Mid-Atlantic Health Law TOPICS

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Did You Know - Summer 2013

Built-In Gain for S Corporations: Did you know that the legislation that averted the so-called Fiscal Cliff preserved through 2013 certain tax treatment for a former C Corporation that sells an asset acquired prior to its conversion to an S Corporation? When a former C Corporation sells such an asset, the general rule is that corporate income tax is due on the gain that accrued between the time the asset was acquired and the time that the C Corporation became an S Corporation. (This gain is called "built-in gain.") The Fiscal Cliff legislation preserved an exception to the corporate taxation of built-in gain when the sale of the asset occurs more than five years after the C Corporation became an S Corporation. Without the legislation, the period would have reverted to ten years.

Same Sex Marriage: Did you know that effective January 1, 2013, same sex couples can legally marry in Maryland? As a result, married same sex couples are now afforded the same rights as married heterosexual couples in Maryland, including the right to: (1) make certain medical decisions; and (2) a portion of the other spouse's estate. However, these rights can be impacted by advance directives, marital agreements, and various estate planning documents.

Physician Ethnicity Survey: Did you know that the Maryland Health Care Commission released data on the racial and ethnic composition of Maryland's physician population? The report found that a physician's race or ethnicity does not correlate with a physician's practice setting or use of electronic medical records. The report also revealed that African-American physicians are more likely to practice in a primary care field than other physicians.

Hospital Disclosures: Did you know that August 2012 brought new Maryland regulations on hospital disclosures to patients? Maryland hospitals' mandatory disclosure forms must now not only state that physician charges are excluded from the hospital bill (as in prior regulations), but must also clarify that this exclusion applies both to inpatient and outpatient physician charges.

Hospital-Physician Employment: Did you know that a federal district court in Pennsylvania recently ruled that a health system may be considered a physician's employer under federal civil rights laws even when the physician works for a subsidiary medical group incorporated separately from the health system? In Ginsburg v. Aria Health Physician Services, the court held that an anesthesiologist could sue Aria for religious discrimination. The court said the health system exercised sufficient control over the anesthesiologist to be deemed his employer because the health system's code of conduct and workplace rules set standards for behavior for physicians working at system hospitals.

Off-Label Marketing: Did you know that a federal appeals court recently overturned a conviction under federal drug laws of a pharmaceutical representative who promoted "off-label" uses of a drug? A section of the Food, Drug, and Cosmetic Act prohibits any person from misbranding a drug (marketing it without a label containing adequate directions for use). Here, the representative communicated to physicians truthful medical and scientific information about legal alternative uses for Xyrem, but those uses were not approved by the Food and Drug Administration, and directions for those uses were not on the Xyrem's label. The court explained that it interpreted the misbranding law to avoid holding it unconstitutional, since the First Amendment generally protects truthful commercial speech about legal activities.


June 20, 2013




Rosen, Barry F.


Health Care