Troy Sympson

Prescription drugs represent upwards of 15-18 percent of the total cost of medical care for workers’ compensation claims. While the increase in cost has been problematic, managing the use of prescription narcotics has become even more challenging.

In many cases, these powerful drugs can be overprescribed, especially when taking into account their highly addictive nature. In addition, frequently other prescription drugs are needed to address the side effects caused by longer term use, all while more effective alternative treatments may be available.

Combine the overutilization of these drugs with the high prices associated with some of them and the result is very high total drug costs. In most cases, however, the costs associated with an insurance payer’s workers’ compensation prescription drug costs are derived from a small group of claimants, whereby an average of less than 10 percent of claimants receiving drugs drive upwards of 70 percent of the total prescription spend.

“Workers’ compensation drug treatments need to be closely monitored to ensure that the claimant is getting the most effective and appropriate therapy for the right injury,” says Todd Pisciotti, the vice president of sales and marketing for Healthesystems.

Smart Business spoke with Pisciotti about the impact narcotics have in workers’ compensation and the challenges accompanying this prescribing pattern.

What does a typical prescription treatment pattern look like when treating or managing pain for an injured worker?

Depending on the severity, most workers’ compensation injury-related drug treatments are generally short-term — a worker hurts his back, he is treated by a physician and receives a prescription medication to ease the immediate pain, which coincides with other medical therapy. Ideally, the injury improves and the prescription is no longer necessary. However, the more complex injuries can turn into long-term claims and chronic pain cases. Often drug therapy side effects arise from the extended use of certain medications like trouble sleeping, acid reflux, etc. In many instances, other drugs can be prescribed to alleviate these conditions. However, over time this type of issue can escalate, turning into an ongoing drug treatment program involving multiple prescriptions, many times from different physicians, which may not necessarily be a good long-term solution for the injured worker or for the insurance payer.

What types of problems exist and where do they usually begin?

When prescription narcotics are involved, especially powerful and addictive opioids like Oxycontin, problems may exist from the beginning. A general practitioner, who may not usually treat severe acute injuries, may prescribe a narcotic right away, based upon limited knowledge of pain treatment regimens. Perhaps a lesser potent drug would have worked, but if the general practitioner wasn’t familiar with treating pain or didn’t know enough about the particular condition, the treatment could immediately start down the wrong path.

In cases where the treatment is appropriate for the injury, problems can still exist when the drugs start being used for the wrong reasons. Maybe the symptoms or pain have gone away, but the drug continues to be taken for the euphoric effects. Or perhaps, the drug is being diverted and sold on the street. This is why physicians, claims professionals and pharmacy benefit management (PBM) companies need to keep a close eye on treatments from the start. In most cases a pharmacist who dispenses the actual drug doesn’t have all the information available to look at a prescription and say, ‘it doesn’t look like you should have this,’ but the PBM should be monitoring all the prescription treatment data and alerting the claims professionals when it’s necessary.

How do prescribing patterns differ in acute cases versus chronic conditions?

Acute treatments are often ‘one-and-done’ — a quick treatment that’s wrapped up in under 45 days. Chronic treatments are for longer-term conditions, the worst of which can be lifetime. The challenge is identifying characteristics or patterns in acute cases to make sure prescribing doesn’t escalate when it shouldn’t. Sometimes drugs used to treat chronic conditions are prescribed for acute conditions, or are prescribed for off-label use. A good example is the drug Actiq, which is a powerful drug for treating break-through pain in cancer patients. Some physicians began prescribing it for other pain-related treatments outside of cancer. This is highly problematic because the strength and addictive nature of this drug is likely far beyond what is appropriate compared to the alternatives, in addition to the cost, which can exceed more than $2,000 per prescription.  

Are the pharmaceutical companies doing anything about narcotics abuse?

Pharmaceutical companies have been actively involved in trying to develop new formulations of pain treatment drugs in order to control abuse. New abuse-deterrent formulations are being created that should render a drug useless if someone tries to boil it, crush it or break it up (in order to then abuse the drug). This is great, but it still doesn’t address issues such as overdose or addiction when the drug is taken in its normal state. Not only that, ‘street chemists’ are pretty intuitive, and it may not take them long to find ways around the abuse-deterrent formulations.

Are there any ways to resolve these issues?

The key to managing the narcotic dilemma is education — making sure the right treatment is being used for the right condition, and that the patient is on the right treatment path. There isn’t a ‘one size fits all’ methodology. PBMs need to watch treatments as they occur and help educate doctors and patients about better alternatives, where available. Being proactive is the way to manage problematic drugs in workers’ compensation cases.

Todd Pisciotti is the vice president of sales and marketing for Healthesystems. Reach him at or (813) 769-5284.

The Michigan House and Senate have approved legislation to provide Michigan income taxpayers investing in qualified businesses a credit against their Michigan Income Tax, the Venture Investment Credit.

Similar to the Film Credit, which provided an incentive for movie producers to film on location in Michigan, this new bill (which is expected to be signed into law) provides a similar incentive for investments in qualified start-up businesses.

The Venture Investment Credit is intended to generate new investment in Michigan. Whereas the Angel Investment Credit provided tax relief only if the investment was successful, this credit mechanism is viewed as making Michigan more competitive in attracting venture capital with other states that have similar investment credit provisions, says Walter M. McGrail, JD, CPA, a senior manager at Cendrowski Selecky PC.

“This provision, assuming it is signed into law as expected, will reward the risk entrepreneurs take in qualified Michigan businesses,” says McGrail. “The legislation anticipates that the state may certify credits up to $9 million per year. This translates into certifiable investments of up to $36 million per year.”

Smart Business spoke with McGrail about the Venture Investment Credit, how it works and how it compares to other tax credits.

How does the Venture Investment Credit work?

The proposed legislation is effective for investments made during calendar years 2011, 2012 and 2013. Taxpayers will be able to claim a credit against their individual Michigan Income Tax for 25 percent of their investment in qualified start-up businesses. For example, if an investor makes a $100,000 investment in a qualified start-up venture, that person would be permitted a $25,000 credit against their individual Michigan Income Tax.

The credit is subject to maximum limitations. First, no more than $1 million may be certified for qualification in a start-up business in any given calendar year. Therefore, the maximum credit any one person or group of investors may claim relative to a single qualified investment is $250,000.

Investments of as little as $20,000 may qualify for the credit. There are also rules preventing investment in start up companies owned by family members.

The maximum amount of Venture Investment Credit that a taxpayer may claim for any given tax year in the aggregate is also limited to $250,000. For example, a taxpayer may invest $1 million in a single qualified business or $200,000 in each of five qualified businesses.

The taxpayer needs to provide his or her tax return preparer with a copy of the state certification to be attached to the income tax return claiming the credit. The credit claimed must be taken equally over two taxable years beginning with the year of certification.

The credit is a nonrefundable credit, so the credit claimed may only offset the amount of the tax due. If there is no taxpayer liability, the credit may not generate an overpayment, but unused credit may be carried forward for up to five years until it is used up.

What types of investments qualify for the Venture Investment Credit?

To qualify, an investment must be made in a Michigan-headquartered ‘Early Stage Business’ with fewer than 100 employees, that has a value of less than $10 million and that has been in existence for less than five years. Additionally, the business cannot have fully established commercial operations, it must be headquartered and domiciled in Michigan, it must have the majority of its workers working in the state and it cannot be a retail establishment. Businesses in existence for up to 10 years may also qualify if they have been linked to qualified university R&D programs.

Similar to the Film Credit, the Venture Investment Credit requires certification from a Michigan agency, in this case, the Michigan Strategic Fund. Investors must seek certification within 60 days of making the investment in order to qualify for the credit.

How does the Venture Investment Credit compare to other tax credits?

The Angel Investment Credit, passed in February 2009, provided for a reduction in the amount of gain recognized, if any, from a sale of the investment several years after the investment was made. In contrast, the new Venture Investment Credit provides for a percentage of a qualified investment as a credit against Michigan Income Tax. The credit is claimed in the year the investment is made, not the year the investment is harvested.

Additionally, while the Angel Investment Credit provided tax relief only if the investment was successful, the Venture Investment Credit may be utilized even if an investment does not achieve a successful harvest.

Assuming it is signed into law as expected, entrepreneurs taking the risk of investing in qualified Michigan businesses will be rewarded for their efforts, and not necessarily their results. The rationale behind the structure of this latter credit is that it will incentivize entrepreneurs to create businesses in Michigan, a fraction of which will likely help energize the state’s economy.

WALTER M. McGRAIL, JD, CPA, is a senior manager at Cendrowski Selecky PC. Reach him at (248) 540-5760 or

Commercial lenders continue to dig themselves out of the credit crisis that began in 2008. In doing so, many lenders are trying to shore up their balance sheets by writing down the loans that, in hindsight, they regret making. However, the law requires that a lender have a legitimate basis to call in a loan or otherwise declare a default.

In general, a loan agreement is like any other contract — there are rights and obligations that run both ways. A lender can breach a loan agreement just as easily as a borrower can default. Thus, lenders must treat their borrowers fairly and as required under the loan agreement and applicable laws. If they don’t, they are subject to litigation.

“Lender liability claims have not gained this much attention since the last banking crises in the late 1980s and early 1990s,” says Monte Mann, a partner with the business litigation specialty firm Novack and Macey LLP. “These claims have returned to prominence since the credit crisis began in 2008 because banks have been trying to improve the overall health of their commercial loan portfolios by, among other things, declaring borrower defaults.”

Smart Business spoke with Mann about lender liability claims and how — as a commercial borrower — you can maintain better balance of power in the relationship with your lender.

What is lender liability?

Lender liability is a general term used to describe a variety of claims that borrowers assert against lenders. These may include claims for breach of: (i) a loan commitment or loan agreement; (ii) the duty of good faith and fair dealing that the lender owes the borrower; (iii) fiduciary duty; or (iv) any other legal obligation the lender owes the borrower.

For example, since 2008, there has been a dramatic increase in the number of lawsuits in which builders and real estate developers have sued lenders, alleging that lenders have improperly refused to honor written commitments to fund construction loans. Moreover, although it may seem counterintuitive, borrowers may have claims against lenders even in instances in which the borrower concedes that it has failed to make payments required under a loan. In particular, borrowers have increasingly sued lenders for selling loan collateral for less than fair market value.

The relationship between lender and borrower is typically harmonious at the beginning, but when it goes bad, it does so quickly. Commercial borrowers must know that they have rights and understand them in order to protect themselves.

Cynics contend that in the current lending environment, unscrupulous lenders are contriving defaults in order to call in loans. In other words, skeptics argue that lenders are actively searching for technical deficiencies to exploit circumstances that they never would have acted on during better economic times. Commercial borrowers must be aware, prepared and protected.

What should a commercial borrower look for if it thinks it may have a lender liability claim?

Commercial borrowers should keep a close watch on the borrowing relationship and must be keenly aware of any sudden changes in lender conduct. Consider pursuing a lender liability claim if your lender:

  • Wrongfully refuses to honor a loan commitment
  • Wrongfully refuses to honor a ‘side deal’ that is not in the loan agreement
  • Wrongfully fails to fund a loan
  • Wrongfully refuses to renew a loan
  • Negligently processes or administers a loan
  • Misrepresents information about a borrower in responding to third-party credit inquiries
  • Threatens to take enforcement action, which it does not intend to carry out but that causes the borrower to act to its detriment
  • Improperly forecloses a deed of trust, a mortgage or a security agreement without giving the required notice or otherwise following proper statutory procedures
  • Sells a borrower’s collateral for less than its fair market value
  • Interferes, to the borrower’s detriment, with a borrower’s day-to-day management or contractual relations with third parties
  • Breaches a fiduciary duty that may have arisen or that a lender may have assumed, whether purposely or inadvertently, with respect to a borrower
  • Engages in other acts that may constitute a breach of the lender’s duty of good faith to a borrower in carrying out the terms of the parties’ loan contract

What are the potential consequences of failing to stay on top of your financing relationships?

Borrowers need to carefully monitor their relations with lenders to quickly recognize if they are being mistreated. Borrowers may have valid claims against lenders without realizing it. Again, this isn’t a one-sided relationship in which the lender has all the power and can do whatever it wants. If a lender engages in misconduct, a borrower must be able to recognize it and use it as leverage to bring balance back to the relationship — even if the borrower does not intend to file litigation against the lender.

Additionally, the line of communication between the borrower and lender needs to remain open. Good lenders have three separate teams — the origination team that sources the loan, the loan administration team that administers the loan and the workout team that deals with loan defaults. The borrower needs to show the administration team and, if need be, the workout team, that it is a thoughtful and savvy borrower, and that it knows how to assert leverage to bring balance to the relationship.

If you think you may have a lender liability claim, who should you consult?

The best person to consult is legal counsel who has litigated lender liability claims in the courts. The experienced litigator will be able to tell you if you really have the basis for a lender liability claim.

Monte Mann is a partner with the business litigation specialty firm Novack and Macey LLP. Reach him at (312) 419-6900 or

Several significant tax law changes will come about as a result of legislation passed in September of this year and legislation passed in previous years that is set to expire at the end of this year.

One of the most significant is the Small Business Jobs Act of 2010. This law, signed by President Barack Obama in September, extends or increases several cost recovery incentives regarding the acquisition of new depreciable property used in a trade or business.

The law extends a 50 percent first-year bonus depreciation that had been set to expire at the end of 2009 until the end of this year. Under bonus depreciation, a company can accelerate depreciation that would otherwise be deducted in later years.

Qualifying equipment must be purchased and placed into service on or before Dec. 31.

“Even the depreciation deductions allowed with respect to passenger automobiles are increased under bonus depreciation,” says Walter M. McGrail, JD, CPA, a senior manager at Cendrowski Selecky PC. “Absent bonus depreciation, passenger automobiles are typically subject to a maximum depreciation deduction in the first year of approximately $3,000. For 2010, maximum first-year depreciation for passenger automobiles is $11,060 ($11,160 for light trucks).”

Unlike Section 179 expensing of the cost of newly acquired depreciable business property, adds McGrail, bonus depreciation is not limited by the size of the business or the dollar value of investment in new depreciable property.

Smart Business spoke with McGrail about the Small Business Jobs Act of 2010 and the key areas that businesses need to pay attention to in the coming months.

What is changing in regard to Section 179 expensing?

The new law increases the maximum deduction for newly acquired depreciable property to $500,000. Qualifying taxpayers may deduct up to $500,000 in the cost of qualifying depreciable property in the year of purchase in lieu of recovering the cost of such property in annual depreciation charges.

A taxpayer’s ability to obtain this deduction is limited by the overall investment in depreciable property for the year. However, the new law increases this overall limit from $800,000 to $2 million for tax years beginning in 2010 and 2011.

How do the qualified small business stock provisions work?

The qualified small business stock provisions have a short fuse and limited applicability, but there are significant advantages for investment in small business stock. The new law increases the benefits of investing in qualified small business stock.

For investments in qualified small business stock post September 2010 and before January 1, 2011, 100 percent of any resulting gain on such stock is excluded from taxation if held for five years. Under the new law, the excluded gain will not generate AMT tax.

Acquired shares must be newly issued shares of a C corporation, not an S corporation, and held until at least 2015.

To be eligible for the exclusion, the individual must generally acquire the small business stock at its original issue (directly or through an underwriter) for money, for property other than stock, or as compensation for services. When the stock is issued, the aggregate gross assets of the issuing corporation may not exceed $50 million. In addition, the corporation also must use at least 80 percent of the value of its assets in the active conduct of one or more qualified trades or businesses.

The amount of gain eligible for the 100 percent exclusion by an individual with respect to any corporation is capped at the greater of 10 times the taxpayer’s basis in the stock, or $10 million.

Are there any other provisions to watch out for?

A C corporation that converts to an S corporation will generally incur federal income taxes on sales of its appreciated assets held at the date of conversion for a period extending 10 years following the conversion. Previous legislation had reduced this holding period to seven years for dispositions during 2009 and 2010.

The new law further shortens the holding period to five years beginning in 2011.

The new law raises the deduction limit for startup expense from $5,000 to $10,000 and increases the phaseout threshold to $60,000 for one year, 2010. Startup expenses are costs related to creating an active trade or business, or investigating the creation or acquisition of an active trade or business.

The increase is viewed as an incentive to investigate and create new businesses.

What tax provisions are expiring at the end of the year?

Prior to the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the individual marginal income tax rates were 15, 28, 31, 36 and 39.6 percent. EGTRRA gradually reduced the individual marginal income tax to 15, 25, 28, 33 and 35 percent, with a phase-in of rates at 10 percent.

Absent intervening legislation, effective for tax years beginning after Dec. 31, 2010, marginal tax rates will revert to 15, 28, 31, 36 and 39.6 percent. These rate hikes are in addition to the 0.9 percent Medicare tax on earned income above $200,000 ($250,000 for married couples filing a joint return) and a 3.8 percent Medicare tax on the lesser of the individual’s net investment income for the tax year or modified AGI in excess of $200,000 ($250,000 for married couples filing a joint return).

In addition to the increase in tax rates, the phaseout limitations for personal exemptions (both AMT and regular tax) and itemized deductions will return to previous limitation amounts, effectively reducing the benefit of such deductions.

WALTER M. McGRAIL, JD, CPA, is a senior manager at Cendrowski Selecky PC. Reach him at (248) 540-5760 or

Local papers ran an eye-catching story recently about a “smiling and smartly dressed middle-class couple” that nearly died trapped beneath a mountain of stuff that had accumulated in their home over the course of many years.

We marvel at stories like these and wonder how anyone could make this big of a mess. And yet, “a surprising number of us who work with business organizations or professional service firms — in offices that are otherwise orderly — let e-mails just pile up in our inbox, sent folder and trash bin,” says John F. Shonkwiler, a partner with Novack and Macey LLP. “Don’t do this. It is not a smart business practice and, if your company becomes involved in litigation, it can cost an awful lot of money to sort through the mess. Every person in your office should be encouraged to organize their e-mails, just as they organize paper documents.”

Smart Business spoke with Shonkwiler about how keeping e-mails neatly organized and cataloged can save you money and time, especially should you ever be involved in litigation.

What happens with e-mails that are subject to discovery in litigation?

Over the past decade, as litigators have tried to get their arms around electronic communication and how to handle it in terms of discovery applications, the ‘dump and search’ method has become common. In litigation, dump and search refers to the way information is obtained from the litigants, when massive amounts of data and information are dumped off of a server without any discretion. It is then transferred to where it can be electronically scanned and searched using search terms related to the litigation. Once that data is gleaned, a manual search is done for relevance and privilege.

Needless to say, the time and expense required to perform the dump and search process is typically proportionate to the size of the e-mail data dump — in many cases, massive — not the least of which is lawyers’ fees for reviewing the (often still massive) quantity of e-mail identified by the term search process. Then, even after that process is completed, the e-mails usually have to be processed and converted by a vendor so that they’re compatible with litigation software.

This is a long and complicated process for just one person’s e-mail. When you have to gather and produce several employees’ e-mail, it can easily take several months to perform the dump and search process. Perhaps the scariest part is that the quantity of e-mail generated in the workplace is only growing as we continue to develop into a community of BlackBerry and smart phone addicts. Because the process is expensive and burdensome, courts must be receptive to alternatives.

How can you handle e-mails in a way that a court ought to accept?

Companies need to require organization. Each and every employee needs to file away e-mails, just like they do with paper documents in a filing cabinet. And filing e-mails is even easier than filing paper documents. With a click of the mouse, you can create folders and subfolders in your e-mail program and drag e-mails into those folders. You can even do this officewide with file-sharing software.

And employees need to dispose of e-mails when appropriate. There is no reason why employees cannot be trusted to do this; they do it with paper every day. Employees simply need to be asked to handle e-mail like they handle paper, including exercising the same discretion that they’ve always exercised in the ordinary course to file and dispose of things.

Litigation hold procedures still need to be strictly followed to preserve information that may be subject to discovery in litigation, but that doesn’t mean that e-mail needs to be treated any different than paper. In short, courts have always tolerated the human element that is part of all hard copy document handling in the workplace and in the discovery process. There’s no reason to believe that judges will not permit litigants to deal with electronic documents in this very same manner. And, as the alternative becomes more and more burdensome, there is every reason to believe that courts will tolerate it.

What do you do if not all employees comply with this directive?

This has benefits even if everyone doesn’t do it. Like anything, you’ll get some employees to organize their e-mails more diligently than others. But every employee who keeps things in order is one fewer employee whose e-mails will have to be dumped and searched.

What else should employers tell their employees about e-mail?

Teach discretion and responsibility. You don’t always have to be on your BlackBerry, firing off every thought that comes to mind. Before you click ‘send,’ consider whether you want to be creating this record and whether the message can be communicated more efficiently by phone or in a meeting. If you require that all e-mails be filed, your employees should naturally be inclined to be more careful about what they send in the first place.

What are the consequences of not filing e-mails?

The task of identifying and producing relevant e-mails is overwhelming and expensive, so much so that a client may ask its lawyers to take short cuts in the review process. But if you do that, it could lead to the unintended release of confidential, privileged, irrelevant and/or embarrassing information. And if that weren’t bad enough, the money the client was hoping to save may be spent anyway in motion practice fighting to recover documents that never should have been produced.

Litigating can be expensive, and clients and lawyers need to recognize and take advantage of opportunities to manage costs whenever possible without compromising quality. Organizing e-mail is a no-brainer, because it’s something you should be doing anyway. And, for those who needed one more compelling reason to take on the imposing task of cleaning up your electronic junkyard, now you have it. It can reduce your legal bills.

John F. Shonkwiler is a partner with Novack and Macey LLP. Reach him at (312) 419-6900 or

In today’s business environment, mobility has become a critical factor. People are constantly on the go, and they need their data, wherever they are, at any time of the day. And they need that access to be fast, easy to use and reliable.

Simply put, if your employees are out in the field trying to find a Wi-Fi connection at a hotel or coffee shop, you’re at a significant competitive disadvantage. Not to mention the money you’re wasting on wireless cards and connection fees.

As a result, more and more companies are embracing wireless solutions, technologies that allow people to access data anytime, anywhere.

“It has become incredibly affordable for businesses to implement wireless technologies,” says Jitesh Bhayani, of Time Warner Cable Business Class. “If you’ve been spending money on per-day access charges at hotels or coffee shops, a wireless solution is a no-brainer. If your people are on the road and need access to the Internet, to access their data, they need a wireless solution.”

Smart Business spoke with Bhayani about wireless solutions, how they work and how you can benefit from using them.

What technologies are available to help with wireless data and mobility?

A very popular technology that’s growing every day is a 3G or 4G mobile network — a high-capacity mobile broadband network that uses WiMAX (Worldwide Interoperability for Microwave Access), a wireless technology standard. These networks offer high-speed mobile Internet connectivity anywhere you need it, without having to find a Wi-Fi hotspot.

Taking this anywhere, anytime connectivity a step further are new hotspot devices that allow you to connect multiple Wi-Fi-enabled devices at the same time. These coaster-sized devices provide a high-speed mobile Internet connection for up to six users at the same time, assuming they’re at the same location.

It’s a wireless connection, but you have to be in the same general vicinity. So now you can send six people out into the field and they’ll be able to connect to the Internet and access all of their data wherever and whenever they need it.

What’s the difference between 3G and 4G?

You’ve probably heard a lot recently about 3G and 4G networks. 4G refers to the fourth generation of cellular wireless standards, which is a successor to 3G. 4G provides higher data rates compared to 3G technologies, allowing you to access applications, stream content and download e-mails and attachments faster.

4G offers network speeds up to 6 Mbps. Typically, you can expect download speeds of 3 to 6 Mbps, with bursts of up to 10 Mbps and uploads up to 1 Mbps. 3G network speeds average .3 Mbps to 1.4 Mbps for downloads, peaking at 3.1 Mbps and .35 Mbps to .5 Mbps for uploads, peaking at 1.8 Mbps.

Actual speeds may vary based on a number of factors, including signal strength, your wireless device, structures, buildings, geography, etc.

Besides speed, what other benefits do wireless solutions provide?

When your people are on the road, they likely pay $10 to $20 a night to use their laptops in their hotel rooms. Then, once they leave the hotel, they have to stop at a coffee shop to send e-mail, or ask clients to connect to their network to share files.

Needless to say, this method is inefficient, costly, time-consuming and, often, unreliable.

A wireless solution saves money and increases productivity. Your employees can use their computers to access the Internet anytime, anywhere. And you don’t have to worry about them connecting to unsecured networks.

With just one device, your employees will be able to connect to the Internet, and, with a VPN, access everything that they would be able to at the office, whenever they need it. There are three major benefits to wireless solutions:

  • Your users will have access to both 4G and 3G networks, so they’ll always have network connectivity, no matter where they travel.
  • You’ll be able to increase productivity by connecting multiple Wi-Fi-enabled devices, including laptops, PDAs, network printers and scanners. Users will be able to share their connection with co-workers or clients, again, assuming they are at the same location.
  • Easily compatible with Wi-Fi-enabled computers, allowing you to access the Internet quickly and without purchasing additional hardware.

Are there any drawbacks to wireless solutions?

Like with your cell phone, there is always the possibility of a dropped connection, but these are usually few and far between. Also, like a cell phone, there may be certain spots in an area or a building where you simply can’t get service.

In addition, if you have to move from a 4G connection to a 3G one, or vice versa, you may have to reconnect to the network.

Other than that, wireless hotspot devices are durable and reliable. You do need to keep them charged, of course.

Jitesh Bhayani is with Time Warner Cable Business Class. Reach him at (614) 255-6378 or

When people think of high-definition (HD) television, they usually think of the televisions in their homes.

However, HDTV services are being used more and more by businesses — especially the hospitality industry — to give their customers an even higher level of service and value.

Major hotel chains are upgrading their guest rooms with HD televisions and services, and more are expected to do so in the future, as today’s travelers want all of the comforts of home, no matter where they are.

By offering HDTV services to their guests, the hospitality industry is trying to meet those needs and provide their patrons with a high-quality experience.

“It’s all about content, and you have to be able to deliver the content that people want,” says Glen Hardin, senior director of video systems for Time Warner Cable. “We’re in the midst of a digital revolution, and customers want more services, in more ways and in more places.”

Smart Business spoke with Hardin, who is working with Time Warner Cable Business Class on HD solutions, about delivering HD services to businesses and why HD is becoming increasingly important for the hospitality industry and for business in general.

Why has HD become so important?

High-definition television has transformed the way people view movies, television programs, Web pages and any other kind of visible content.

Although HDTV uses approximately the same bandwidth as analog signals, HDTV transmits more than six times the information, leading to a significant improvement in sound and quality. Often, consumers visually see an improvement in the picture and sound, in addition to high-quality programming and the opportunity to watch their favorite programs in widescreen format, and never want to return to regular television again.

The hospitality industry is keeping up with this market for HD, but it is not the only business that can benefit from this high-quality experience. Businesses with a TV in a waiting room, or a bar or a restaurant that airs games or events, or even a lobby that shows entertainment or informative programming, can benefit from HD. With its high-quality content, outstanding technology and convenience, HDTV can make a big difference to a company’s clients.

HDTV’s premium quality and content add to the customer experience. According to the 2010 North America Hotel Guest Satisfaction Study by the firm J.D. Powers and Associates, having intuitive, useful and recognizable in-room technology is one of the main amenities that business and luxury travelers are looking for in a hotel room, aside from the cleanliness of the room.

Why is cable leading the way in the HD revolution?

Cable is reliable and proven. Widely available, cable companies already provide HD content to all kinds of businesses. Field technicians, who specialize in the delivery and maintenance of cable service, are locally available to support immediate business needs.

In addition, cable offers another advantage in that the millions of cable subscribers who travel and frequent hotels and businesses are already familiar with cable TV’s services and growing HD programming, and they want the comforts of home when they travel.

Business requirements for HD service are often more complex than those of a home viewer and cable can use its flexibility to more than meet those needs.

A cable company can offer the most robust lineup a business owner can offer and it’s often of a higher quality than what’s available through any other means. With cable, a consumer gets local affiliates, regional sports channels and national cable television programs, delivering relevant community television.

In addition, cable’s flexibility and local account management system and support make HD the perfect solution for businesses such as those in the hospitality industry.

What other business benefits can HD bring to an organization?

Providing HD content to a business provides benefits on several levels. Guests, clients and employees will receive the highest quality viewing experience. In addition, depending on the line of business, this factor may drive repeat business and higher levels of satisfaction.

Patrons want to frequent establishments with HD televisions and programming, and travelers are looking for establishments that provide the comforts of home. Finally, employees can benefit from staying on top of news, current events and financial market information.

No matter how you evaluate your cable television needs, chances are that they would be better served in HD. As technology evolves and HD programming becomes the standard, businesses will undoubtedly need to migrate their services in order to continue meeting their clients’ expectations.

Glen Hardin is the senior director of video systems, advanced technology group, for Time Warner Cable. Reach him at

In this day and age, employees are coming to terms with the fact that pay increases are few and far between. Still, hard work should not go unrecognized, so companies are looking for new and different ways to reward their top performers.

A good benefits package can go a long way toward keeping an employee motivated and engaged. It can also swing a prospective employee’s decision your way — an edge any company could use in today’s competitive job market. And today, employees are looking for more than the traditional medical and dental benefits.

But, you can’t just offer the traditional medical and dental benefits. Employees are looking for more, so it would behoove a company to find out what their employees want and need — and then give it to them.

“Offering attractive and affordable benefits in addition to traditional insurance keeps employees engaged,” says Melissa Hulsey, president and CEO of Ashton. “By creating a plan that suits your specific work environment, you end up with a happier, healthier and more productive staff.”

Smart Business spoke with Hulsey about implementing effective benefits programs.

Why are benefits so important to today’s work force?

The benefits package your company offers says a lot about the culture and personality of your business. It is important to consider three main factors when designing your plan — avoiding economic hardships for employees due to illness or disability, providing employees with some form of retirement income and creating a system of leave. Good talent demands more than a paycheck and if you do not offer a competitive benefits package, your competitors will.

What benefits are most important to today’s work force?

Even with recent legislative changes, access to health care is still the No. 1 benefit for employees. Vision, dental and disability are also highly desirable. Other standard and very popular benefits include life insurance, retirement plans, flexible compensation (cafeteria plans) and employee leave. Automating the enrollment process and ease of information regarding the benefit plan is very important to employees, as well. Offering an easy-to-use, Web-based system will bring added value to an existing benefits program.

Why is rewarding employees so important?

Rewarding and recognizing employees leads to retention. We all feel the need to be appreciated. Recognition of a job well done communicates that our work is valued and respected. This sends an important message to the recipient and other team members about job performance and a company’s ability and willingness to just say ‘thank you.’ A successful reward/recognition plan includes the ability to identify good performance by communicating expectations, immediately recognizing the performance and then giving meaningful rewards.

Rewards can be as simple as posting top performers in company newsletters or on bulletin boards. Hosting ice cream socials or having the boss serve lunch are other fun ways to reward employees. Reward wheels are also very popular. Items like a free day off, leaving early on Friday, free lunch, gift cards and free car washes are posted on a wheel that employees take turns spinning. Be creative with rewards — cash is always nice but sometimes simply appreciating the talent you have goes a long way in building employee loyalty.

What if an employer cannot afford to fully fund benefits?

Most benefits plans offered by small or midsize businesses are not fully funded by the employer. When deciding what benefits to fund or partially fund, a good benchmarking of your largest competitors’ benefits may help decide where your money is best spent. In today’s economy every little bit helps, so do not underestimate the importance of contributing even a small amount to the benefits that are important to your population.

What are some examples of nontraditional benefits?

Nontraditional benefits are as varied and unique as the companies that offer them. Unconventional examples include bringing your dog to work, a handyman on staff to assist with home repair while employees are busy at work, weekly in-office massage therapy, a full-time concierge and dry cleaning services. Some of the more popular options include offering paternity leave for new fathers. Allowing men to be at home with a new baby and take a more active ‘daddy’ role is a big deal to families. While this is becoming standard with large corporations it can set a small to mid-size business apart from others. Paid or non-paid this can put a feather in any company’s benefit hat.

On-site child care, child care discounts or a child care allowances are all great ways to assist parents with young children. Offering unpaid leave is a no-cost way to add a benefit. Studies have shown that employees will take six to nine unpaid days per year if available to them. Telecommuting and flextime also top the list of widely used nontraditional benefits. Another trend is moving to a completely performance-based model. In this situation there are no set hours, just very defined job expectations and goals. As long as these standards are being met employees can set their own hours and enjoy the ultimate in job flexibility.

How can employers help employees with work-life balance?

The first thing employers can do is survey their work force. Design a plan that is important to you and be willing to listen and make changes when necessary to keep it current. Secondly, be creative and have an open mind to new ideas. Companies can always pick a ‘beta’ group before rolling out a new benefit to the entire company. Work-life balance is more important now than 10 years ago, and the trend will only grow as the next generation enters the work force.

Melissa Hulsey is president and CEO of Ashton. Reach her at (770) 419-1776 or

British Petroleum (BP) has topped headlines for weeks as it continues to struggle with the oil spill in the Gulf of Mexico. However, in addition to destroying BP’s goodwill with the public, the spill has also made BP the focus of a government-originated criminal investigation.

Missteps in the days immediately following the launch of a governmental investigation can have costly and far-reaching consequences for any company, so you need to be prepared.

“Cooperate, be honest and forthcoming, have a complete and total understanding of your company and communicate with your employees,” says Theresa Mack, a senior manager at Cendrowski Corporate Advisors. “You need to have proper procedures and processes in place early on so you’re not scrambling.”

Smart Business spoke with Mack about what to do when your company becomes the focus of a government investigation.

If a company is facing a government investigation, what are the first steps it should take?

A firm often learns it is going to be the subject of an investigation when an agent either serves a search warrant or requests an employee interview. There’s no time to prepare, so firms need to have processes in place to handle these situations.

One of the most important steps after being informed of a governmental investigation is the preservation of documents. Once a firm has been notified of the investigation, its counsel should issue a written directive — a preservation memo — to everyone in the company, telling them not to destroy any documents. This goes for all offices and branches of the company worldwide, not just the physical location where the investigation started.

Do not destroy or delete anything that could be perceived as important to the investigation. If the investigation leads to a trial and the destruction of documents comes to light, there can be dire ramifications. And in these types of investigations, everything comes to light eventually.

Firms must be especially careful about the inadvertent destruction of documents. Many servers automatically delete stale e-mails or documents housed in electronic storage areas. If employees are leaving the company, their records should be maintained rather than deleted. This will likely require informing a firm’s IT staff about the investigation to ensure none of this happens. Firms can go one step further and have IT staff back up everyone’s data, so even if people delete documents on their machines, a copy has been preserved elsewhere.

How do you know where your company stands during an investigation?

First and foremost, cooperate with the investigation. Your counsel should be in contact with the prosecutors. Be responsive and timely, and ask questions. Make sure you ask what your status is in the investigation, as all companies and individuals fall into one of three categories: witness, subject or target.

A witness is not yet under suspicion but may have information of interest. A subject is someone whose conduct is within the scope of the investigation, but it is uncertain that any crime has been committed. A target is someone whom the prosecutor has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant. You do not want to be a target.

Make sure that the prosecutor is using these terms properly and have your counsel make sure that the prosecutors are properly relaying the status of the investigation. Some prosecutors are more willing to discuss the investigation than others. Some will provide nontarget or nonsubject letters to the individual upon request. This is often a request made before someone will submit to an interview, assuming that he or she is not a target of the investigation.

What else should be considered in an investigation?

If your firm has been notified of an investigation, often a subpoena for testimony, records or documents will be issued. Subpoenas have specified deadlines that need to be adhered to, or recipients run the risk of being held in contempt of court. A recipient, however, can sometimes receive an extension if he or she shows reasonable cause. This is just one reason why subpoena recipients need to be in constant contact with prosecutors.

Depending on the situation, and especially if the government is investigating misconduct or fraud by management or senior executives, consider prohibiting the trade of the company’s stock by the firm’s treasury and by those with knowledge of the investigation.

Also, firms should be aware of applicable state laws. Documents filed in court cases are open to the public in some states and firms should be very careful with communications — a document sent to a prosecutor might be filed in the court case and thus available in the public domain. Additionally, keep in mind that all forms of communication can be discoverable.

Should a company make a public statement if it is under investigation?

Some companies will want to send out a press release right away to show that they’re on top of things, but firm executives and board members should first weigh their options. Will coming out to the public impact the company’s value and/or stock? Are you sure that the investigation will lead to charges? Often, an investigation ends with minimal evidence and the case is closed before it can go to court, so do not speak too soon.

However, if you do decide to disclose the investigation, ensure everyone in the company knows exactly what to say. Don’t lie and don’t deny.

You never know who someone could be talking to — and with the Internet, information is easily leaked — so be sure that everyone says exactly what you want them to say and be sure it is the truth.

Theresa Mack is a senior manager at Cendrowski Corporate Advisors. Reach her at (866) 717-1607 or, or visit Cendrowski Corporate Advisors’ Web site at

Individuals with sound credit standing are often asked to provide credit enhancements to banks or other lenders for loans made to another person.

These credit enhancements might be required for entities in which a person has invested, in trades or businesses they operate, or for friends and relatives they wish to assist. They can lead to co-borrowers, personal guarantees, collateralization agreements and/or indemnification agreements with borrowers.

“Although the particular laws differ from state to state, when a debtor defaults on a debt that some other party has guaranteed, the debtor becomes obligated to the guarantor in an amount equal to his or her guarantee,” says Walter M. McGrail, JD, CPA, a senior manager at Cendrowski Selecky PC. “This is often referred to as subrogation and has significant tax implications.”

Smart Business spoke with McGrail about guarantees and what you should consider before serving as a guarantor.

Can making good on a guarantee result in a tax deduction?

If guarantors make good on their guarantees, the tax benefit of doing so generally depends on the reason for providing the guarantees.

A guarantee of a debt incurred in a taxpayer’s trade or business results in an ordinary loss. If the guarantee was provided for an investment that is not the taxpayer’s trade or business, the loss is a short-term capital loss.

If the guarantee was strictly personal, there is no tax deduction available to the guarantor.

In order to get an ordinary or capital loss, the taxpayer must also be able to demonstrate several facts. The obligation to make good on the guarantee must have been enforceable by the lender before the original debtor defaulted on the debt.

Also, the guarantor must have received some benefit as a result of making the guarantee, such as secured financing for the guarantor’s trade or business, or a fee from the original debtor.

If an individual taxpayer meets the criteria for obtaining a deduction, he or she may claim the related deduction in the year that the taxpayer actually made payment of the underlying debt that was guaranteed. If an individual guarantor signs a new note with the lender to make payment, then the guarantor takes a deduction each year equal to the amount that he or she actually paid during the year.

In the case of someone other than an individual cash basis taxpayer, for example, if the guarantor is an accrual basis partnership, corporation or LLC, such a taxpayer would be entitled to take the deduction in the year that such person becomes primarily liable for the debt.

Does a taxpayer have to pay income tax if he or she defaults on a guarantee?

Once the lender informs the guarantor that the lender intends to collect a debt directly from the guarantor, the guarantor must decide whether he or she is able to make good on such debt. If the guarantor defaults on all or a portion of such guaranteed debt, the guarantor may be responsible for income tax on this default.

Generally speaking, if a taxpayer is relieved of an obligation to repay a debt (sometimes called debt discharge), the taxpayer recognizes income to the extent that it pays less than the face amount of the debt. There are several exceptions to paying tax on debt discharge income available to most taxpayers, such as discharge of debt in bankruptcy or insolvency.

However, guarantors of indebtedness are entitled to a unique exception. They do not have to pay tax on discharged debt to the extent the payment of this debt would have entitled the guarantor to an income tax deduction. When the original debtor defaults, subrogation results in a liability due from the original debtor to the guarantor. When the original debtor does not pay this subrogated liability, the guarantor becomes entitled to a tax deduction.

So, as long as the guarantor would have obtained a deduction, he or she will not recognize income. This exclusion applies regardless of whether the deduction would have been an ordinary deduction or a capital loss.

Finally, when a taxpayer serves as a guarantor for the debt owed by a partnership, LLC or S corporation, care must be taken to avoid income tax on forgiven debt. Remember, when subrogation occurs, the entity becomes a debtor to the guarantor.

However, if the guarantor forgives this subrogated debt, the entity may have income from discharge of indebtedness. Such tax consequences flow through to individual owners, including owner guarantors.

What should someone consider before agreeing to serve as a guarantor?

First, consider the creditworthiness of the original debtor. Is the debtor financially viable, or is the risk of viability an acceptable risk? Second, is there a way to ‘buy down’ the guarantee? Could the debtor incur a little higher interest rate and avoid the necessity for a guarantee?

Finally, especially if it involves guarantees of family member loans, consider whether the guarantor should charge a guarantee fee of 100 to 300 basis points to document the benefit required to obtain a tax deduction.

WALTER M. McGRAIL, JD, CPA, is a senior manager at Cendrowski Selecky PC. Reach him at (248) 540-5760 or