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Cypen & Cypen
NEWSLETTER
for
FEBRUARY 3, 2011

Stephen H. Cypen, Esq., Editor

1.      FLORIDA FEDERAL JUDGE DECLARES OBAMACARE UNCONSTITUTIONAL:   Senior United States District Judge Roger Vinson has granted a final summary judgment declaring the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, is unconstitutional. On March 23, 2010 President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010. A few minutes later, a case was filed in the United States District Court for the Northern District of Florida, challenging constitutionality of the act. The case was brought by officials of twenty-six states and others. The following language is from Judge Vinson’s 78-page Order Granting Summary Judgment in favor of plaintiffs: 

The existing problems in our national health care system are recognized by everyone in this case.  There is widespread sentiment for positive improvements that will reduce costs, improve the quality of care, and expand availability in a way that the nation can afford. This is obviously a very difficult task. Regardless of how laudable its attempts may have been to accomplish these goals in passing the Act, Congress must operate within the bounds established by the Constitution.  Again, this case is not about whether the Act is wise or unwise legislation. It is about the Constitutional role of the federal government. 

For the reasons stated, I must reluctantly conclude that Congress exceeded the bounds of its authority in passing the Act with the individual mandate.  That is not to say, of course, that Congress is without power to address the problems and inequities in our health care system.  The health care market is more than one sixth of the national economy, and without doubt Congress has the power to reform and regulate this market.  That has not been disputed in this case.  The principal dispute has been about how Congress chose to exercise that power here.  

Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void.  This has been a difficult decision to reach, and I am aware that it will have indeterminable implications.  At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled "The Patient Protection and Affordable Care Act."

In closing, I will simply observe, once again, that my conclusion in this case is based on an application of the Commerce Clause law as it exists pursuant to the Supreme Court's current interpretation and definition.  Only the Supreme Court (or a Constitutional amendment) can expand that. 

Judge Vinson was appointed to the federal bench in 1983 by President Reagan. State of Florida v. United States Department of Health and Human Services, Case No. 3:10-civ-91 (U.S. ND, January 31, 2011). 

2.        CALLAN PERIODIC TABLE OF INVESTMENT RETURNS: Callan Associates Inc. annually publishes its Table of Investment Returns, showing annual returns for key indices, ranked in order of performance over the past twenty years (see C&C Newsletter for February 18, 2010, Item 2). Here are the numbers for 2010, in which all nine categories are in positive territory: 

RUSSELL 2000 GROWTH                                        29.09%
RUSSELL 2000                                                           26.85%
RUSSELL 2000 VALUE                                             24.50%
MSCI EMERGING MARKETS                                   19.20%
S&P/CITI 500 VALUE                                                 15.10%
S&P 500                                                                       15.06%
S&P/CITI 500 GROWTH                                            15.05%
MSCI EAFE                                                                   7.75%
BC AGG                                                                        6.54%

Two specific items of note: for six of the last eight years, MSCI Emerging Markets has topped the list; for six of the last eight years, Barclays Capital Aggregate Bond Index has been at the very bottom.

Here are some other observations: 

  • Stock markets around the world enjoyed a second year of rebound in 2010, building on the double-digit gains in 2009. A reversal of the pattern in 2009, the U.S. stock market generated a return (15.1%) superior to that of stocks in the developed markets overseas (7.8%).
  • For the tenth year out of the last twelve, small cap (26.9%) outperformed large cap (15.1%) stocks. Small cap growth (29.1%) outperformed small cap value (24.5%) for the second year in a row. 
  • Fixed income (6.5%) generated a higher return than the 5.9% reported in 2009, yet once again ranked last among all categories. 
  • Stocks recorded five years of gains from 2003-2007, led by particularly strong growth in emerging markets. Then the bottom fell out in 2008, and large cap stocks suffered the second-worst annual decline (-37%) since 1926. The strong performance of the S&P 500 in 2009 and 2010 has still not been quite enough to overcome the loss sustained in 2008. 

3.      PURCHASER OF ASSETS MAY BE LIABLE FOR SELLER’S DELINQUENT ERISA FUND CONTRIBUTIONS:   The U.S. Third Circuit Court of Appeals was asked to consider the circumstances in which a purchaser of assets bears liability for delinquent employee benefit fund contributions under the Employee Retirement Income Security Act, as a successor in interest to the seller of those assets. The administrator of the Teamsters Pension Trust Fund and Welfare Fund of Philadelphia and Vicinity brought suit to recover unpaid contributions from M.L. Ruberton Construction Company. According to the administrator, Ruberton was obligated to contribute to the benefit funds under two collective bargaining agreements as a successor employer to the original signatory. The federal district court applied the traditional common law rule of successorship liability, but found that Ruberton was not a continuation of the original signatory, and granted Ruberton’s motion for summary judgment. On appeal, the appellate court reversed. In sum, the court held that a purchaser of assets may be liable for a seller’s delinquent ERISA fund contributions to vindicate important federal statutory policy where a buyer had notice of liability prior to the sale and there exists sufficient evidence of continuity of operations between buyer and seller. The inquiry should be effectuated on a case by case basis, balancing the equities before the court. Einhorn v. Ruberton Construction Company, Case No. 09-4202 (U.S. 3rd Cir., January 21, 2011). 

4.      MIAMI BEST CITY TO BUY HOME:   Is there any upside to having a sky-high foreclosure rate, double-digit unemployment and a tight credit market? According to The Miami Herald, these elements help make Miami the top market in the nation to buy a home rather than to rent. Miami has moved up two spots since last year to become the nation’s most attractive market to become a homeowner instead of renting. A new study compared home prices and rental rates in the nation’s 50 largest cities to determine where homeownership made the most financial sense. Rankings compared the cost of buying a median-priced 2-bedroom, 2-bath home with the cost of renting a similar property for a year. Cities were ranked as either “buy” or “rent” based on the ratio of buy-to-rent costs. For example, the median-priced 2-bedroom in Miami cost $140,201. To rent a 2-bedroom apartment for a year would cost $22,459, resulting in a buy-to-rent ratio of 6. In other words, renting a home for six years would cost about as much as buying a home free-and-clear. The market where it makes least financial sense to buy is New York, with a buy-to-rent ratio of 31. Any ratio below 15 was considered a buyer’s market. 

5.      ILLINOIS STATE REP WANTS TO TAKE AWAY NEW LAWMAKERS’ PENSIONS:   State Representative Jack Franks, a Democrat from Chicago-suburb Marengo, wants to take the chances for state pensions away from all future lawmakers. Franks has filed legislation that would keep all members of the Illinois General Assembly taking office in 2013 and later out of the state pension system, in an effort to save money. Franks acknowledges doing so would not make a huge difference to the state’s huge budget problems, but said it is important to cut where possible. “I can’t think of anywhere else a person can work part-time and receive a pension, let alone a pension as lucrative as those received by Illinois lawmakers.”  Hey, every little bit helps. 

6.      RETIREMENT – LIVE LONG AND DON’T PROSPER:   As the 79-million-strong baby boom generation starts hitting age 65, demographers and medical researchers are increasingly at odds over how long they will live.  It is a question, according to businessweek.com, with major implications on a national level, for how much Social Security and Medicare will cost future generations of Americans.  On a personal level, life expectancy complicates plans for saving and spending:  live too long and risk running out of money; die young and you cannot take it with you. At least one member of a 65-year-old couple can expect to live for another 23 years, to age 88. That is just an average, however, and there is a 30 percent chance of living past 92.  Medical advances are keeping more people alive for longer than ever.  The current life expectancy for an American at birth is 77.9 years -- 58 percent longer than in 1900, when the average life expectancy was 49 years.  From 2000 to 2007, the rate of death from heart disease, the leading cause, plunged 19 percent, while the rate for cancer, the second-leading cause, fell 5 percent.  If such gains continue, as expected, they will swell the federal tab for old-age benefits.  Adding 3.1 to 7.9 years to life expectancy by 2050 would add an estimated $3.2 Trillion to $8.3 Trillion to Medicare and Social Security outlays above current expectations. But wait -- deteriorating American lifestyles are taking away some of the gains from advanced medicine.  The rate of obesity in the United States has risen 48 percent in 15 years, and by 2020, 45 percent of the population is expected to be obese. In any case, there is a good chance that even as Americans live longer lives, they will spend more years disabled, needing expensive care.  There are steps baby boomers can take to protect their portfolios from uncertainty about both length and cost of retirements.  On the most basic level, retirees and pre-retirees could stay on top of longevity projections.  Two-thirds of retirees underestimate average life expectancy at their age, with 42 percent doing so by five years or more.  Still, even individuals' well-informed guesses can be wrong by a decade or more. One economist suggests more Americans should be buying annuities.  For many Americans, especially healthy people who expect long lives, it makes sense to lock in an annuity at age 55 rather than later in retirement. Despite longevity risks, relatively few Americans buy annuities. Just 20 percent of Americans age 45 to 70 have plans to buy an annuity or similar financial instrument.  One reason may be the costs and complexities involved in annuity products.  Or, it could be reluctance to pay for a investment product that, if they die too young, retirees might never collect on. Also, by delaying Social Security payments until age 70 retirees can increase monthly payments and make the program a far more valuable income stream late in life. One obvious way to finance a longer retirement is to save more, either by spending less or working longer.  (Another more obvious way, at least to us, is to have a defined benefit plan, the benefit of which a retiree cannot outlive – something we’ve been saying for over 40 years.) 

7.      WOMAN SUES DIDDY FOR $1 TRILLION:   And, the award for the most awesome lawsuit goes to … the woman who is suing rap mogul Sean “Diddy” Combs for $1 Trillion! Yep, that’s trillion with a “T.” USATODAY.com reports that Valerie Joyce Wilson Turks has a bone or two (or a trillion) to pick with Combs. In addition to claiming that he is behind the September 11, 2001 terror attacks, Turks insists Combs harmed her children and owes her child support. A judge denied Turks’s request for a restraining order against Combs. Here are a few highlights from the suit:

  • Turks is seeking $900 Billion in child support and an additional $100 Billion in loss of income
  • Turks claims Combs is in possession of a casino chip belonging to her worth "100 zillions of dollars"
  • Turks alleges that Combs sexually assaulted her children and broke one of her child's legs
  • Turks says she and Combs, 41, dated and that he fathered her son, who is now 23
  • Turks accuses Combs, his ex-girlfriend Kim Porter and Rodney King (The Rodney King?) of bringing down the Twin Towers in 2001 and subsequently putting her on disability

We have to confess: this lawsuit does top the one where a Washington, DC judge sued a dry cleaner for over $1 Million for ruining his slacks. 

8.      HOW BUSINESSES CAN MINIMIZE WORKPLACE PAIN, BOOST PRODUCTIVITY:   Writing specially for The Miami Herald, Elsayed Abdel-Moty, Program Director of the Rosomoff Comprehensive Pain Center, says recently released government data reveal an unsettling trend:  fewer workers doing more work. According to Bureau of Labor Statistics, the national unemployment rate stands at 9.8 percent, with productivity climbing by 2.3 percent from November to December.  The numbers in Florida are even more striking, with the state's 12 percent jobless rate ranking among the five highest in the United States. Unfortunately for businesses, this dynamic comes with a hidden cost -- research shows that overworked employees are at a greater risk of experiencing workplace injuries and chronic pain.  In fact, work-related pain causes an average of 50 million lost workdays each year, costing employers an estimated $100 Billon annually. Factor in the ancillary costs associated with employee absenteeism, hiring and training replacements and productivity loss, and the total dollar figure soars to more than $200 Billion.  To complicate the matter further, projections indicate that employers are likely to see an average increase of 9 percent in their healthcare costs this year. Conventional wisdom suggests that employees most at risk of suffering an injury while on the job are those who regularly perform heavy labor.  But even desk-bound employees can fall victim to such chronic injuries like carpal tunnel syndrome, eye strain and back pain, which is the leading cause of productivity loss for businesses and the costliest healthcare problem for people ages 30 to 50. Beyond the physical workplace, psychological work environment can also have also a powerful effect on employee stress levels, a common risk factor for injuries. With the start of 2011, now is an ideal time for companies to evaluate their work environment and make adjustments aimed at minimizing and eliminating risk factors that can lead to pain and injury down the road. Fortunately, many of these modifications can be made easily and affordably: 

  • For starters, companies should survey their employees to gain an accurate understanding of how staff members work and perceive their day-to-day environment. This process can be conducted through formal surveys or casual conversations. It is good practice to include the discussions during an annual performance evaluation process. 
  • Employees should have comfortable, supportive, adjustable chairs. Workstations should allow for computer monitors to be aligned at eye level, have keyboard and mouse placed conveniently and comfortably, and include a document stand for reference materials.  
  • Just as important as the physical workplace is the psychological environment.  Workplace stress can place wear and tear on the body as a result of worry, anxiety or exhaustion -- becoming common among workers who fear for their jobs, perform the work of more than one employee, or have experienced reduced wages.  While every workplace may have elements of psychological stressors, employers can implement measures to address them, such as improved light and ventilation; implementing work-rest schedules; job rotation; offering brown-bag sessions on stress management; and implementing employee wellness programs.   

Budget aside, companies of all sizes can take measures to understand and manage demands on an employee's endurance, concentration and mental resilience with goals of maintaining appropriate and safe levels of attentiveness, acuity, work pace and judgment. [In the spirit of full disclosure, the Rosomoff Comprehensive Pain Center is located on the main campus of Miami Jewish Health Systems, where your editor serves as volunteer chairman.]

9.     HANDBOOK FOR 2011: Here are some Health Tips for 2011:

 1.     Drink plenty of water. 

 2.     Eat breakfast like a king, lunch like a prince and dinner like a pauper.

 3.     Eat more foods that grow on trees and plants, and eat less food that is manufactured in plants.

 4.     Live with the 3 E's -- Energy, Enthusiasm and Empathy.

 5.     Make time to pray.

 6.     Play more games.

 7.     Read more books than you did in 2010.

 8.     Sit in silence for at least 10 minutes each day.

 9.     Sleep for 7 hours.

10.    Take a 10-30 minutes walk daily. And while you walk, smile.

10.    REMARKABLE QUOTES FROM REMARKABLE JEWS: It's so simple to be wise. Just think of something stupid to say and then don't say it. Sam Levenson

11.    BLESSED ARE THE CRACKED, FOR THEY LET IN THE LIGHT:  I'm not a complete idiot -- Some parts are just missing.

12.    PARAPROSDOKIAN: (A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect.):   Light travels faster than sound. This is why some people appear bright until you hear them speak. 

13.    QUOTE OF THE WEEK:    “Obsession is a great substitute for talent.” Steve Martin

14.    KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items? Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources. 

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Copyright, 1996-2011, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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