Telemedicine: Many Opportunities, Many Legal Issues, Many Risks

by Pepper Hamilton LLP

This article was published in AHLA Connections (July 2014). It is reprinted here with permission.

Telemedicine touches on multiple practice areas for health care lawyers, such as payment and reimbursement, fraud and abuse, credentialing and privileging, peer review, privacy, consent, licensing, and regulatory compliance. Health care lawyers need to understand telemedicine and its multi-faceted regulatory framework to better serve this growing area.

Technological advancements, the expansion of access to health care under the Affordable Care Act, the emphasis on cost-effective quality care, and the proliferation of mobile medical applications have pushed telemedicine to the new frontier of health care delivery. Since its beginnings more than 50 years ago, the scope of telemedicine has expanded to include simultaneous and non-simultaneous interactions, consultations, and interpretations for patients in remote and metropolitan regions. Such services are provided using various telecommunication channels and mobile technology. In light of the seemingly limitless opportunities to provide telemedicine capabilities, health care providers and entrepreneurs must navigate the many risks that come with reliance on telemedicine practices and comply with an increasing number of regulations.

Defining Telemedicine

Telemedicine involves direct patient care and is considered a subcategory of telehealth. Yet, there is no single definition for “telemedicine.” For example, the U.S. Department of Health and Human Services and its Centers for Medicare & Medicaid Services (CMS) defines “telemedicine” as the “provision of clinical services to patients by practitioners from a distance via electronic communications.”1 The American Telemedicine Association (ATA), a nonprofit organization that works to integrate telemedicine into health care systems to improve quality, equity, and affordability of health care, defines “telemedicine” as “the use of medical information exchanged from one site to another via electronic communications to improve a patient’s clinical health status.”2 The ATA often treats “telemedicine” and “telehealth” as synonyms, stating that in both cases, the terms refer to the “use of remote healthcare technology to deliver clinical services,”3 but notes that the scope of “telehealth” is broader as it does not always involve clinical services. In its accreditation standards, The Joint Commission refers to the ATA’s definition of “telemedicine,”4 and elaborates that “telehealth” is “the use of electronic information and telecommunications technologies to support long-distance clinical health care, patient and professional health-related education, public health, and health administration.”5

The definitions of “telemedicine” and “telehealth” also differ by state, based on the purpose of specific health care statutes addressing various issues, including state licensure and reimbursement. Generally, “telemedicine” is the delivery of specialty care at a distance via telecommunications using applications that provide direct patient care. “Telehealth,” in turn, includes remote monitoring, telepharmacy, and nonclinical services, such as education programs, administration, and public health that can be provided remotely using communication technologies.

What Is Not Telemedicine

If a service constitutes telemedicine or telehealth, it is subject to applicable federal, state, and accreditation requirements. If it does not, then these requirements do not apply. A determination of what does and does not constitute telemedicine or telehealth requires an assessment of each applicable federal or state law or accreditation standard.

Under both federal and state law, telemedicine typically involves the application of secure videoconferencing or store and forward technology to provide or support health care delivery, depending on whether the service is being provided simultaneously or non-simultaneously. According to CMS, telemedicine does not include telephone calls, emails, images transmitted via fax, and text messages without visualization of the patient.6 Many states, such as California, have similarly carved out telephone conversations, email/instant messaging conversations, and faxes from their definition of telemedicine or telehealth.7 However, the ATA and a few states, such as Montana, have interpreted telemedicine to include transmission of an evaluative or therapeutic act through any means, method, device, or instrumentality, which may include telephone calls, emails, or faxes.8

Recent Telemedicine Trends

Telemedicine is transforming the way health care is delivered and monitored, permitting the delivery of services anywhere at any time either simultaneously or non-simultaneously. Whereas simultaneous telemedicine arrangements involve real-time interactions between a patient and a health care provider located at a distant site, non-simultaneous telemedicine arrangements involve the transmission of a patient’s medical information from one site to another without the patient’s presence. Historically, the most common telemedicine arrangement involved non-simultaneous tele-radiology services, in which an off-site radiologist, who may or may not have been a member of a hospital’s medical staff, read or interpreted images remotely. More recently, a significant upsurge has been seen in simultaneous arrangements between two health care entities, particularly involving tele-ICU, telestroke, and tele-psychiatry services.

The recent resurgence of telemedicine began in 2011, when CMS issued a much-awaited final rule permitting a more flexible process for credentialing and privileging practitioners who provide telemedicine services; escalated in 2013, when federal and state legislation and major insurers expanded the types of reimbursable telemedicine services; and continues in 2014 with more partnerships between insurers and integrated health care delivery systems to provide patients in rural communities access to specialists through telemedicine programs.

Highlighting the expansion of telemedicine and in an effort to address significant barriers brought by lack of uniformity throughout the states, in 2014, the Federation of State Medical Boards drafted language for the Interstate Medical License Compact, a proposed system that, if successful, will ease the ability to practice telemedicine across state lines. On April 26, 2014, it also adopted the Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine, intended to provide guidance to state medical boards for regulating the use of telemedicine technologies.9 This model policy addresses several issues that are often regulated by individual state requirements, including licensure, establishment of a physician-patient relationship, evaluation and treatment of the patient, informed consent, continuity of care, referrals for emergency services, maintenance of medical records, privacy and security of patient records, disclosures regarding telemedicine technology, and prescribing. State medical boards may adopt the model policy as a whole, in part, or not at all.

As reliance on telemedicine practices grows, an increasing number of clinical, operational, and technical guidelines will impact the way care is delivered by practitioners using telemedicine technologies.10 Where federal and state regulations do not currently exist, these guidelines, along with applicable state medical board guidance, provide a standard that should be met when providing telemedicine services.

Navigating Legal Issues in Telemedicine Services

As more providers use telemedicine and more entrepreneurs develop technology to support telemedicine services, oversight and scrutiny of telemedicine by state medical boards and federal and state regulatory agencies continue to increase. Providers and entrepreneurs must be mindful of the following legal issues to ensure their telemedicine services are compliant with federal and state requirements and appropriately protect patient safety and privacy:

  • Reimbursement: Reimbursement continues to be a barrier to telemedicine. Medicare reimbursement for telemedicine services is limited and generally requires face-to-face contact between a patient and provider, with exceptions for certain telemedicine services provided at an eligible facility located in a rural, non-metropolitan area with a health care professional shortage. Medicaid reimbursement varies from state-to-state, and only about 20 states have enacted statutes that recognize or require reimbursement for certain telemedicine services by commercial insurers. Providers should scrutinize federal Medicare and state Medicaid reimbursement policies, state health insurance regulations, and private payer contract requirements so that they are aware of the multiple reimbursement requirements and restrictions that may affect their billing practices, know what telemedicine services will and will not be reimbursed, and only submit compliant claims to avoid liability for fraud and abuse and false claims.
  • Fraud and Abuse: Telemedicine services often involve business arrangements between distinct health care entities and may include the lease of equipment or the use of a product owned in part by physicians. Such business arrangements must be structured in a manner that does not implicate federal fraud and abuse laws, including the Anti-Kickback Statute and the Stark Law. Under the Anti-Kickback Statute, it is a criminal offense to knowingly offer, pay, solicit, or receive any remuneration to induce referrals of items or services reimbursable by a federal health care program.11 Arrangements that meet the requirements of safe harbors do not implicate the statute. The Stark Law, in turn, prohibits physicians from referring Medicare patients for designated health services to an entity with which the physician has a financial relationship.12 The Stark Law includes exceptions that apply to ownership interests and compensation arrangements involving physicians. Anti-Kickback safe harbors and Stark Law exceptions that apply to telemedicine arrangements may include, but are not limited to, those for the rental of office space or equipment, personal service arrangements, and electronic health records items and services. Advisory opinions issued by the Office of Inspector General addressing telemedicine-related fraud issues provide additional guidance for providers and entrepreneurs when structuring telemedicine arrangements.
  • Medical Staff Bylaws: Health care organizations that rely on information from a distant site hospital or telemedicine entity to credential and privilege telemedicine practitioners must review and revise their medical staff bylaws and credentialing and privileging policies to include criteria for granting privileges to distant-site practitioners, and a procedure for applying the criteria to those practitioners.13 Revisions should also address what category of the medical staff distant-site telemedicine practitioners will join, the level of involvement they may have in medical staff committees, and what procedural rights they should be given.
  • Credentialing and Privileging: Regardless of telemedicine advancements, health care organizations remain liable for the care provided to their patients. Under CMS’ final rule, effective July 5, 2011, which revised the federal Medicare Conditions of Participation for hospitals, health care organizations may rely on the credentialing and privileging decisions of distant-site hospitals or the information provided by other telemedicine entities when determining privileges for distant-site practitioners who provide telemedicine services as long as certain conditions are met, including a compliant written agreement.14 To mitigate possible malpractice and negligent credentialing claims and associated risks, when entering into written agreements with distant sites, health care organizations must know who will be providing care to patients and when they will be providing such care, confirm that any written agreement they sign reflects current legal requirements, establish specific responsibilities of distant-site hospitals and telemedicine entities, and ensure that written agreements include adequate representations, warranties, and indemnifications regarding the quality of services provided by the distant site and any entity with which it subcontracts. Distant sites, in turn, must have processes to assess the quality of their practitioners. Whereas distant-site Medicare-participating hospitals are highly regulated, distant-site telemedicine entities are not, and relationships with such entities require greater scrutiny to assure the quality of the telemedicine services being provided and the qualifications of the practitioners providing them. Additionally, from a medical staff organizational standpoint, telemedicine ushers in a new era of individual providers who hold telemedicine privileges but are not medical staff members. Turnover in individuals with telemedicine privileges creates more credentialing challenges that must be timely addressed to limit liability exposure.
  • Peer Review: As telemedicine practices expand and reliance on telemedicine practitioners grows, health care organizations and telemedicine entities must develop policies and procedures for monitoring telemedicine practitioners and sharing internal review information so that the privacy of peer review and patient information is protected while information needed to make accurate credentialing and privileging decisions is regularly shared. At a minimum, this information must include adverse events that result from telemedicine services provided by a practitioner to patients, and complaints the health care organization receives about a practitioner.15 Health care organizations should determine what additional information, if any, to collect, how often to collect such information, how to use and act on the information, and what information to share. Given the variety of telemedicine practices, no one method exists for conducting peer review. Rather, parties to a telemedicine arrangement must determine what peer review methods are manageable and sustainable. However, information should only be disclosed in a manner that preserves all peer review privileges under state law, keeping in mind that a telemedicine entity may not be a recognized peer review body under state law and thus not subject to any peer review privilege.
  • Patient Privacy: Entrepreneurs are continuing to develop interfaces and mobile medical applications for virtual physician-patient and physician-physician interactions. Prior to relying on any telemedicine technology to collect and transfer patients’ protected health information, providers should ensure that they have secure communication channels, implement entity- and technology-specific business associate and other confidentiality and privacy agreements, educate administrators and users regarding the appropriate use of telemedicine technologies, and understand how and what patient information is being collected and stored. When information is shared between distinct entities, all disclosures must comply with federal and state privacy and security laws, including the Health Insurance Portability and Accountability Act and the Health Information Technology for Economic and Clinical Health Act. As a result of modifications to federal privacy and security laws in 2013, all subcontractors having access to protected health information (no matter how far down the chain) must now comply with the full spectrum of requirements applicable to business associates of certain health plans and health care providers.16
  • Compliance with State Requirements: According to data compiled by the Federation of State Medical Boards, as of June 2013, ten state medical boards are authorized to issue a special purpose license or certificate to practice medicine across state lines and provide telemedicine services.17 Most states, however, continue to require physicians engaging in telemedicine to be licensed in the state where the patient is located, with limited exceptions for consultations. While legislators and state medical board representatives discuss alternatives to this requirement, health care organizations need expert legal guidance to navigate individual state requirements, including licensure, consent, and practice of medicine issues, when providing telemedicine services, and the limitations of exceptions to such requirements.

Navigating Legal Issues in Telemedicine Technologies

More health care organizations are using technology to expand their networks with other health care providers. Similarly, more developers are creating telecommunications tools to virtually connect patients to health care providers. Just as health care lawyers must be aware of the legal issues affecting the delivery of telemedicine services, they must be knowledgeable about the multiple regulations affecting telemedicine technologies and the use of appropriate equipment. The Federation of State Medical Boards has defined “telemedicine technologies” as “technologies and devices enabling secure electronic communications and information exchange between a licensee in one location and a patient in another location with or without an intervening health care provider.”18 These may include multimedia communications equipment, mobile health applications, and two-way video interface platforms.

  • Regulatory Overlap: Manufacturers of mobile health applications and devices that support telemedicine services must comply with multiple, and often conflicting, privacy and security regulations promulgated by various federal agencies or offices:

(1) The Food and Drug Administration (FDA) establishes regulations regarding the hardware and software, including the safety and effectiveness, of telemedicine devices and mobile medical applications.

(2) The Federal Communications Commission (FCC) establishes regulations regarding interstate and international communications by airwaves, including wireless technology issues and problems with connectivity, as well as technical regulations for transmitters and other equipment.

(3) The Federal Trade Commission (FTC) establishes regulations regarding false, misleading, and deceptive trade practices and provides a framework for protecting mobile privacy. The FTC is currently examining health care competition, including regulatory barriers that may prevent telemedicine across state lines.

(4) The Office of National Coordinator for Health Information Technology (ONC) establishes regulations to adopt standards and certification criteria for health information technology (health IT).

  • Inter-Agency Framework to Address Regulatory Duplication: Recognizing the confusion caused by regulatory overlap, in 2012, through the FDA Safety and Innovation Act (FDASIA), Congress required the FDA to consult with the FCC and ONC to develop a report with a strategy and recommendations on a risk-based regulatory framework pertaining to health IT, including mobile medical applications, that avoids regulatory duplication.

On April 3, 2014, the Department of Health and Human Services released the draft FDASIA Health IT Report, which identified three categories of health IT, based on function and level of risk to patient safety, rather than the platform on which it operates: (a) administrative health IT functions, such as billing and claims processing, practice and inventory management, and scheduling; (b) health management health IT functions, such as health information and data exchange, data capture and encounter documentation, electronic access to clinical results, and medication management; and (c) medical device health IT functions, such as computer aided detection software, remote display or notification of real-time alarms, and robotic surgical planning and control.19

The agencies concluded that the first category, administrative health IT functions, posed little or no risk to patient safety and required no additional oversight. Under the proposed framework, health management health IT functions within the second category were considered low risk compared to their potential benefits. Therefore, health management health IT functions, including those meeting the statutory definition of a medical device, would be subject primarily to ONC-coordinated activities, quality management principles, industry standards, product testing requirements, and certification or accreditation rather than FDA regulation. However, due to their recognized risks, medical device health IT functions within the third category would remain under FDA oversight. This proposed functional categorization emphasizes that the safety of health IT relies not only on how it is designed and developed, but also on how it is customized, implemented, integrated, and used by patients, providers, and vendors.

  • FDA Guidance on Mobile Medical Applications: Of all the federal agencies, the FDA has been most active in regulating mobile health and telemedicine. On September 25, 2013, the FDA issued a Final Guidance on Mobile Medical Applications to provide clarity for manufacturers regarding regulatory oversight.20 The Guidance defines a “Mobile Application” as a software application that can be run on a mobile platform, or a web-based software application that is tailored to a mobile platform but is executed on a server, and a “Mobile Medical Application” as a Mobile Application that meets the statutory definition of a “device” and either is intended to be used as an accessory to a regulated medical device, or to transform a mobile platform into a medical device. Whether a mobile application constitutes a medical device that is subject to FDA regulation depends on its intended use.

The FDA Guidance separates mobile applications into three categories:

(1) Mobile Applications that are considered medical devices and subject to FDA regulations (e.g. applications that are intended to be used as an accessory to a medical device to control the device or display patient-specific medical device data, that transform the mobile platform into a medical device with attachments or sensors, or that perform patient-specific analysis and assist with diagnosis or treatment recommendations).

(2) Mobile Applications that may be considered medical devices, but which the FDA does not currently intend to regulate (e.g. applications that supplement clinical care by helping patients manage their health, that provide patients with tools to organize and track their health information, that help patients document or communicate their medical information to providers, or that perform simple calculations used in clinical practice).

(3) Mobile Applications that could be used in a health care environment, but are not considered medical devices (e.g. electronic copies of reference materials, educational tools for medical training, applications used for general patient education, and applications that automate general office operations in a health care setting).

The regulatory overlap surrounding mobile medical applications is complex and likely to change as federal agencies continue to interact. Even if a mobile application is not currently subject to FDA regulation, the content of such application may trigger obligations under other agency regulations. To navigate these complexities, health care companies should appoint an interdisciplinary committee to monitor regulatory guidance, assess common compliance principles across regulatory agencies, document compliance with privacy and security criteria, perform regular risk analysis for privacy and security issues, and develop incident response programs.


Telemedicine is an exciting area of health care that opens the door to greater access, greater efficiency, and more effective health care delivery. More than ten million patients in North America presently receive aspects of their health care services via telemedicine. As health systems grow and develop provider networks in multiple states, the provision of health care through telemedicine will continue to expand. Successful implementation of telemedicine practices requires awareness of and compliance with federal and state legal requirements. Obtaining competent legal advice will help telemedicine providers avoid major risks and pitfalls in this novel area.


1 76 Fed. Reg. 25553 (May 5, 2011).

2 ATA, What is Telemedicine?, available at

3 ATA, Telemedicine Frequently Asked Questions, What is the distinction between telemedicine and telehealth?, available at

4 The Joint Commission, Hospital Accreditation Standards, Introduction to Standard MS.13.01.01 (Oakbrook Terrace, IL 2013).

5 The Joint Commission, Hospital Accreditation Standards, Glossary (Oakbrook Terrace, IL 2013).

6 42 C.F.R. § 410.78(a)(1), (3).

7 See, e.g., Revisiting Informed Consent for Telehealth Services, Medical Board of California Newsletter, at 13 (Med. Bd. of Cal., Sacramento, CA), Summer 2012.

8 See, e.g., ATA, Proposed Changes to the Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine (Apr. 21, 2014); Mont. Code § 37-3-342.

9 Fed’n of State Med. Bds., State Medical Board’s Appropriate Regulation of Telemedicine (SMART) Workgroup, Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine (Apr. 26, 2014), available at

10 Several national medical specialty societies and the ATA have developed clinical guidelines addressing telemedicine. Most recently, during its Annual Meeting in June 2014, the American Medical Association (AMA) recognized the need for a set of safeguards and standards in AMA policy to support the appropriate coverage of and payment for telemedicine services, and approved recommendations of the AMA Council on Medical Service regarding the provision of telemedicine services. The AMA’s policy provides that telemedicine services should be covered and paid for if they abide by certain guiding principles, including, but not limited to, establishment of a valid physician-patient relationship; compliance with state licensure, medical practice, and scope of practice laws; delivery of telemedicine services consistent with evidence-based practice guidelines; delivery of telemedicine services in a transparent manner; collection of a patient’s medical history; and proper documentation of telemedicine services. Press Release, AMA, AMA Adopts Telemedicine Policy to Improve Access to Care for Patients (Jun. 11, 2014); see also AMA, Report of the Council on Medical Service, Coverage of and Payment for Telemedicine, June 2014.

11 42 U.S.C. § 1320a-7b.

12 42 U.S.C. § 1395nn.

13 42 C.F.R. § 482.12(a)(8), (a)(9); see also CMS State Operations Manual, Appendix A-Survey Protocol, Regulations and Interpretive Guidelines for Hospitals, Interpretive Guidelines for § 482.12(a)(8) & (a)(9).

14 42 C.F.R. § 482.12(a)(8), (a)(9).

15 42 C.F.R. § 482.22(a)(3)(iv), (a)(4)(iv).

16 45 C.F.R. § 160.103.

17 Fed’n of State Med. Bds., Telemedicine Overview, Board-by-Board Approach (Jun. 2013), available at

18 Fed’n of State Med. Bds., State Medical Board’s Appropriate Regulation of Telemedicine (SMART) Workgroup, Model Policy for the Appropriate Use of Telemedicine Technologies in the Practice of Medicine (Apr. 26, 2014), available at

19 Press Release, U.S. Dep’t of Health & Human Servs., Proposed health IT strategy aims to promote innovation, protect patients, and avoid regulatory duplication (Apr. 3, 2014); see also FDA, FCC, ONC, FDASIA Health IT Report: Proposed Strategy and Recommendations for a Risk-Based Framework, Apr. 2014.

20 FDA, Mobile Medical Applications: Guidance for Industry and Food and Drug Administration Staff, Sept. 25, 2013.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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