other sources, Cooley reportedly had 3,931 students in 2010-2011, so the 1121 “enrollment” figure certainly looked like the enrollment for an incoming class, since 1) law school is a three year process for most students and 1121 is just less than 1/3rd; 2) Cooley’s Form 509 elsewhere reports that they made 1600 offers of admission; 3) Cooley’s Forms 509 report 851, 909 and 966 first time bar exam “takers” in 2010-2012; and 4) the form also reports grants and scholarships to 3095 students in the “prior academic year.”

          Instead, a column under the title “GPA and LSAT Scores” entitled “Number of matrics” [SIC] apparently reflects the incoming class. “Matrics” is now understood to mean matriculants, i.e., first-year students matriculated. So, in addition to the closing of Cooley’s Ann Arbor campus being good for business, the decline in Cooley’s enrollment (from 3095 students to 1121 as far as I can tell) is similarly good news – as would be a decline of nearly 2000 law students at any other school, in my opinion.

          However, whether looking at enrollments or matriculants, my point about Cooley turning out more lawyers than other schools remains valid. The Forms 509 for 2013 reflect the following “Enrollments” and matriculants of Michigan law schools. To gain a Michigan perspective, I have generously assumed that 20% of Cooley’s students are at its Florida campus, despite indications to the contrary.

Law School Enrollment Assuming 20% for Florida Campus 2014 Matriculants Assuming 20% for Florida Campus
Cooley 1121 896 582 465
U of M 399 315
MSU 301 277
Wayne State 169 117
U of D Mercy 212 191

 

          As such, Cooley is training more law students in Michigan than any other school.

          Dean Robb also referred me to a Cooley-sponsored website arguing against the impression that Cooley is flooding us with lawyers, stating that “a majority of our students are from other states and many…return…home to practice law.” I looked at the site. Readers can find it by Googling the opening line: “Of late, statements have circulated claiming that Cooley is flooding the market with new graduates, driving down employment among Michigan lawyers.”

          While I acknowledge, that many Cooley students do leave Michigan, my concern wasn’t about unemployed lawyers in Michigan. My point on October 21 was that businesses everywhere should be glad that Cooley’s enrollment is declining, not only Michigan businesses.

          As to Michigan, I have looked at Cooley’s statistics, and note they measure Cooley’s contribution to the entire population of lawyers in the State of Michigan – not the number or proportion of lawyers it has been producing since it has grown to its present size. Cooley was not accredited until 1975, and certainly did not have 3095 students or even 1121 students in its early years. Lawyers are notorious for not retiring. (For example, I understand there is no word for “retirement” in Yiddish, relevant to a large portion of the bar.) The oldest practicing lawyers – let’s say at age 72 – likely graduated from law school at 25 years of age, 47 years ago, i.e., in 1967. The “other” law schools (accredited in 1923, 1933, 1937, and 1941) were turning out lawyers before Cooley was created, and undoubtedly had bigger classes than Cooley for some time after Cooley was created. It’s thus difficult to believe that Cooley isn’t dramatically under-represented among older lawyers and over-represented among the most recently admitted lawyers.

          Another section of the Forms 509 bears this out. Each school reports the number of Bar Exam “takers” for the past three years (as well as passage rates). Here are the numbers of graduates from each Michigan law school taking the Michigan Bar Exam in the years reported on the Forms 509 currently posted by the law schools:

Law School 2013 “Takers” 2012 “Takers” 2011 “Takers” 2010 “Takers”
Cooley Not reported 447 358 336
U of M Not reported 44 54 45
MSU Not reported 146 139 152
Wayne State 148 147 169
U of D Mercy Only one year reported, but year not specified: 143

 

          There just doesn’t seem to be any question but that, even though many graduates leave the state, Cooley is churning out more graduates who desire to practice in Michigan than any other school. Hundreds more Cooley grads take the Michigan Bar Exam year after year.

          Moreover, Dean Robb did not quibble with my report that the median LSAT score for Cooley students was at the 26.1 percentile. (In case the point escapes you, that means ½ of their students scored below the 26.1 percentile.) Accordingly, the point that Cooley turns out more lawyers with lower LSAT scores seems inescapable. Moreover, it is worth noting that one page of Cooley’s website is specifically tailored to attract students with only a 2-year degree or with only 3 years of credit toward a bachelor’s degree: http://www.cooley.edu/prospective/bachelors.html.

          Dean Robb has also indicated that Cooley’s Bar Exam pass rate in Michigan was not 43% as I reported, but was 52.3%. So, I double checked my sources. The 43% passing rate I reported is the “pre-appeal” passing rate reported by the State Bar of Michigan in a post dated 11/01/13. I thus retrieved documentation from the Michigan Board of Law Examiners, which reports the following “Statistics After Appeals,” and have included a column with the Pre-Appeal statistics I reported:

Law School Feb., 2014 July, 2013 7/13 Pre-Appeal Feb., 2013 July, 2012 Feb., 2012
Cooley 65% 53% 43% 63 52 65
U of M 91% 97% 94% 87 88 80
MSU 86% 82 74% 76 69 65
Wayne State 87% 76 67% 90 72 67
U of D Mercy 66% 63 52% 64 53 72

           At least for these five most recent bar exams, Cooley was lowest in each column. However, it should be noted that in 2011 and earlier, Cooley sometimes eclipsed Wayne State University or my alma mater, U of D Mercy.

          Finally, Dean Robb asked me to clarify that Cooley is a “tax exempt, 501 (c)(3) educational institution.” Hmmm. My “mistaken” impression was based on two points: 1) comments from one of the earliest Cooley students during the 1970’s, that financial motivations prompted Justice Thomas Brennan to resign from the Michigan Supreme Court to devote full time to the law school he founded; and 2) I could discern no altruistic purpose in throwing the doors of a law school open to formerly thousands, and now still over a thousand students at, near and below the bottom quartile of aspirants, even as one who fought his way out of the projects into law school and who thus appreciates the importance of granting “opportunity.” However, I could certainly understand a financial motive for collecting tuition from thousands of students.

          So, I sharpened my pencil and took a second look at the matter. Cooley’s website reports that Justice Brennan “retired on January 19, 2002,” and “served on the Board of Directors…until 2002.” However, like all non-profits, Cooley is required to file IRS Form 990s, which are freely available from on-line sources, such as Guidestar.org.  Though retired and not on the board of directors, Justice Brennan continues to reap very significant financial rewards for starting a “non-profit” law school:

Year Base Compensation(for 2013 “reportable compensation) Deferred Compensation Non-Taxable Benefits Total
(for 2013 “estimated other compensation”)
2013 329,198 44,352 373,550
2012 329,198 19,495 24,857 373,550
2011 329,198 19,160 24,705 373,065
2010 Not presently at hand
2009 329,198 19,160 21,887 370,245
2008 329,198 19,160 20,223 368,581

           Form 990 reflects that former Justice Brennan devotes approximately five hours per week to duties as Dean Emeritus. I believe that my impression that Cooley Law School was/is a for-profit institution is forgivable. When one collects a third of a million dollars’ worth of compensation each year from the non-profit business entity he started, though devoting minimal effort to it, that looks a lot like profits and dividend checks. If it looks like a duck…

          I thank Associate Dean Robb for joining the discussion and welcome his observations. However, the perspective in my October 21 blog remains valid: Business should welcome the closure of Cooley’s Ann Arbor campus as well as its declining enrollment. Admitting an overabundance of lawyers is not good for business, because those lawyers will find someone to sue to feed their families and cases will not be as closely scrutinized as society might hope. Admitting an overabundance of lawyers at, near and below the lowest quartile of those taking the LSAT is even worse.

 

 

Michigan Court of Appeals Approves Unemployment Benefits for Medical Marijuana Users

Michigan Court of Appeals Approves Unemployment Benefits for Medical Marijuana Users

By Dan Cohen – 11/4/14

          On October 23, 2014, the Michigan Court of Appeals ruled that Michigan’s Medical Marijuana Act (“MMMA”) preempts the misconduct provision of the Michigan Employment Security Act, MCLA 421.29(1)(m), which until now had disqualified employees from receiving unemployment benefits where they were terminated for failing a drug test. Braska v. Challenge Manufacturing Co., ___ Mich. App. ___(October 23, 2014).

          The MMMA provides, in relevant part:

 “A qualifying patient who has been issued and possesses a registry identification card shall not be subject to arrest, prosecution, or penalty in any manner, or denied any right or privilege, including but not limited to civil penalty or disciplinary action by a business or occupational or professional licensing board or bureau, for the medical use of marijuana in accordance with this act. . . .”

           MCLA 333.26424(a). This language had previously been interpreted as only protecting medical marijuana users from criminal laws concerning marijuana and not creating rights for them in the workplace. Casias v. Wal-Mart Stores, Inc., 695 F3d 428 (6th Cir 2012). In Casias, the Sixth Circuit held that the MMMA’s immunity clause did not apply to a private employer’s decision to fire an employee for using medical marijuana.

          In Braska, the Court of Appeals concluded that it would be unlawful for the state to penalize a card-carrying user by denying unemployment benefits when use of medical marijuana resulted in discharge. The three member panel relied upon the language that “[a]ll other acts and parts of acts inconsistent with this act do not apply to the medical use of marijuana as provided for by this act.” Thus, according to the panel, to the extent a medical marijuana card carrying user was denied unemployment benefits due to use, the unemployment act was an act inconsistent with the medical marijuana act. The Court of Appeals clarified that its decision was not at odds with the Casias decision because the issue was not whether the employers violated the MMMA because they terminated the claimants, but whether the State of Michigan imposed a penalty upon the claimants that ran afoul of the MMMA’s broad immunity clause.

          The decision does not affect the misconduct provisions of the MESA where the employer can establish (1) intoxication at work, (2) ingestion or possession on the employer’s premises, or (3) refusal to submit to a drug test. It only applies where a claimant’s positive drug test is the basis for denial of unemployment benefits.

           On the surface, this sounds like a bad decision for Michigan employers, since they will be penalized for discharging medical marijuana users who test positive for marijuana in the form of increased contributions to the unemployment compensation fund. A review of the underlying facts makes the decision even worse for employers in my opinion because it paints the issue with a broad brush and ignores the case sensitive safety implications. For example, one of the three claimants was a hi-lo driver, whose positive drug test was accompanied by the medical review officer’s report that the level of marijuana in the claimant’s system “was higher than average.” Another one of the claimants was a hospital worker and there were reports that she was breaching safety protocols and patient confidentiality, and discussed her family’s drug use, including that she ate “special brownies.” I don’t know about you, but I am somewhat uncomfortable with a hi-lo driver who has “higher than average levels” of marijuana in his system and with a hospital worker who inserts an IV line without protective gloves.

           Proponents of the legalization of marijuana hail the decision as a “breakthrough” and “another acknowledgment that medical-marijuana users’ rights have been unfairly infringed.” This contingent believes “[i]t’s a very favorable decision for the civil rights of employees in Michigan.” Of course, these folks seem to think the rights of marijuana users are more important than the rights of the rest of us to work in a safe workplace. There can still be little doubt that reporting to work after consuming marijuana and then operating dangerous machinery makes for an even greater danger.

           Many employers will still discharge marijuana users regardless of their status as medical marijuana card carrying users even though the Braska case will make their decision more expensive. Others will capitulate and lighten up on medical marijuana users. At least, for now, employers have this choice. But, there is growing pressure to legalize marijuana outright. Today’s elections are proof of that as 11 more Michigan communities seek to de-criminalize possession of small amounts of marijuana or ease enforcement of marijuana laws. More than a dozen Michigan communities have already passed similar laws.