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Massachusetts SJC Rules in Favor of Insureds for Ambiguous Insurance Policy Term

In Zurich American Insurance Company v. Medical Properties Trust, Inc. (and a consolidated case[1]) (Docket No. SJC-13535), the Supreme Judicial Court of Massachusetts ruled in favor of insureds in a dispute over an ambiguous term in two policies insuring Norwood Hospital in Norwood, Massachusetts. A severe storm with heavy rain caused damage to the hospital basement and to the hospital’s main buildings caused by seepage through the courtyard roof and parapet roof. The owner of the Hospital, Medical Properties Trust, Inc. (“MPT”) and the tenant, Steward Health Care System LLC[2] (“Steward”), both had insurance policies for the Hospital, MPT’s coverage being through Zurich American Insurance Company (“Zurich”), and Steward’s through American Guarantee and Liability Insurance Company & another (“AGLIC”). Both policies had coverage of up to $750 and $850 million but lower coverage limits for damage to the Hospital for “Flood” at $100 and $150 million (“Flood Sublimits”). Both Steward and MPT submitted proof of loss claims to their respective insurers that exceeded $200 million; the insurers responded that damage to the hospital was caused by “Flood”, which limits both MPT and Steward to their respective Flood Sublimits. The policy provision “Flood” is defined as “a general and temporary condition of partial or complete inundation of normally dry land areas or structures caused by…the unusual and rapid accumulation or runoff of surface waters, waves, tides, tidal waves, tsunami, the release of water, the rising, overflowing or breaking of boundaries of nature or man-made bodies of water.”

The insurers, and MPT and Steward had differing opinions on the definition of “surface waters.” Litigation commenced to determine the extent of coverage available to MPT and Steward for damage to the hospital. The parties agreed that the damage to the basement was caused by Flood, and therefore subject to the Flood Sublimits. However, the parties disagreed as to whether the damage caused by rain seeping in through the courtyard roof and parapet roof was caused by “Flood” because of ambiguity in the definition of Flood. The United States District Court for the District of Massachusetts held that the term “surface waters” in both policies’ definition of “Flood” included rainwater accumulating on the rooftop. The judge allowed an interlocutory appeal due to the substantial difference in opinion of the term “surface water” under the definition of “Flood.” The Court noted that case law across the country is divided on this issue. MPT and Steward appealed, and the First Circuit certified a question to the Massachusetts Supreme Judicial Court (SJC), “Whether rainwater that lands and accumulates on either (i) a building’s second-floor outdoor rooftop courtyard or (ii) a building’s parapet roof and that subsequently inundates the interior of the building unambiguously constitutes ‘surface waters’ under Massachusetts law for the purposed of the insurance policies at issue?”

The SJC concluded that the meaning of “surface waters” and the definition of “Flood” under the policies are ambiguous in regard to the accumulation of rainwaters on roofs, finding that ambiguity is not the party’s disagreement of a term’s meaning but rather where it is susceptible of more than one meaning and reasonably intelligent persons would differ as to which meaning is the proper one. The SJC noted there is no consistent interpretation in case law for “surface waters” to include rainwater accumulating on a roof. Reasoning that if the policy language is ambiguous as to its intended meaning, then the meaning must be resolved against the insurers that drafted the terms, as they had the opportunity to add more precise terms to the policy and did not do so.

This case is an example of the importance for all parties to closely review the language of their insurance coverage to ensure that coverage is consistent with their lease obligations. Additionally, this dispute also draws attention to the importance of casualty provisions in leases. It is important to negotiate the burden of costs in the event of caps or insufficient insurance, along with termination rights for each party.

[1] Steward Health Care System LLC vs. American Guarantee and Liability Insurance Company & another.

[2] Apart from this litigation, the future of Norwood Hospital as a hospital is uncertain as it has not been open for four years and Steward Health Care System LLC has filed for bankruptcy protection.

DOER Finalizes SMART Program Emergency Regulations

The Department of Energy Resources (DOER) has finished the required Solar Massachusetts Renewable Target (SMART) Program 400MW review and emergency rulemaking and published its final regulations. Several revisions and adjustments have been made to the final regulations, including an extension to the COVID-19 extension for new applications received through December 31, 2020.

Revisions have been made to previously published land-use exceptions. Projects that meet the below criteria will now be assessed under the former land-use regulations:

Have applied for the Interconnection Service Agreement (ISA) 135 business days prior to April 15, 2020, or have obtained a fully executed ISA by October 15, 2020; and
Have obtained a sufficient interest in real estate or other contractual rights to construct the Solar Tariff Generation Unit at the location specified in the ISA as of April 15, 2020.

Additionally, the DOER distinguished eligible land use between projects qualifying for capacity as part of the original 1600MW versus projects qualifying under the new 1600MW. Projects qualifying under the original 1600MW will be eligible for the SMART Program even if located on land designated as Critical Natural Landscape, while projects qualifying under the new 1600MW will be ineligible if the project is sited in a Priority Habitat, Core Habitat, or Critical Natural Landscape.

The final regulations also allow for single-axis trackers to be eligible for the Tracker Adder, and behind-the-meter systems to receive Alternative On-Bill Credits.

The DOER also made modifications to the Statement of Qualification Reservation Period Guideline. In addition to continuing the COVID-19 extension for new applications, the DOER has done the following:

Eliminated the requirement that projects obtaining an indefinite extension, pending the authorization to interconnect, must submit a claim within 10 business days of receiving the authorization to interconnect;
Granted eligible Public Entity Off-taker Adder Solar Tariff Generation Units an initial Reservation Period of 18 months;
Clarified that projects qualified as Community Shared Solar that do not submit a claim with the CSS Adder will have their base compensation rate decreased to the value in the lowest available Capacity Block, but will not be at risk of losing their Statement of Qualification outright: and
Established a process by which DOER will queue project applications if there is a rush of applications submitted following the issuance of ISAs by a Distribution Company upon the completion of an ASO study.

Several other Guidelines related to the SMART Program are still being revised, and the DOER is expected to release these updates in the coming weeks. Publication of the regulations is just the beginning phase for resuming the SMART Program. Changes to the regulations that affect the tariff will now need to be implemented into each Electric Distribution Companies’ tariffs and undergo administrative review of the Department of Public Utilities.

ARTICLE BY Tanya M. Larrabee at Sherin and Lodgen LLP.

For more on solar renewable energy, see the National Law Review Environmental, Energy & Resources law section.

Northeast State Solar Programs in Light of COVID-19

COVID-19 is impacting industries across the globe and clean energy is no exception. As the pandemic continues to influence economic relief efforts at both the state and federal level, states are beginning to offer specific forms of relief through their incentive programs.

Additionally, electric distribution companies in each state have declared COVID-19 a force majeure event, allowing extensions to interconnection milestones and in some cases payment schedules. Below are summaries of the specific relief efforts being offered by some states, and more details regarding electric distribution companies’ declaration of a force majeure event.

Massachusetts

The Massachusetts Department of Energy Resources (“DOER”) filed emergency regulations with the Secretary of State following its regulatory 400MW review of the Solar Massachusetts Renewable Target (“SMART”) Program on April 14, 2020. Among the regulations is a blanket extension of six months to all Solar Tariff Generation Units, including any projects that submit their applications before July 1, 2020, due to the ongoing impacts of COVID-19. More details are provided in the DOER’s Statement of Qualification Guideline.

The Massachusetts Department of Public Utilities has also developed a webpage with information and resources specific to COVID-19. The website includes information on the impacts of the electric distribution companies’ respective declarations of COVID-19 as a force majeure event.

New York

The New York State Energy and Environment agencies wrote a letter to the clean energy industry on April 1, 2020, expressing support for the clean energy industry, particularly as construction has been impacted by COVID-19. The agencies announced in the letter that they are seeking input from clean energy industry stakeholders so that the agencies and the industry can work together to form creative solutions. The letter is found on NYSERDA’s COVID-19 page.

Connecticut

In Connecticut, the Department of Energy and Environmental Protection (“DEEP”) is coordinating with governmental offices and stakeholders to offer webinars for clean energy contractors with information about available state and federal aid. Please check in with CT DEEP to find out more information on these offerings.

Maine

The Governor’s Energy Office (GEO) released a statement that the GEO is working with the Maine Public Utilities Commission (PUC) and clean energy stakeholders to answer questions and concerns that are related to COVID-19. Stakeholders that have questions and concerns should contact the GEO for further information.

Electric Distribution Companies’ Force Majeure Declaration

Several electric distribution companies have notified state’s public utilities commissions that COVID-19 is a force majeure event. By declaring a force majeure event, the electric distribution companies have allowed extensions to project milestone dates and in some cases interconnection payments. Electric distribution companies that have not formally declared COVID-19 a force majeure event have waived late fees and extended payment timelines. Individual projects should check in with the electric distribution company specific to the project to confirm how theirs may be impacted.

ARTICLE BY Tanya M. Larrabee at Sherin and Lodgen LLP, Amy L. Hahn also contributed.

For more on renewable energy programs, see the National Law Review Environmental, Energy & Resources law section.

Sticks and Stones May Break Bones, But Words May Constitute Unlawful Discrimination

In recent months, there have been several news stories about the legal implications of inappropriate and/or offensive language in our society, generating discussion about whether such language is, or should be, unlawful in certain circumstances. This past fall, the Massachusetts Legislature held a committee hearing on a widely-publicized bill which sought to penalize the use of “bitch,” by imposing a fine of up to $200 for any person who “uses the word ‘bitch’ directed at another person to accost, annoy, degrade or demean” another person.

While this proposed legislation, fraught with Constitutional issues involving the exercise of free speech, was largely decried and gained no traction, it does highlight an important question: In what circumstances may offensive and demeaning comments constitute unlawful discrimination? In fact, in January, Chief Justice John Roberts, during oral arguments in Babbe v. Wilkie, asked the hypothetical question whether the phrase “OK Boomer” would qualify as age discrimination.

The answer to Chief Justice Robert’s question is not a bright-line “yes” or “no.” Context matters. For example, in connection with a hostile work environment claim, one of the central legal issues is whether the conduct in question was severe or pervasive. As a general rule, a single, isolated comment will not be actionable as creating a hostile work environment, but in some instances, it may. See Augis Corp. v. Massachusetts Comm’n Against Discrimination, 75 Mass. App. Ct. 398, 408-409 (2009) (noting that a supervisor who calls a black subordinate a f***ing n***** “has engaged in conduct so powerfully offensive that the MCAD can properly base liability on a single instance”).

Courts do not impose a numerosity test. Rather, the legal analysis is focused on whether the discriminatory comments “intimidated, humiliated, and stigmatized” the employee in such a way as to pose a “formidable barrier to the full participation of an individual in the workplace.” See Thomas O’Connor Constructors, Inc. v. Massachusetts Comm’n Against Discrimination, 72 Mass. App. Ct. 549, 560–61(2008); Chery v. Sears, Roebuck & Co., 98 F. Supp. 3d 179, 193 (D. Mass. 2015) (noting that, in the context of a hostile work environment based upon race, “[i]t is beyond question that the use of the [“N” word] is highly offensive and demeaning, evoking a history of racial violence, brutality, and subordination”).

Similarly, in the context of a disparate treatment claim (e.g., allegations that employee was terminated based on unlawful age bias), evidence that the decision-maker referred to the employee as a “Boomer” should not be evaluated in a legal vacuum. Rather, this evidence may be presented to the jury as just one piece of a “convincing mosaic of circumstantial evidence” from which a fact-finder could properly determine that the termination decision was driven by discriminatory animus based upon age. See Burns v. Johnson, 829 F.3d 1, 16 (1st Cir. 2016).

So, while sticks and stones may break bones, words also do harm and depending upon the circumstances, may result in legal claims and liability.

ARTICLE BY Brian J. MacDonough of Sherin and Lodgen LLP.

For more on Free Speech, see the National Law Review Constitutional Law section.

Taking Vacation While on Medical Leave: Massachusetts Court Rules on Liquidated Damages Under the FMLA

On June 5, 2019, the Massachusetts Supreme Judicial Court (SJC) issued a decision emphasizing that an employer’s well-designed and thorough internal investigations made prior to a termination decision can provide a strong defense to claims, but less carefully conducted investigations do not.

In DaPrato v. Massachusetts Water Resources Authority, the Massachusetts Water Resources Authority (MWRA) terminated DaPrato’s employment because of its “honest belief” that his family vacation to Mexico during the last two weeks of his Family and Medical Leave Act (FMLA) leave for recovery from foot surgery was an improper use of the leave and warranted termination. The court rejected that position, and clarified the employer’s burden to avoid the award of liquidated damages (i.e., double damages) in claims brought pursuant to the FMLA.

The FMLA states that a judge “shall” award liquidated damages in accordance with statutory provisions if an employer is found liable for violating the FMLA. However, when an employer demonstrates that its conduct was “in good faith and that the employer had reasonable grounds for believing that [its action] was not a violation [of the FMLA]” liquidated damages are in the discretion of the judge and are not mandatory. The MWRA argued such discretionary authority should be available due to a “belief that the employee had misused FMLA leave, even if that belief is mistaken.”

The SJC emphasized that the statute requires employers to act both “in good faith” and on “reasonable grounds.” Applying this standard, the court found that, even though the defendant honestly believed it was complying with the FMLA, it lacked objectively reasonable grounds for such belief. Notably, the SJC found the MWRA’s investigation ignored the employee’s FMLA application and medical records and instead was grounded in “shock, outrage and offense” at the possibility of further FMLA leave for a scheduled knee surgery.

The MWRA’s policy that considered impermissible all vacation taken while on FMLA leave fell short the requirement that it be in good faith and reasonable. The SJC explicitly noted that an employer may not treat the mere fact that an employee went on vacation during FMLA leave, on its own, as impermissible. Instead, a vacation can be permissible or impermissible in terms of consistency with medical leave depending on whether the employee’s conduct while on vacation is consistent with his or her claimed reasons for medical leave. Only when an employer is privy to such information regarding the employer’s conduct may it consider inconsistencies between the conduct and the claimed reasons for leave when evaluating whether leave has been properly or improperly used. Here, a blanket assumption that the employee’s vacation represented an improper use of leave time and the failure to properly investigate left the MWRA unable to obtain a lesser liquidated damages amount.

Key Takeaways

While the decision focused on the narrow “honest belief” exception to liquidated damages in the FMLA, it should remind employers of the importance of objectivity in their investigations. In the context of an FMLA investigation, DaPrato reminds employers to ensure that they avoid decisions that are “honest but unconsciously biased” where, as here, the employer mistakenly believed an employee on FMLA leave could not legitimately take a vacation. Only by satisfying both the good faith and reasonableness requirements—which in this case mandated knowledge of the law surrounding employee use of vacations while on FMLA leaves—could this employer have avoided liquidated damages. Thus, DaPrato should prompt employers to be even more cautious when discharging employees for perceived misconduct and ensure their internal investigations are thorough, fair, and objective.

BY Lisa Stephanian Burton and Mark H. Burak of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more on FMLA policies see the National Law Review page on Labor & Employment.

Terminating Right to Stock Options Through Severance Agreement in Massachusetts

Parting with any employee comes with a host of dangers and pitfalls for an employer. These liabilities are increased when the exiting employee holds ownership in or options to own the employer’s company. Especially for smaller businesses, restricting its ownership from departing with employees is essential to continuing to operate smoothly and effectively. But in cases where an employee has unexercised stock options in his or her employer’s company, how can the company ensure that shares of its ownership do not walk out the door with a former manager? A well-crafted severance agreement is the answer.

By taking the extra time to craft a comprehensive severance agreement, rather than an off-the-shelf template, a company can extinguish its former executives’ interest in the company. Because a grant of stock options is a part of the employment contract, it is essential that the severance agreement clearly and unambiguously terminate the employment agreement itself. Recently, in the case of MacDonald v. Jenzabar, Inc., 92 Mass App. Ct. 630 (2018), the Appeals Court for the Commonwealth deemed a former manager’s rights to both unexercised stock options and unclaimed preferred shares in his employer’s company to be extinguished by a broad general release by his employer.

Broad Release Term Specifically Terminating Employment Agreement

Among other provisions the general release at issue provided:

“As a material inducement to the Company to enter into this Agreement, you agree to fully, irrevocably and unconditionally release, acquit and forever discharge the Company…from any and all claims, liabilities, obligations, promises, agreements, damages, causes of action, suits, demands, losses, debts, and expenses (including, without limitation, attorneys’ fees and costs) of any nature whatsoever, known or unknown, suspected or unsuspected, arising on or before the date of this Agreement and/or relating to or arising from your employment and your separation from employment with the Company and/or any of the Released Parties, including, without limitation, … any and all claims under the [employment agreement].”

Integration Clause Terminating and Superseding All Previous Agreements

In addition to this general release of claims, the severance agreement contained a merger and integration clause:

“This Agreement constitutes a single, integrated contract expressing the entire agreement between you and the Company and terminates and supersedes all other oral and written agreements or arrangements; provided, however, that you understand and agree that the terms and provisions of the Confidentiality Agreement are specifically incorporated into this Agreement, and you remain bound by them.”

Stock Options Arise Out of Employment Agreement and Are Extinguished with Its Termination

Because the Court found that the plaintiff’s stock options and preferred shares arose from his prior employment, these provisions were found to be unambiguous and conclusive. Of note, the Court specifically observed that in addition to “generally [extinguishing] any and all agreements, of any nature whatsoever….[it] also expressly extinguishes the employment agreement.” Therefore, absent any language to the contrary, this contract provision is sufficient to extinguish the employment agreement and consequently the preferred shares and stock options arising therefrom.

Going forward, an employer seeking to extinguish the unvested stocks and stock options in its departing managers, would be advised to consult with an attorney to craft a broad severance agreement with specific reference to the operative agreements relating to employment. Such consultation will allow the employer to restrain the ownership of its business while also crafting exceptions for contracts executed in the employer’s favor. With the right severance agreement, an employer can make sure that its stock stays in-house while continuing to be protected by previously executed non-competes and confidentiality agreements.

This post was written by Evan K. Buchberger of Raymond Law Group LLC.

Nurse Staffing Ratios May Be Coming to a Hospital Near You

On November 6, 2018, when Massachusetts voters go to the polls to select a new Governor and other key elected officers, they will also consider Ballot Question 1, which will mandate rigid registered nurse staffing ratios for hospitals across the Commonwealth effective as of January 1, 2019. This proposal would make Massachusetts the second state in the United States to have specific staffing ratios mandated in all units. This initiative follows only California, which passed a less comprehensive law through the legislative process in 1999 and provided over five (5) years for hospitals to implement by 2004.^[1] The Massachusetts ballot initiative process, like that of some other states, allows the voters to write entirely new law into books. Question 1 appears to be the most heavily-fought ballot initiative in Massachusetts in recent memory. While Massachusetts seems to be the only state this year with a nurse staffing ratio as a referendum ballot initiative,^[2] unions nationally will focus on the results of this year’s effort.

What is Question 1?

Question 1, if passed, would mandate highly-prescriptive and specific nurse-to-patient ratios based on the type of patients/units in hospitals, regardless of market, acuity of the patient, physician orders, or nursing judgement. Hospitals are required to implement a written plan detailing the maximum number of patients to be assigned to a registered nurse by unit at all times, while also “concurrently detailing the facility’s plans to ensure that it will implement such limits without diminishing the staffing levels of its health care workforce.”

Hospitals would also be required to develop a “patient acuity tool” for each unit to be used to determine whether the maximum number of patients that may be assigned should be lower than the assignment limits in the law. Notices regarding the patient assignment limits must be posted in conspicuous places, including each unit, patient room, and waiting area.

What are the Ratios?

The specific ratios mandated are summarized as follows (nurse:patient):

Step-down/intermediate care 1:3
Post anesthesia care (PACU) 1:1; PACU post-anesthesia 1:2
All units with operating room (OR) patients 1:1; OR patients post-anesthesia 1:2
Emergency Services Department: 1:1, 1:2,1:3, or 1:5 depending on the emergent or urgent nature of a patient which often changes by the minute
Maternal child care patients:
- Active labor, intermittent auscultation for fetal assessment, and patients with medical or obstetrical complications 1:1
- During birth and for up to two hours immediately postpartum 1:1 for mother and baby; when the condition of the mother and baby are determined to be stable and the critical elements are met, 1 nurse may care for both the mother and the baby(ies)
- During postpartum for uncomplicated mothers or babies 1:6 (either 6 mothers or babies, 3 couplets of mothers and babies, or, in the case of multiple babies, not more than a total of 6 patients
- Intermediate care or continuing care babies is 1:2 for babies
- Well-babies 1:6
Pediatric 1:4
Psychiatric 1:5
Medical, surgical and telemetry patients 1:4
Observation/outpatient treatment 1:4
Rehabilitation units 1:5
All others 1:4

How Would the New Law be Enforced?

Question 1 also requires the state’s Health Policy Commission (HPC) (as opposed to the Department of Public Health, which is the state authority to license and regulate hospitals and other health care providers) to promulgate regulations and conduct inspections governing the implementation of the initiative. The HPC is a six year old independent state agency charged with monitoring health care spending growth, it does not have the staff or infrastructure to conduct routine hospital surveys to monitor internal facility management and operations. It is also important to note that the proposed ballot would restrict the HPC by preventing it from issuing any delays, temporary or permanent waivers, or modifications of the ratios. Thus, even if the HPC believed that the January 1^st implementation date was unfeasible, it may be prohibited from offering waivers.

The HPC may report violations to the State Attorney General, who could file suit to obtain injunctions as well as civil penalties of up to $25,000 per violation and up to $25,000/day for continued violations.

The Impact if Question 1 Passes

Coalitions have lined up on both sides of Question 1. Each side has painted dramatically-different pictures of a future for the industry with mandated nurse staffing ratios. The supportive nursing union has cast the initiative as being relatively small dollars for the industry, costing only $47 Million for all hospitals in the state in total according to their study.^[3],[4] The Massachusetts Health and Hospital Association and a broad-based coalition of health care providers and other nursing organizations opposed to the initiative point to studies estimating that the cost will be in excess of $1 Billion to the industry.^[5] Increased costs are based on the need to recruit new nurses, as well as the across-the-board increases in pay. There will be a need to hire 5,911 registered nurses within 37 business days to comply with January 1^st deadline and this is in a state that already has a shortage of approximately 1,200 registered nurses.^[6] Individual community hospitals are reporting projected additional expenditures that amount to more than the $30 Million per year, with teaching hospitals anticipating increased expenditures higher than that.^[7]

On October 4, 2018, the HPC issued its independent report on the estimated costs of Question 1, essentially validating the opposition’s concerns, and projecting annual increased costs of $676 Million to $949 Million, and noted that the projections were “conservative.” The HPC study undercounted costs as it only looked at increased costs in certain units, and excluded costs associated with increased staffing in emergency departments, observation units, outpatient departments, or any costs for implementation or to non-acute hospitals.^[8] Wage increases of 4 – 6% are predicted in the HPC study, based on the California experience with across-the-board staffing requirements in place, and estimated increases of total health expenditures in Massachusetts of 1.1 – 1.6%, with increases of 2.4 – 3.5% for hospital spending alone, again, based on a conservative and partial analysis. Thus, it appears that the industry fears of greater than $1Billion in annual increased expenses are valid.

Ancillary adverse impacts anticipated by the HPC included reduced access to emergency care, increased wait times, decreased patient flow, increased “boarding,” and more ambulance diversions.

The HPC also compared Massachusetts to California hospitals and concluded that there was “no systematic improvement in patient outcomes post-implementation of ratios.”

What Should Hospitals be Doing Now?

Question 1, if passed, would only apply to Massachusetts licensed hospitals. But hospitals and health systems in other jurisdictions should be prepared for similar efforts in their states. The following are some initial steps hospitals should be considering

Access Management. Access problems will be common starting in January if Question 1 passes. Elective procedures, non-emergent appointments and other services may need to be curtailed effective January 1, 2019. Hospitals will need to meet staffing levels on that day with respect to then-current inpatients and outpatients. Avoiding new admissions in December may be necessary to assure the hospital is not in instant violation on New Year’s Day. Early patient contact to warn about the possibility of rescheduling procedures will prudent.

Payer Contract “Reopeners.” Payer contracting “reopeners” should be added to managed care contracts now. The hospital community has been watching the interest of the unions in pushing nurse staffing ratios in Massachusetts and other states for a number of years. Health systems and hospitals negotiating long-term contracts with payers have often included “reopeners” to permit the hospital to revisit contract rates even during the term of an agreement if certain extreme events come to pass. Hospitals in all jurisdictions are encouraged to consider adding such reopeners to their agreements today.

Massachusetts hospitals should review their payer contracts now to confirm if they have the right to a mid-term reopening and, if so, provide notice immediately upon passage to their payers that the hospital will need to renegotiate rates to address the increased costs. Charge masters will also need to be reviewed immediately.

Union status? Based on their efforts to rally public support around Question 1, the Massachusetts Nurses Association is trying to do an end-run around the collective bargaining table where their past efforts on the issue of staffing ratios have failed. Health systems and hospitals should review their collective bargaining agreements to determine whether they are in a position to trigger a reopener during the term of the contract to address the numerous monetary and non-monetary consequences of rigid staffing ratios contemplated by Question 1.

Unit Closure Plans. If passed, hospitals in Massachusetts will likely need to immediately assess whether and how they could comply with these new ratios. Units that already operate at a loss, or for which meeting the staffing requirements is impossible, should be closed or reduced to the smallest possible patient compliment. Closure plans and negotiations will need to commence immediately.

Massive Recruitment Efforts. While there are believed to be a few hospitals that may already meet these staffing levels (at some times), most hospitals will need to recruit many more registered nurses, as well as have additional nurses standing by for fluctuations in patient loads on various units on a daily basis. As noted above, the law will require hiring nearly 6,000 RNs in the fourth quarter of this year.^[9]

Conclusion

If Question 1 passes, conservative projections estimate extreme new costs will be incurred by Massachusetts hospitals, which will result in both reductions in levels of service, and increased costs to payers and patients. It is important to note that the dire circumstances of the ballot has led to an increasing large number of nursing organizations and physician groups in Massachusetts to all oppose Question 1. While Massachusetts hospitals are making plans akin to natural disaster preparedness, hospitals in other states should watch carefully these events to be ready should similar initiatives arise locally.

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[1] A few other states have limited ratios in certain special types units (like intensive care units), but Question 1 applies to all hospital units.

[2] See http://www.ncsl.org/research/elections-and-campaigns/ballot-measures-database.aspx(June 6, 2018); downloaded on October 8, 2018.

[3] See https://www.massnurses.org/news-and-events/p/openItem/11083

[4] See https://safepatientlimits.org/wp-content/uploads/Shindul-Rothschild-Esti…

[5] See https://www.protectpatientsafety.com/get-the-facts/

[6] See Mass Insight Global Partnership, Protecting the Best Patient Care in the Country, Local Choices v Statewide Mandates in Massachusetts (April, 2018) http://www.bwresearch.com/reports/bwresearch_mha-nlr-report_2018Apr.pdf (“Mass Insight Study”)

[7] See Financial impact of nurses ballot question? Depends who’s counting, Priyanka Dayal McCluskey, Boston Globe (Sept. 17, 2018). https://www.bostonglobe.com/metro/2018/09/17/financial-impact-nurses-ballot-question-depends-who-counting/mlS4yZa5IB8hcDaFZ7ojXM/story.html

[8] See Analysis of Potential Cost Impact of Mandated Nurse-to-Patient Staffing Ratios, October 3, 2018, https://www.mass.gov/doc/presentation-analysis-of-potential-cost-impact-…

[9] Mass Insight Study.

This post was written by Lawrence W. Vernaglia and Donald W. Schroeder of Foley & Lardner LLP.

State Investments in Electric Vehicle Charging Infrastructure

Various studies indicate that an overall lack of charging infrastructure serves as an impediment to the widespread adoption of electric vehicles (EVs). However, the road to transportation electrification is officially under construction following several major state investments.

At the end of May, in the largest single state-level investment in EV charging infrastructure, the California Public Utilities Commission (CPUC) approved more than $760 million worth of transportation electrification projects by the State’s three investor-owned utilities. The CPUC’s Decision, See A.17-01-020, Proposed Decision of ALJs Goldberg and Cook (May 31, 2018), authorized Pacific Gas and Electric Company (PG&E) and Southern California Edison (SCE) to install vehicle chargers at more than 1,500 sites supporting 15,000 medium or heavy-duty vehicles. The FD also approved rebates to San Diego Gas & Electric (SDG&E) residential customers for installing up to 60,000 240-volt charging stations at their homes. Moreover, PG&E was authorized to build 234 DC fast-charging stations.

Besides the total spend and resulting emissions reductions represented by the Commission’s action, the Proposed Decision is also notable for the policy priorities it advances. For instance, it clearly prioritizes the creation of electrification-related benefits for California’s disadvantaged communities (DACs). (The authorizing legislation, SB 350, found that “[w]idespread transportation electrification requires increased access for disadvantaged communities . . . and increased use of [EVs] in those communities . . . to enhance air quality, lower greenhouse gases emissions, and promote overall benefits to those communities” § 740.12(a)(1)(C) (De Leon)). Accordingly, the CPUC focused on promoting construction of charging infrastructure in DACs. For example, the PG&E fast charging program will target construction in DACs by providing up to $25,000 per DC fast charger in rebates to cover a portion of the charger cost for sites located in DACs.

The CPUC also prioritizes the survival of non-utility charging competition. For example, the Proposed Decision eliminates utility ownership of the charging infrastructure on the customer side of the meter in the SDG&E residential charging program. Additionally, for the PG&E and SCE’s medium and heavy-duty programs, the utilities will own make-ready infrastructure, but not the Electric Vehicle Supply Equipment (EVSE). Instead, the utilities will allow customers to choose their own EVSE models, EVSE installation vendors, and any network services providers.

The CPUC noted several benefits of allowing the utility to own electrification infrastructure only up to the point of the EVSE stub. First, the Commission found that “[u]tility ownership of the charging infrastructure dramatically drives up costs, in comparison to alternative ownership models.” Instead, restricting utility ownership of charging equipment will allow more charging infrastructure to be built at the same (or lower) cost to ratepayers. Second, it allows private parties to compete and innovate, which will improve charging technology and lower costs. Lastly, non-utility competition addresses “stranded cost” fears, since private parties will bear the risks of nascent charging technologies.

While California has made the largest commitment, other states have also joined the effort to pave a national road toward the widespread adoption of EVs.

In New Jersey, utility company PSE&G recently proposed spending $300 million to set up a network of up to 50,000 charging stations. This investment would constitute a massive upgrade to New Jersey’s charging infrastructure, which currently consists of less than 600 charging stations according to U.S. Department of Energy data. The proposed investment is part of a larger $5.4 billion expansion in PSE&G’s five-year infrastructure plan, and represents the first major proposal of New Jersey’s largest utility to invest in EV infrastructure.

In New York, Governor Andrew Cuomo announced a $40 million commitment (that could grow to $250 million by 2025) by the New York Power Authority for its EVolve NY initiative. The new funding will be used to build fast chargers and to support EV model communities. EVolve NY is a part of the broader Charge NY 2.0 initiative, which advances electric car adoption by increasing the number of charging stations statewide. The new funding will aid New York as it aims to meet its particularly ambitious goal of 800,000 electric vehicles on the road by 2025.

Late last year, the Massachusetts Department of Public Utilities approved a $45 million charging station program by local utility, Eversource. The program includes investments to support the deployment of almost 4,000 “Level 2 Stations” and 72 DC Fast Charging stations. Even more investment could be on its way to Massachusetts as utility company National Grid has also proposed investing in charging station infrastructure.

And in Maryland, utility companies have proposed spending $104 million to build a network of 24,000 residential, workplace and public charging stations. The program, currently before the state’s Public Service Commission, would be a major part of Maryland’s effort to reach 300,000 electric vehicles on the road by 2025.

On the federal level, energy-related projects could be eligible for the $20 billion “Transformative Projects Program” announced by the Trump administration in February. However, President Trump recently remarked that his infrastructure plan will likely have to wait until after this year’s midterm elections. In the meantime, states have shown that they are more than willing to take the lead in investing in transportation electrification infrastructure. (In related news this week, Colorado’s decision to move toward adopting California’s greenhouse gas emissions standards for light-duty vehicles represents a parallel and noteworthy development, further indicating leadership and action from states focused on developing advanced vehicle technology.) It’s also notable that in addition to utility commission activity, states are also expressing support for advanced vehicle technology While the states have certainly taken a lead, their investments also complement significant action in the private sector, including the recent effort to stand up the Transportation Electrification Accord. See our recent post on that subject, and continue to follow Inside Energy and Environment for continued updates on this subject.

This post also includes contributions from Michael Rebuck, a summer associate.

This post was written by Jake Levine Covington & Burling LLP.

Massachusetts to Require CGL and PL Coverage for All “Marijuana Establishments”

In regulations finalized just before the March 15, 2018, deadline, the Massachusetts Cannabis Control Commission (CCC) has included a provision requiring the maintenance of liability insurance or an escrow account to cover potential liabilities. This applies to all Marijuana Establishments, which include marijuana cultivators, craft marijuana cooperatives, marijuana product manufacturers, marijuana retailers, independent testing laboratories, marijuana research facilities, marijuana transporters and “any other type of licensed marijuana-related businesses,” except for medical marijuana treatment centers, which are already subject to a comprehensive regulation scheme, including a similar requirement.

Provisions

Under the new regulations, Marijuana Establishments must obtain and maintain general liability coverage with minimum limits of at least $1 million per occurrence and $2 million aggregate, and product liability insurance coverage of $1 million per occurrence and $2 million aggregate, with a maximum deductible of $5,000 per occurrence. 935 CMR 500.105(10)(a).

In the event that a Marijuana Establishment is unable to obtain the required coverage, upon providing documentation of the unavailability of coverage, the requirement may be met by the deposit of $250,000, or some other amount approved by the CCC, into an escrow account. 935 CMR 500.105(10)(b).

Any new applicant will be required to provide a description of its plan to obtain the required insurance coverage or otherwise meet the requirements of this regulation as part of the application process. 935 CMR 101(c)(5).

This insurance requirement is one of several designed to ensure the financial responsibility of marijuana businesses in the Commonwealth, including a requirement that applicants detail the amounts and sources of capital resources available to them, and a requirement that a license applicant provide documentation of a bond or other resources held in an escrow account in an amount sufficient to adequately support the dismantling and winding down of a Marijuana Establishment pursuant to 935 CMR 500.101(1)(a).

Synopsis

The recreational marijuana business regulations were approved on March 9, 2018, after extensive hearings and public input. The regulations must be signed by the Secretary of the Commonwealth and published in the Massachusetts Register, which is expected to take place on March 23, 2018. The regulations become effective upon publication.

Massachusetts voters approved the legalization of recreational marijuana via ballot in November 2016. The CCC plans to begin accepting applications on April 1, 2018, and recreational marijuana sales are expected to begin on July 1, 2018. Existing medical marijuana treatment centers have been given priority for licensure in towns and cities where the number of licenses is limited, see MGL c. 94G, § 5(c), and already will have these coverages in place. However, as applications will be reviewed on a rolling basis, we would expect to see the number of businesses seeking this coverage only increasing.

This post was written by Kara Thorvaldsen of Wilson Elser.

Baker-Polito Administration Awards $3.7 Million in Grants for Clean Energy Technology

On November 1, the Baker-Polito Administration awarded $3.7 million in grants to increase the adoption of cost-saving clean energy technologies by Massachusetts low-income residents as part of the Commonwealth’s Affordable Clean Residential Energy Program (ACRE).

Launched in April of this year, the ACRE program evolved out of the Administration’s $15 million Affordable Access to Clean and Efficient Energy (AACEE) Initiative, which focuses on coordinating the agencies that serve the energy and housing needs of Massachusetts’ low- and moderate-income residents. The Initiative’s goal is to increase the number of renewable technologies employed by low-income, single-family homes throughout the Commonwealth. To that end, an AACEE working group published a report last year highlighting recommendations to address barriers to clean energy investment by the state’s low-income residents. These recommendations, which included maximizing clean energy market growth in the low-income housing community and structuring clean energy incentives to better serve low-income residents, have served as a guidepost for the Initiative and its suite of programs.

Through ACRE, the Massachusetts Clean Energy Center (MassCEC) is awarding $2 million to Action for Boston Community Development (ABCD), a non-profit human services organization helping low-income residents in the greater Boston region transition from poverty to stability. ABCD will assist in the installation of air-source heat pumps and solar photovoltaic systems, weatherization, and energy efficient lighting as well as appliance replacement for qualifying single-family homes with reported incomes below 60 percent of the State Median Income.

Energy Futures Group, an expert consulting services organization focused on the design and evaluation of energy efficiency and renewable energy programs, will receive the remaining $1.7 million of the Administration’s funding and will focus their efforts on Western Massachusetts residents living below 80 percent of the State Median Income.

The ACRE program will give low-income homeowners access to renewable technologies, allowing these households to reduce energy costs without out-of-pocket investment. In addition to helping mitigate greenhouse gas emissions, the expanded use of energy efficient appliances benefits all Massachusetts’ ratepayers. By increasing the affordability and accessibility of these technologies, Massachusetts continues to affirm its role as a leader in clean energy generation and the fight against climate change.

For more Environmental & Energy legal analysis, go to The National Law Review

Tag: Massachusetts

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