The American Taxpayer Relief Act of 2012 (the “Act”) was signed into law by President Obama on January 2, 2013 to avert the so-called fiscal cliff. In addition to many other changes to existing tax laws, the Act makes three specific and substantial changes to the Federal Estate, Gift and Generation Skipping Taxes that are each discussed briefly below:

Permanent Unified Credit – Generally speaking, the Act makes permanent the estate, gift and generation skipping tax regimes existing in 2012. The Act makes the unified credit for estate, gift and generation skipping taxes permanent at $5 million dollars per person (adjusted for inflation). The adjusted credit amount for 2012 is $5.12 million and the adjusted credit amount for 2013 is $5.25 million. Under the Act, the unified credit is set to continue to increase each year based on inflation. From an estate planning standpoint, this means that with proper estate planning, a married couple can utilize each spouse’s unified credit amount, and essentially double the amount they can pass to the next generation tax free (For example, with proper planning, if both spouses die in 2013, they could pass $10.5 million to the next generation tax free). We suggest that you consult with your estate planning attorney to determine if your estate requires special planning to take full advantage of the new unified credit amounts.

Portability – The Act also makes permanent the portability of spouses’ unused exemption amounts. This means that the surviving spouse can use their deceased spouse’s unused unified credit if certain criteria are met. In order to take advantage of such portability, the deceased spouse’s personal representative must file an estate tax return making such election, and the surviving spouse cannot later remarry. The Act also sets the portability amount permanently at $5 million, adjusted for inflation, similar to that of the unified credit amount discussed above. Therefore, if the requirements under the Act relative to portability are met, a surviving spouse can utilize his or her predeceased spouse’s unified credit against estate tax at the time of the surviving spouse’s death. Be aware that although portability applies to the estate and gift tax exemption, it does not apply to the generation skipping tax exemption.

Tax Rate Increase - The Act also increases the tax rates for estates that are larger than the applicable exclusion amounts above. The following tax rates now apply when estates exceed the applicable exclusion amounts above by: $500,000 to $750,000 – 37% tax rate applies; $750,000 to $1 million – 39% tax rate applies; and over $1 million – 40% tax rate applies. The Act makes these tax rates permanent.

Annual Gift Tax Exclusion Amount - The annual gift tax exclusion amount was not changed by the Act and is $14,000.00 for 2013, and will continue to be adjusted for inflation in the future in increments of $1,000.00.

The Act makes the above changes permanent, meaning estate planners now have a permanent set of rules to work from for the first time in several years. However, the changes made by the Act will only be permanent for as long as Congress allows them to be. Who knows how long the certainty will last?

The above material is only a brief discussion of the topics mentioned and we advise that you consult with your estate planning attorney regarding your estate for specific advice relative to how the Act may affect your estate and estate plan.

ATS – Kiwanis speaker – March 2013

Andrea Teves Smith, shareholder of Peterson & Myers, and her husband Brian Smith attended the 2013 Wine Festival of Central Florida, which benefits Alliance For Independence.  Alliance For Independence provides day training and residential programs to Polk County adults with developmental disabilities.

For more information about Alliance for Independence visit http://www.afi-fl.org/

The 1970 film Love Story featured the quote, “Love means never having to say you’re sorry.” However, does the law mean that you can never say you’re sorry? At the 2013 NASCAR Daytona 500, at least 30 people were injured when car parts flew into the grandstands following on on-track collision. The injuries varied in severity, but 14 people were transported to the hospital. Following the race, Daytona Speedway president Joie Chitwood responded by stating, “We responded appropriately according to our safety protocols” and “we expect to go racing tomorrow with no changes.” However, driver Brad Keselowski’s take on the situation was different. His response was “I’m just hoping everyone was OK, as drivers we assume the risk, but fans do not.” The question is, when you have been involved in an accident, what are the legal ramifications of making such a statement?

When you are in a car accident, should you apologize to the other driver or tell them you feel terrible about what happened? Well, that depends on how you structure your statement. Many states, including Florida, have enacted apology legislation that dictates whether an apology at the scene of an accident can be admitted into evidence against the person who says it. The Florida rule is that a “benevolent gesture” is not admissible to prove that you were at fault in the accident, but a “statement of fault” that is a part of the “benevolent gesture” is admissible. What all this means is what you say and how you say it means everything. Statements such as, “I’m sorry you are hurt,” or “I’m sorry that this happened,” cannot be used in court. However, saying something like, “I’m sorry, it was all my fault,” or “I’m sorry this happened, I shouldn’t have driven so fast to get around that truck” are examples of statements that could be used to prove you were at fault. In Keselowski’s example, his statement seems to be one that could potentially be used in court to show fault. Whether it ever will remains to be seen.

In conclusion, most Americans would agree that car and truck accidents are a classic example of a necessary evil that society must cope with in the name of the American economy’s advancement. Let’s face it, without the use of motor vehicles, our economy and trade would grind to a halt. However, the number of car and truck accidents happening every year in the United States, and the number of injuries and deaths associated with them paint a sobering picture. Statistics show that 3 out of 4 Americans will be involved in a car accident at some point in their lives. The average American driver will be involved in 3 or 4 auto accidents in their lifetime. On average, there are 6 million accidents on U.S. roads each year resulting in 3 million Americans being injured or killed. With the introduction of smart phones and text messaging, these numbers continue to rise. The statistics all seem to imply that the question is not if you will be involved in an auto accident, but when. And when it happens, what you say to the occupants of the other vehicle involved matters.

For more information visit the LCS website.

The Peterson & Myers Hope on the Run team participated in the second annual Susan G. Komen Florida Suncoast Polk Race for the Cure on January 19, 2013 at the Tiger Town stadium in Lakeland. Two members of the team, Gail Allen and Kathy Cargal, are breast cancer survivors. The group raised over $1,100 for the cause.

Taking part in the 5k event were team members Gail Allen, Cathy Branch, Jan Crosetti, Telecia Flowers, Angi Griffin, Alyssa Haaker, Lauren Kiley, Lisa Shellhorn and Darla Stahl. Running in the 10k race were Kathy Cargal and Yolanda Heipp. Kathy placed 3rd in her class in the race.

Team member Lauren Kiley crossing the
finish line with daughters Madeline and Amelia

The Susan G. Komen for the Cure promise: to save lives and end breast cancer forever by empowering people, ensuring quality of care for all and energizing science to find the cures. For more information about Susan G. Komen for the Cure, breast health or breast cancer, visit the Susan G. Komen website.

Perhaps you have read in the news recently that the United States Supreme Court has just clearly reaffirmed that the government must pay compensation when it impermissibly takes private property by flooding it. Arkansas Fish & Game Comm’n v. United States, 133 S.Ct. 511 (2012).

This may seem like a distant legalism, but imagine for a moment that one day your local government repaves the street in front of your home and, instead of experiencing gratitude for the maintenance, you experience flooding on your property. When flooding of your property is caused by the actions of the government, you may have a remedy under Federal and Florida law called “inverse condemnation”. The concept is that if the government basically “takes” your private property by periodic flooding, the Federal and Florida Constitutions require you to be compensated, just like any citizen is compensated when the government takes property to construct a road, building or other structure. The good news is that there is a possible remedy and someone with funds to pay for any damage or loss. However, the bad news is the law on flooding is often hyper technical and difficult to maneuver.

Under Florida law, the party who has experienced the flooding must bring the lawsuit and prove the elements of the flooding. The legal principles governing what kind of inundation with water constitutes “flooding” (that is, how long? how much? how deep? where?) are the subject of many cases, and the standards are predictably complicated, requiring legal argument and briefing by your chosen lawyers. Additionally, in the vast majority of cases, the services of experts like engineers and appraisers are required to determine whether these standards are met, and, if so, what the cost of the remedy is. However, unlike most civil litigation, the attorney fees and costs to hire expert witnesses may be reimbursed by the government if the case succeeds. This rule tends to even up the otherwise giant advantage the government has in such litigation by virtue of its large staffs of lawyers and experts.

If you ever have a difficulty where your property is repeatedly being flooded and you feel it is due to government action, you should keep detailed records of the dates and times as well as photograph and videotape the events. We stand by ready to help you analyze the facts under the law. This particular area of the law may be difficult to navigate (no pun intended), but we have the background and experience here at Peterson & Myers and stand ready to assist you!

All physicians and healthcare facilities highly value the security of their patients’ financial and health information, which has come to be called “Protected Health Information” (“PHI”). But sometimes, even with the best of intentions, security measures fail and patient data is breached. Since the risks of financial or reputational harm are high in the event of such a breach, physicians and other providers are required to notify the affected patients so they can take appropriate actions to decrease their chances of being victims of identity theft or other harm.

However, even though a provider may take all the necessary steps to notify the affected patients, that’s not the last of the story. The next chapter is a potential investigation by the Office for Civil Rights of the Department of Health and Human Services (“OCR”). OCR enforces the HIPAA Privacy and Security Rules, and may initiate an investigation upon being notified of the breach, or receiving a complaint from an affected patient.

OCR will usually notify the covered entity of the investigation and request relevant information, but if a “surprise” facility visit occurs, the covered entity should first verify the identity and authority of the investigators, including law enforcement personnel, contact legal counsel, and notify staff that an investigator is on the premises. With the assistance of legal counsel, a copy of any warrant, subpoena, or other authority of the investigators should be requested. In general, when OCR initiates an investigation it examines the following: (1) policies and procedures, (2) other documentation, (3) employee training information, (4) business associate agreements and contracts, and (5) internal risk analysis and management.

If an OCR investigation occurs, the provider should consider the following steps in preparation:

1. Update HIPAA Policies and Procedures: ­­­After any HIPAA breach, the covered entity should re-evaluate internal policies and procedure to address the breach and implement more adequate HIPAA policies.  Importantly, the covered entity should make written documentation of all steps taken in updating and implementing new HIPAA policies and procedures.
2. Initiate an Internal Risk Assessment:  In the case of any recent breach, it may be helpful to implement an internal HIPAA audit regarding the immediate areas of vulnerability inside the practice.  All funds spent in implementing a new compliance plan should be documented.
3. Institute New Workforce Training Procedures:  The practice should implement a new employee training program and/or ensure that all current employees have received up-to-date HIPAA training.  The covered entity should keep time records for training and training materials for all training programs.  Most importantly, the covered entity should require all employees to execute a signed written compliance certification stating that they have read, understood, and shall abide by HIPAA policies and procedures.
4. Review Physical Security of Facilities and Mobile Devices: During an investigation, OCR may review the physical security of a covered entity and the security of mobile devices used that contain e-PHI.  If any recent breach involved physical safeguards, the covered entity should re-evaluate its current policies and consider whether they specify methods used to control physical access such as door locks, electronic access control systems, security officers, video monitoring, adequate signage, and access badges.
5. Review Business Associate Agreements: All business associate agreements should be updated to reflect the covered entity’s updated HIPAA practices and should specifically allocate responsibility in the case of a breach, specifically including adequate indemnification provisions are in place to protect covered entities from improper actions undertaken by their business associates.
6. Update Disclosure Log: Review and update the covered entity’s HIPAA Disclosure Log to reflect the recent breach as well as any other incidents not previously recorded.
7. Update Notice of Privacy Practices: In light of the possible compliance review outlined above, a covered entity should also update its Notice of Privacy Practices for Protected Health Information.
8. Update Breach Notification Procedures:  In the case of a breach, the covered entity should maintain written documentation of all corrective action, why a particular corrective action was unnecessary, and all measures taken to mitigate the effects of the recent breach.
9. Review Policy for Medical Record Requests:  The covered entity’s HIPAA compliance review should include an assessment of the current policies and procedures for authenticating patient record requests and for releasing those medical records to the appropriate individuals.
10. Evaluate Appropriate Monitors for User Access to Medical Records: The practice should review its policies and procedures to make sure they clearly identify employees, or classes of employees, who will have access to PHI, and ensure that those same policies and procedures address “access authorization, establishment, modification and termination.”  A practice using an electronic health record system should also ensure that appropriate controls are in place so that only those individuals who have a “need to know” can access certain parts of patient’s medical record.

The above steps are a starting point for implementing a more robust HIPAA compliance program at any medical practice in preparation for a potential HIPAA investigation. Other various considerations, such as the PHI in e-mails, de-identifying PHI, and the use of encryption technologies throughout a Health IT system may merit further consideration with the help of a legal specialist. All effort a medical practice invests in creating a system for dealing with HIPAA breaches or investigations will pay off abundantly if and when either occurs.

The Lake Mirror Classic Auto Festival & Auction
Now in its 13th year, the Lake Mirror Classic is considered one of the “must do” collector car shows in the Southeastern United States.

For more information visit http://www.lakemirrorclassic.com