Eric Pritchard is a partner in Kleinbard Bell & Brecker LLP, Philadelphia, a commercial law firm with a national practice in the electronic security and life safety industries.
Healthcare is all over the news. Our population is aging, healthcare costs and the demand for services are rising and this spring the U.S. Supreme Court will attempt to decide the constitutionality of the sweeping healthcare reform law enacted in 2010.
I recently participated on a panel at the Central Station Alarm Association Annual Meeting on Personal Emergency Response Systems (PERS) and one of the clear take-aways was that it’s a rapidly expanding market sector that presents an extraordinary opportunity for the industry.
And while it may be a natural—and lucrative—market extension for the industry, providing PERS services differs significantly from providing other electronic security services. Users typically are the elderly, ill or infirm. And often, a shorter term of use and a higher turnover rate may impact its deployment as users may no longer need the service for a variety of reasons. In fact, the only real similarity between providing PERS services and other electronic security is that both involve the use of communications to transmit a signal to a monitoring station that triggers a response. Even the technology, the monitoring and the response, including the responders themselves, are different.
All of these differences not only impact the way providers market and sell PERS services, but also create significant legal risks and obligations for installation and monitoring.
PERS contracts are specialized documents
PERS subscriber agreements must not only be drafted very differently from standard industry subscriber agreements for other electronic monitoring services but will be viewed differently from a legal perspective. For example, the Uniform Commercial Code (UCC), which governs the sale of goods, provides that limitations of liability provisions are unenforceable per se—meaning no matter how well-drafted the provisions, they won’t offer you any protection in the case of a loss related to physical injury of a subscriber, because the court won’t enforce them. To avoid this outcome, your PERS program could be structured and your contract must be drafted so that you’re providing a service (monitoring) and not selling PERS units.
Contracts—especially PERS contracts—don’t make good do-it-yourself projects. Make sure you consult a lawyer who has both industry experience and knowledge of specific PERS-related issues, to assist you in structuring your subscriber agreements before enforcing them. Do you know the answers to these questions?
Do you need an original “wet-ink” signature on a paper contract to have an enforceable agreement? Are e-signatures on agreements through your Internet-based sales program valid?
Are your shrink-wrap or click-wrap service agreements valid and enforceable?
Does your lender require original, wet-ink signatures, or will it accept e-signatures as collateral? What about your insurer? What kinds of agreements are required for coverage?
Do you need to be licensed to provide PERS in states in which you market your services?
Does your monitoring facility need to be licensed in states where your subscribers are located?
Does your sales program need to comply with the FTC’s Door-to-Door Sales Act regulations? What about state right-to-cancel provisions?
Does your contract meet state “plain language” laws and consumer protection laws?
If you don’t know the answers, you leave yourself open to substantial legal and financial risk. PERS is a hot market opportunity and providing these services can be extremely profitable. Protect yourself from its unique risks and don’t get burned.
Eric Pritchard is a partner in Kleinbard Bell & Brecker LLP, Philadelphia, a commercial law firm with a national practice in the electronic security and life safety industries. This column does not constitute legal advice; contact an attorney with specific questions.