Booz Allen’s liability, Europe and the NSA, and Obamacare as stimulus

June 10, 2013

1. Booz Allen’s liability in the government snooping leaks:

We now know that the source of last week’s leaks revealing various U.S. government data collection and surveillance activities is a low-level employee of the giant consulting firm Booz Allen Hamilton, which the New York Times reported on Monday was paid $1.3 billion last year by various American intelligence agencies under multiple contracts related to data collection and analysis. (The firm’s website  has a whole section under “Intelligence Community” about how Booz turns “Big Data Into Big Insights.”)

So, the obvious question is what do those contracts say about the firm’s liability if one of its employees spills its client’s secrets resulting in what Director of National Intelligence James Clapper calls “gut=wrenching” losses? Can we at least get some or all of our money back? (The company’s stock was down in Monday morning trading, perhaps in anticipation of such problems.) If not, why not?

2. Greenwald’s conflict?

Revealing Snowden’s identity was Guardian reporter Glenn Greenwald’s latest in his series of scoops on U.S. government snooping. Greenwald posted a video interview with Snowden in which the Booz Allen employee says he revealed the government’s intelligence programs to Greenwald to expose abuses of what he called “a surveillance state.”

I’d sure like to know exactly how much, if at all, Greenwald encouraged the 29-year-old Snowden to turn himself in. After all, the main beneficiary of Snowden’s confession is Greenwald – because now it’s Snowden who will likely be prosecuted while Greenwald will avoid all of the legal hassles that would have come from an investigation aimed at finding his source.

3. Look to Europe for the next fight over NSA snooping:

This paragraph in a Wall Street Journal report  on Saturday summarizing the week’s revelations about the snooping programs should be a launching point for lots of stories in the coming days:

Obama administration officials stressed Friday that the NSA surveillance program focuses on foreign nationals, not Americans. But for companies like Facebook — which counts roughly 80% of its monthly users outside the U.S. and Canada — the disclosure of surveillance on foreign nationals raises its own problems.

A backlash, privacy advocates warned, may be particularly strong in Europe, where governments and citizens have been more sensitive to privacy issues.

American companies that have operations in Europe and seek to do business with, and collect data from, Europeans online cannot bring the data into the United States unless they obtain something called “Safe Harbor” status – meaning they are vetted to make sure they are protecting the data the way Europe’s tight regulations demand it be protected.

So it seems obvious that European privacy regulators are now going to demand to know how Facebook and all the others could not be committing wholesale violations of those Safe Harbor promises by allowing the NSA or FBI access to everyone’s emails, chats, phone calls, and other data. For some, the answer may be that the companies kept the data on servers in Europe, but if that’s the case then those companies clearly violated the promises they must make under Europe’s tough privacy laws, or still violated their Safe Harbor promises because they allowed the NSA or FBI  to tap into the data from the U.S. or bring it into the U.S.

Here’s a summary  of how Safe Harbor works. Is there any way these companies won’t be accused of violating its required privacy protection self-certifications? Did these companies somehow seek and get U.S. government protection from the likely wrath of European officials – and how is that now going to play out?

4. Obamacare’s stimulus:

Lately, I’ve been reading lots of healthcare industry trade publications covering the implementation of Obamacare, and I’ve been added to lots of related email lists. What I’ve seen cries out for a fun feature in the Wall Street Journal or other business publication: Do a count of the number of seminars, conferences, and “summits” being held in Washington and across the country promising to help insurers, benefits managers, hospital executives, lawyers, government officials and others in and around the healthcare industry understand the ins and outs of Obamacare. From the ads and other promotional material I’ve seen lately, I’m betting there are hundreds coming up between now and the end of the year.

Then do a count of what it would cost for one person to attend all of them. I’ll bet it’s over $200,000 (not counting stimulants to keep attendees awake).

Then estimate the attendance at each and multiple by the average price of a ticket, add in an estimate of related travel expenses, and I’m guessing just this round of seminars intended to help industry experts understand a government program has stimulated the economy to the tune of $50 million to $100 million dollars. And that’s not counting the many more millions being paid to squadrons of consultants who are getting hired because these conferences hardly do the trick.

5. Obamacare and labor law:

Speaking of the ins and outs of Obamacare, I got copied last week on an interesting email to his clients from Ralph Weber, an employee benefits consultant. Weber wrote to alert them to a legal angle I hadn’t thought of — and haven’t seen written about — that could end up generating a slew of dicey lawsuits.

Weber points out that “Countless employers and their advisers are considering a healthcare reform strategy of cutting employees’ weekly hours to less than 30 hours to try to avoid dealing with coverage requirements under” Obamacare.

However, Weber notes, the federal Employee Retirement Income Security Act (ERISA), which regulates employee benefits, says that “It shall be unlawful for any person to discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan … or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.”

As Weber explains, “If the single motive for cutting employees’ hours is to avoid the purposes of [Obamacare], to me, that sounds like a subterfuge that interferes with a plan participant’s rights to their health plan. That is one of the very prohibitions that ERISA section 510 was written to prevent.”

So, are we going to see a wave of litigation on behalf of workers who suddenly got cut to 29 hours a week on the eve of Obamacare? If so, what will the employers’ defense be?  Sounds like a topic for a few more seminars.

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