Tag: pandemic

The COVID-19 Change Order

During the pandemic it has become common for contractors to submit change orders to owners seeking reimbursement for COVID-19 related expenses and costs.  This is especially true for large construction projects.  These “COVID-19 Change Orders” seek reimbursement for everything from masks, dividers, hand sanitizer and other items required to follow and implement CDC guidelines (or to comply with state and local orders) for maintaining a safe work environment.  COVID-19 Change Orders also seek reimbursement for extended general conditions caused by having less workers on site because of social distancing requirements, lost time caused by shorter working hours, and lost time associated with CDC mandated hygiene breaks and temperature checks. On larger projects, COVID-19 Change Orders can escalate into millions of dollars and are often submitted without warning towards the end of a project when final completion and the payment of retainage are approaching.

For owners and contractors that are trying to complete their projects, many of which have been delayed or suffered from cost overruns, these unexpected COVID-19 Change Orders can be very problematic and hard to navigate.  Owners will argue that increased costs associated with the pandemic have affected all businesses, not just contractors.  Contractors will respond that these are real costs that they must pay to operate.  Often, the justification for reimbursement is not black and white because it is hard to find a specific contractual provision that addresses such an unprecedented situation, which causes uncertainty and strained relations between owners and contractors at the end of a project.

The justifications asserted for COVID-19 Change Orders vary from project to project and are sometimes asserted as an event of force majeure or more commonly as a general change in site conditions.  While many force majeure clauses expressly apply to acts of God, pandemics and government shutdowns, that is not the end of analyzing whether the clause applies.  While the application of a force majeure clause to these situations is highly dependent on the wording of such a clause, most require that performance be completely prevented and do not recognize commercial impracticability as a justification for delay.  There were a small number of projects that were shut down at the beginning of the pandemic by state and local orders in stricter jurisdictions, but for the most part complete shutdowns were uncommon because of various exceptions to such orders for businesses broadly defined as “essential.”  As the pandemic extended through late 2020, and into 2021, shutdowns became non-existent.  Finally, many force majeure clauses don’t allow for the reimbursement of costs for implementing required protective measures, they simply allow for an extension of the contract time.

As a result, many contractors have turned to other contractual provisions, such as language related to changes in site conditions or clauses related to change orders in general.  But prior to the pandemic these provisions were not drafted with this circumstance (a virus) in mind.  Instead, they usually apply to changes in “physical” conditions at the site that are specifically described, like subsurface conditions, otherwise concealed physical conditions or hazardous materials found at the site.   Making the argument that a virus is an unknown “physical” condition at the site can be a challenge since the virus is airborne, not necessarily part of the site itself and not unique to the site.  In addition, because many of these clauses require the approval of the owner or are only triggered by specific conditions, they may not support a unilateral change order.

Because of the ambiguity surrounding COVID-19 Change Orders, many owners will initially be reluctant to cover such reimbursements for their contractors.  Aside from the specific language in their construction contracts, Owners should consider other factors when deciding whether to reject, accept or partially accept COVID-19 Change Orders, including the risk of strained relations with its contractor, distractions at the project and the costs of a potential dispute with its contractor.  If there are remaining construction contingency funds available, and the project has otherwise run smoothly, the owner should consider offering all or part of it at the end of the project to avoid a dispute.  Likewise, contractors should be thoughtful and thorough when deciding whether to seek reimbursement for project costs associated with COVID-19, and make sure the costs at issue were necessary and can be verified.  Finally, if the contractor received government loans or payments because of the pandemic, including funds from the Paycheck Protection Program, it should strongly consider not seeking reimbursement from the owner.

Article By Richard F. Whiteley, Phillip L. Sampson Jr., and Stacianne M. Wilson of Bracewell LLP

For more coronavirus legal news updates, click here to visit the National Law Review.

© 2022 Bracewell LLP

Federal District Court Says Pre-Shift COVID Screening Time Not Compensable

In the first reported decision we’ve seen addressing the issue head on, a federal district court in California dismissed a putative collective action claim under the Fair Labor Standards Act (FLSA) seeking payment for time spent in pre-shift COVID screening.

Prior to clocking in each day, the plaintiff—a non-exempt truck driver whose job duties included loading and transporting automobile parts from a central distribution center to stores throughout southern California—was required to submit to COVID-related health screening conducted on his employer’s premises.  During the screening process, a company employee asked the plaintiff a series of questions and took the plaintiff’s temperature.  The total time spent in the screening process often exceeded five minutes, which included waiting time.

The plaintiff filed a collective action claim, contending that the time spent by him and other employees participating in the daily screening was compensable under the FLSA.

Starting with the premise that time spent in pre-shift activities is only compensable under the FLSA if it is “integral and indispensable” to the employee’s “principal activities or activities which [the] employee is employed to perform,” the district court granted the employer’s motion to dismiss the FLSA claims, noting:

A pre-shift COVID screening is not the “principal activity or activities which [the] employee is employed to perform.”  29 U.S.C. § 254(a)(1).  O’Reilly did not hire the employees to undergo health screenings, but instead to load and transport products to stores….  [T]he pre-shift COVID screenings were not “integral and indispensable” to the employees’ duties because the screening was not an intrinsic element of the loading and transporting of products to the stores.  The screenings were not indispensable to the employees’ duties because O’Reilly could eliminate them completely without hindering the employees’ ability to perform their duties….  A pre-shift COVID temperature check and short questions regarding exposure do not share the required nexus with Plaintiff’s duties of retrieving automotive parts and delivering them to auto part stores to make the screening a compensable activity that is integral and indispensable to those activities.

Notably, the court referenced—and then distinguished—the U.S. Department of Labor’s COVID-19 and the Fair Labor Standards Act Questions and Answers, which were issued during the height of the pandemic and which many employers felt were ambiguous on the issue of which COVID-related activities were and weren’t considered “hours worked” under the FLSA:

Unlike the nurse in the DOL example whose principal job duty is to keep patients healthy and has direct patient contact, Plaintiff’s principal activities consisted of manual labor and transportation of auto parts to stores.

We examined those agency Q&As—and the broader issues around compensability of time spent in vaccination, testing, and screening activities—in an earlier blog.

The decision is Pipich v. O’Reilly Auto Enterprises, LLC (S.D. Cal. Mar. 15, 2022).

Article By Allan S Bloom of Proskauer Rose LLP

For more coronavirus legal news, click here to visit the National Law Review.

© 2022 Proskauer Rose LLP.

EEOC Sanctions Employer for GINA Violations Relating to Collection of Employees’ Family Members’ COVID Test Results

On July 6, 2022, the Equal Employment Opportunity Commission (EEOC) announced it has entered into a conciliation agreement with a Florida-based medical practice for violations of the Genetic Information Non-Discrimination Act (GINA) arising out of the practice’s collection of employees’ family members’ COVID-19 testing results.

In a press release announcing the agreement, the EEOC stated that, following an investigation, it found that the medical practice – Brandon Dermatology – violated GINA by requesting the test results of employees’ family members and that “[s]uch conduct violates the GINA, which prohibits employers from requesting, requiring or purchasing genetic information about applicants or employees and their family members, except in very narrow circumstances which do not apply in this matter.”  GINA defines “genetic information” to include “the manifestation of a disease or disorder in an employee’s family members.”

While the press release includes limited details on the matter, the EEOC noted that “[i]n addition to compensating affected employees through restoration of leave time or back pay, as well as compensatory damages, the conciliation agreement resolving the charge requires Brandon Dermatology to review its COVID-19 policies; conduct training on EEO laws as they pertain to COVID-19; and post a notice.”

In its technical assistance guidance relating to COVID-19, the EEOC states that GINA “prohibits employers from asking employees medical questions about family members” including asking an employee who is physically coming into the workplace whether they have family members who have COVID-19 or symptoms associated with COVID-19.  However, the guidance goes on to state that “GINA . . . does not prohibit an employer from asking employees whether they have had contact with anyone diagnosed with COVID-19 or who may have symptoms associated with the disease.”  It also notes that “from a public health perspective, only asking about an employee’s contact with family members would unnecessarily limit the information obtained about an employee’s potential exposure to COVID-19.”

Article By Evandro C Gigante and Laura M. Fant of Proskauer Rose LLP

For more labor and employment legal news, click here to visit the National Law Review.

© 2022 Proskauer Rose LLP.

COVID-19 Healthcare Enforcement Actions to Increase in 2022 and Beyond

“The Department remains committed to using every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud. We will continue to hold accountable those who seek to exploit the pandemic for personal gain, to protect vulnerable populations, and to safeguard the integrity of taxpayer-funded programs”

US Attorney General Merrick Garland – March 10, 2022, Remarks

The Biden Administration, US Department of Justice (DOJ), US Department of Health and Human Services Office of Inspector General (HHS-OIG), and other federal agencies have prioritized prosecuting COVID-19-related fraud since the pandemic began. Although the United States appears to be finally emerging from the pandemic, the government’s pandemic-related enforcement actions are here to stay for the foreseeable future. DOJ has made clear that the government’s COVID-19 enforcement efforts will accelerate, with a more significant focus on complex healthcare fraud cases and civil actions under the False Claims Act (FCA). As the federal government continues to devote additional resources towards its pandemic-related enforcement efforts, healthcare companies, hospital systems and providers should prepare for increased scrutiny.

Additional Resources Devoted to COVID-19 Fraud Enforcement Efforts

DOJ and other federal agencies have already devoted an unprecedented amount of resources to investigating and prosecuting pandemic-related fraud cases. These extensive efforts have led to immediate results. To date, DOJ has brought pandemic-related criminal charges against more than 1,000 individuals with the total alleged fraud losses exceeding $1 billion, and has seized more than $1.2 billion in fraudulently obtained relief funds.

DOJ’s pandemic-enforcement efforts show no sign of slowing down anytime soon. Less than a year after US Attorney General (AG) Merrick Garland established the COVID-19 Fraud Enforcement Task Force, the Biden administration announced that DOJ would appoint a chief prosecutor to expand on the Task Force’s “already robust efforts,” to focus on “most egregious forms of pandemic fraud” and to target particularly complex fraud schemes.

On March 10, 2022, DOJ announced that Kevin Chambers has been appointed as DOJ’s director for COVID-19 fraud enforcement. During his introductory remarks, Chambers said that DOJ would be “redoubling [its] efforts to identify pandemic fraud, to charge and prosecute those individuals responsible for it and whenever possible, to recover funds stolen from the American people.” He also indicated that DOJ would use “new tools” it has developed since the start of the pandemic to investigate such fraud.

In a March 2, 2022, speech before the American Bar Association’s Annual National Institute on White Collar Crime, AG Garland also announced that the Biden Administration will seek an additional $36.5 million in the 2022 budget for DOJ to “bolster efforts to combat pandemic-related fraud.” As evidence of this point, DOJ plans to hire 120 new prosecutors and 900 new Federal Bureau of Investigation agents who will focus on white-collar crime.

DOJ and HHS-OIG to Increasingly Focus on FCA Cases

For the past two years, officials from DOJ and HHS-OIG have identified civil and criminal healthcare fraud relating to COVID-19 as a high priority. As the effects of the pandemic subside, COVID-19-related civil enforcement actions targeting healthcare providers and healthcare companies seem set to increase.

During remarks at the Federal Bar Association’s annual Qui Tam Conference in February 2022, Gregory Demske, chief counsel to the inspector general for HHS-OIG, emphasized that COVID-19 remains a key enforcement priority. Demske indicated that HHS-OIG is focused on the use of COVID-19 to bill for medically unnecessary services, and fraud in connection with HHS’s Provider Relief Fund (PRF) and Uninsured Relief Fund. Demske also confirmed that HHS-OIG remains intensely focused on fraud in connection with telehealth services, the use of which increased exponentially during the pandemic. And, in March 2022, AG Garland reiterated that DOJ will use “every available federal tool—including criminal, civil, and administrative actions—to combat and prevent COVID-19 related fraud.”

The majority of pandemic-related healthcare enforcement actions to date have been criminal prosecutions involving truly blatant instances of fraud and abuse. Going forward, civil and administrative actions likely will be used to pursue cases that turn on lower mens rea requirements or involve more complex regulatory issues. These civil actions will include qui tam actions filed by whistleblowers, as well as FCA cases initiated directly by the DOJ.

In 2021, DOJ recovered more than $5 billion in connection with FCA cases involving the healthcare industry. Given the unprecedented amount of government funds expended to combat the COVID-19 pandemic, DOJ and HHS-OIG will undoubtedly rely on the FCA to maximize the government’s financial recovery. DOJ has already reached FCA settlements in several Paycheck Protection Program cases. It is only a matter of time before we see similar FCA investigations, complaints and settlements focused on relief funding to healthcare providers.

Pandemic-Related Healthcare Priorities

HHS’s PRF

The PRF was created as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide direct payments to “eligible health care providers for health care-related expenses [and] lost revenues that are attributable to coronavirus.” More than $140 billion has been disbursed to hospitals and healthcare providers under the PRF, which is administered by the Health Resources & Services Administration (HRSA).

Payments under the PRF are subject to specific terms and conditions. To retain PRF disbursements, providers must attest to “ongoing compliance” with these requirements and acknowledge that their “full compliance with all Terms and Conditions is material to the Secretary’s decision to disburse funds.” Notwithstanding ongoing concerns and confusion regarding the PRF program requirements, any noncompliance with the terms and conditions could result in criminal, civil and administrative enforcement actions. As recently as March 3, 2022, AG Garland identified fraud in connection with the PRF as a key DOJ enforcement priority.

To date, the Healthcare Fraud Unit of DOJ’s Criminal Division has already brought criminal charges against nine individuals for fraud relating to the PRF. These criminal cases, however, have almost exclusively focused on egregious allegations of fraud and abuses, such as misappropriating PRF disbursements and using the money for personal expenses. For example, in September 2021, DOJ charged five individuals with using PRF payments to gamble at Las Vegas casinos and purchase luxury cars.

DOJ, however, has long indicated that the FCA will also play a “significant role” in DOJ’s PRF enforcement efforts. It is now just a matter of time before such civil investigations and settlements emerge.

HRSA’s stated oversight plan includes post-payment analysis and review to determine whether HHS distributed PRF payments to eligible providers in the correct amounts; audits to assess whether recipients used the funds in accordance with laws, guidance, and terms and conditions; and the recovery of overpayments and unused or improperly used payments. Among other things, HRSA and HHS-OIG likely will evaluate ownership changes, double counting reimbursed expenses and losses, and compliance with the balanced billing requirements.

PRF oversight and enforcement actions have been delayed partly because of program complexities and extended reporting timelines. For example, the first report from PRF recipients on use of funds was not due until the end of 2021. Depending on the date funds were received, PRF recipients may have no reporting obligations through 2023. Entities that expended more than $750,000 in federal awards, including PRF payments, also must obtain an independent audit examining their financial statements; internal controls; and compliance with applicable statutes, regulations and program requirements. These independent audits of PRF payments must be submitted to the Federal Audit Clearinghouse, for nonprofit organizations, or the HRSA Division of Financial Integrity, for for-profit “commercial” organizations. Recipients also may be subject to separate audits by HHS, HHS-OIG or the Pandemic Response Accountability Committee to review copies of records and cost documentation and to ensure compliance with the applicable terms and conditions.

Finally, DOJ and HHS-OIG have increasingly relied on sophisticated data analytics to drive their healthcare enforcement efforts generally. Now that the first round of reports containing specific PRF data certifications are available to HRSA and HHS-OIG, we expect to see the use of such analytics, in conjunction with all the other available information, in connection with PRF enforcement.

Telehealth

Telehealth use expanded exponentially during the pandemic. A March 2022 HHS-OIG report showed that during the first year of the pandemic, more than 28 million Medicare beneficiaries (approximately 43% of all Medicare beneficiaries) used telehealth services—a “dramatic increase from the prior year” in which only 341,000 beneficiaries used telehealth. This increase was largely the result of HHS temporarily waiving statutory and regulatory requirements related to telehealth to allow Medicare beneficiaries to obtain expanded telehealth services.

Telehealth has been at the forefront of DOJ’s healthcare enforcement efforts for years now. For example, DOJ’s 2021 nationwide healthcare enforcement action included criminal charges against dozens of individuals for telehealth fraud schemes involving more than $1.1 billion in alleged loses. The majority of these telehealth enforcement actions to date have involved the use of telehealth to engage in traditional fraud healthcare schemes, such as illegal kickbacks and billing for medically unnecessary services and equipment.

DOJ, however, has increasingly pursued criminal enforcement actions directly related to the telehealth waivers HHS issued in response to the pandemic. For example, in November 2021, a defendant was sentenced to 82 months in prison for participating in a $73 million telehealth fraud scheme. The defendant owned laboratories that provided genetic testing and had paid his coconspirators to arrange for telehealth providers to order medically unnecessary genetic tests. The telehealth providers were not actually treating the beneficiaries, did not use the test results and often never even conducted the telemedicine consultation. Although this was primarily a traditional Anti-Kickback Statute/medical necessity case, DOJ also charged the defendant with using the COVID-19-related telehealth waivers to submit more than $1 million in false claims for sham telemedicine visits.

Similar criminal prosecutions and civil actions relating to the expanded telehealth waivers and sham telehealth encounters can be expected in the future. DOJ and HHS-OIG will likely focus on telehealth visits that resulted in claims for services and equipment with particularly high reimbursement rates, such as genetic testing and durable medical equipment. DOJ and HHS-OIG likely will use data analytics to focus on instances in which telehealth services were billed by providers with whom the beneficiary did not previously have a relationship.

Improper Billing Schemes

DOJ has also pursued criminal cases involving traditional healthcare fraud schemes that sought to take advantage of the COVID-19 pandemic. For example, in May 2021, DOJ announced criminal charges against numerous individuals who were improperly bundling COVID-19 tests with other more expensive laboratory tests, such as genetic testing, allergy testing and respiratory pathogen panel testing. DOJ has likewise pursued criminal cases in which defendants improperly used COVID-19 “emergency override” billing codes to circumvent preauthorization requirements and bill Medicare for expensive medications and treatments. Any improper billing schemes that relate to the pandemic will continue to be a focus of criminal and civil enforcement efforts going forward.

Key Takeaways and Recommendations

DOJ, HHS-OIG and other federal agencies remain focused on pursuing healthcare fraud relating to the COVID-19 pandemic. The best way for hospitals, health systems and other healthcare companies and providers to prepare for this increased enforcement activity and scrutiny is to ensure that they have a robust compliance program in place.

There is no one-size-fits-all approach to compliance, but companies can take several proactive and practical steps to minimize their enforcement risk:

  • Monitor federal and state regulatory and statutory changes. The rules, regulations and guidance relating to the COVID-19 pandemic, including for the PRF and expanded telehealth waivers, have repeatedly changed over the past two years and continue to evolve. Monitoring such changes will not only help prevent enforcement actions, but a company’s reasonable and good faith efforts to interpret and follow such rules and regulations can be a powerful defense should an investigation arise, as discussed in connection with the Allergan case, above. Further to that point, where regulatory requirements and associated guidance is ambiguous, a good documentary record of the basis for your entity’s interpretation of the rules is critical.
  • Incorporate data analytics into your compliance program. DOJ and HHS-OIG continue to rely heavily on sophisticated data analytics, including artificial intelligence, to identify and prosecute fraud. In March 2022, AG Garland emphasized DOJ’s use of “big data” to identify payment anomalies that are indicative of fraud. Healthcare companies already have access to vast amounts of data that they can and should use to proactively identify errors, monitor risk areas and address any potential misconduct.
  • Adapt your compliance program and internal controls, as appropriate, to support PRF compliance, reports and audits. Recipients should continue to practice good compliance hygiene and maintain contemporaneous records regarding the receipt and spending of federal funds. Doing so may involve implementing additional systems to track spending, recovery and relief to avoid overlapping use of funds among relief programs, or consulting with grant accounting and compliance advisors to augment existing infrastructure. Recipients also should periodically review policies, procedures and controls, particularly following major updates to program requirements and interpretations.
  • Ensure the accuracy of required PRF reports, certifications and submissions. Particularly in light of ongoing political pressure, HRSA and HHS-OIG likely will conduct extensive oversight of the PRF to identify potential errors, overpayments and improper use of funds. Recipients should carefully review guidance and instructions to avoid inadvertent errors and misstatements on all submissions. Recipients may consider revisiting prior submissions underlying significant disbursements to identify interpretative issues or compliance concerns that warrant additional supporting documentation or disclosure.
  • Carefully consider the implications before entering into arrangements with other parties. The biggest risk to healthcare companies often comes from those with whom they do business. Compliance programs should focus heavily on reducing the risk of entanglement with bad actors.
  • Be diligent in the design and oversight of marketing strategies. Healthcare companies and providers should regularly review their marketing strategies to ensure total transparency and compliance (both historic and prospective) with applicable state and federal anti-kickback statutes. Companies should confirm that patients are reached through appropriate channels. Although issues relating to COVID-19 may be the impetus for a government investigation, violations of the Anti-Kickback Statute frequently result in larger recoveries for the government.
  • Proactively examine coding and billing practices. Providers should immediately review and revisit their coding and billing practices to determine if their practices involved bundling COVID-19 testing with other claims, the use emergency override billing codes or billing for other COVID-19 related services with high reimbursement rates. There is a strong likelihood that the DOJ will review the claims data for any providers with statistically significant use of these billing and coding practices, particularly when the providers are located in geographical areas where the DOJ’s Healthcare Fraud Strike Force and HHS-OIG’s Medicare Fraud Strike Force operate.

Article By Julian L. André, Benton Curtis, and Dawn R. Helak of McDermott Will & Emery

For more health law legal news, click here to visit the National Law Review.

© 2022 McDermott Will & Emery

Return to Work Considerations – COVID and the ADA

Employers are contending with difficult challenges unlike any time in modern history. Even though many employees, especially in the manufacturing industry, returned to work after working from home during the COVID pandemic, the effects of the increased flexibility seen during the COVID era linger. Many employees enjoyed the benefits of working from home during the last two years, even if only part-time, and do not want to give up the benefit. By contrast, and especially as COVID restrictions ease, employers often desire their workforce return to work in a more consistent and routine capacity. These tensions are further complicated by an extremely competitive labor market. Recruiting and retaining employees is a challenge in the current environment. Against this backdrop, prudent employers will keep in mind employment law considerations when developing return-to-work and work-from-home policies.

Where should an employer look to determine what accommodations it should make for an employee who wishes to work from home, either due to a COVID diagnosis and/or a condition that places the employee at a heightened risk for severe COVID? Early in the pandemic, local or state health orders answered such questions regarding COVID-related leave. As the pandemic continued, many of those local health orders were rescinded or expired. As a result, employers are left without clear local guidance. When local requirements are of no assistance, employers should look to CDC guidance for quarantining and isolating guidelines.

In addition, employers should keep in mind that COVID may qualify as a “disability” depending on the symptoms and their severity. If an employee tests positive for COVID and is experiencing symptoms that require an absence from work that is longer than the CDC recommended quarantine period, employers should involve legal counsel to analyze whether the employee’s COVID diagnosis constitutes a disability under the ADA. If it does constitute a disability, the employer is then required to engage in the interactive process under the ADA with the employee to determine whether a reasonable accommodation for the disability can be made. Leave can be an accommodation under the ADA, as can working from home, in certain circumstance and for certain roles.

Likewise, some disabilities may heighten the risk of severe COVID symptoms. In the event that such a disabled employee requests an accommodation related to this heightened risk of COVID, the employer should treat the request as it would any request for accommodation under the ADA. As always, employers should seek legal counsel and check local requirements regarding COVID leave when considering accommodations for employees in these circumstances.

Employers have many competing and challenging considerations when determining a company’s return-to-work policy. While the labor shortage, industry, and specific role considerations certainly play a part in those decisions, employers should not lose sight of the ADA’s additional requirements. The ADA may play a role on an individual level and affect whether an employee may seek leave, work from home, or is entitled to other accommodations related to a COVID diagnosis or high-risk factors.

Article By Felicia S. O’Connor of Foley & Lardner LLP

For more labor and employment legal news, click here to visit the National Law Review.

© 2022 Foley & Lardner LLP

Debt Ceiling Shrinks for Small Business Bankruptcies

Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect in February 2020, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors.  Under the law as originally passed, to be eligible for Subchapter V, a debtor (whether an entity or an individual) had to be engaged in commercial activity and its total debts — secured and unsecured – had to be less than $2,725,625.  At least half of those debts must have come from business activity.

In March 2020, in response to the COVID-19 pandemic, Congress passed the CARES Act, which raised the Subchapter V debt ceiling to $7.5 million for one year.  Congress extended it to March 27, 2022.  A bipartisan Senate bill would make the Subchapter V debt limit permanent at $7.5 million and index it to inflation.  But Congress has not yet passed the legislation or sent it to President Biden for signature.  So, for now, the debt ceiling has shrunk to the original $2,725,625.

Subchapter V has proven popular, with over 3,100 cases filed in the last two years (78 in North Carolina).  Many of those cases could not have proceeded under Subchapter V but for the higher debt limits.  The American Bankruptcy Institute has reported that Subchapter V cases are experiencing higher plan-confirmation rates, speedier plan confirmation, more consensual plans, and improved cost-effectiveness than if those cases had been filed as a traditional Chapter 11.  Anecdotally, most debtors in North Carolina are filing under Subchapter V if they are eligible.

We will continue to monitor legislative activity and report if Congress passes a law to reinstate the $7.5 million debt ceiling.

Article By Lance P. Martin of Ward and Smith, P.A.

For more financial and business legal news, click here to visit the National Law Review.

© 2022 Ward and Smith, P.A.. All Rights Reserved.

Ongoing Canadian Protests Shine Spotlight on Ripple Effect of Supply Chain Disruptions

Although the last two years have seen a nearly never-ending line of supply chain impacts for manufacturers, the latest disruption is also serving to shine a spotlight on the broader impact that relatively small disruptions in the supply chain can have on the global economy.  We all know that trucking is a critical component of the economy.  The U.S. estimates seventy two percent of goods in the U.S. travel by truck.  Trucking has become even more important in this era of increased deliveries and backlogs at ports and other logistics hubs.

In Canada, what began as protests by truckers regarding certain pandemic-related restrictions and mandates have snowballed into broader protests and blockages of roads, bridges, and border crossings.

Protesters have been blocking various bridges and roads in Canada in protest of certain pandemic-related restrictions and mandates.  On Tuesday, the bridge connecting Windsor, Ontario to Detroit (a critical linkage for cross-border travel) was largely blocked, with traffic stopped going into Canada and slowed to a trickle going into the United States. The blockades are now leading U.S. automakers to begin trimming shifts and pausing certain operations in their Michigan and Canadian plants. The bridge protests and automakers’ reduction in capacity continued on Thursday without an end in sight.

The ongoing protests in Canada have also served as a reminder of how seemingly local trucking disruptions in one country can cascade through the supply chain.  This is not the first time that trucking strikes and blockages have rippled through the supply chain and economy.  In 1996, a truckers’ strike in France lasted 12 days, barricading major highways and ultimately leading to concessions from the French government over certain worker benefits and hours.  The resulting agreement led to heightened tensions with Spain, Portugal, and Great Britain due to the impact felt across borders.  In 2008, truckers went on strike in Spain and blocked roads and border crossings, protesting fuel prices.  In 2018, truckers in Brazil staged a large strike and protest that lasted for 10 days, blocking roads, disrupting food and fuel distribution, canceling flights, and causing certain part shortages for automakers.

The ongoing protests in Canada have similarly expanded from Ottawa to the current blockage of border crossings, further raising their profile internationally as they begin to impact global trade.  It remains to be seen how the blockades and protests will resolve, as leaders call for de-escalation and re-opening of roads and crossings.  However, the ripple effects of what started as a localized protest will continue to be felt far beyond Canada’s borders.

Article By Lauren M. Loew of Foley & Lardner LLP

For more COVID-19 and supply chain legal news, click here to visit the National Law Review.

© 2022 Foley & Lardner LLP

Study Demonstrates Earlier Physician Retirement Overall and Increased Pay Equity Concerns for Female Doctors During the Pandemic

This month, Doximity issued its Fifth Annual 2021 Physician Compensation Report. With the continued strain of the pandemic spanning 2021, the self-reported physician data reflected widespread burnout and early retirement, especially by female physicians. With respect to physician compensation, Doximity findings demonstrated:

  • While average doctor pay increased 3.8 percent between 2020 and 2021, there was a decline of real income compared to 2020 given the CPI 6.2% rate of inflation in 2021.
  • The top five metro areas with the highest physician pay were Charlotte, NC; St. Louis, MO; Buffalo, NY; Jacksonville, Florida; and, Orlando, Florida.
  • The top five metro areas with the lowest physician pay were Baltimore, MD; Providence, RI; San Antonio, TX; Washington, D.C.; and Boston, MA.
  • A widening gender pay gap of 28.2% this year, with female physicians making $122,000 less than male physicians in 2021.
  • Based on 2014-2019 data, Doximity estimates that over the course of a career, female physicians will earn over $2 million less than male physicians.

Specialties with the largest pay equity gaps between men and women are oral & maxillofacial surgery; allergy and immunology; ENT; pediatric nephrology; and thoracic surgery. Significantly, there is no one medical specialty where women earned the same or more than men in 2021. All specialties had a pay gap over 10%, except Pediatric Rheumatology (which had a gap of 7.9%). To compound matters, a recent Jama Network Open research letter found that physician residents who were mothers – compared to physician residents who were fathers – were more likely to be responsible for childcare or schooling (24.6% v. .8%), household tasks (31.4% v. 7.2%), to work primarily from home (40.9% to 22%), and to reduce their work hours (19.4% to 9.4%). The study reflected the significant concern that these “short-term adjustments can have serious long-term repercussions as they may lead to lower earnings and negatively impact advancement.”

Doximity’s research also revealed that due to the pandemic, over 1% of physicians retired before expected, which is feared to strain an already tight labor market. The report also highlighted studies suggesting about half of doctors are considering an employment change due to the “COVID-related overwork.” The overwork also had a disproportionate impact on women physicians, with 25% of them reporting they are “considering early retirement” due to increased work during the pandemic.

This research reflects the importance of a physician/employer in any setting reflecting on the impact of the pandemic on its healthcare team. Moreover, the research shows continued pay equity deficits between female and male physicians, which may be exacerbated by the pandemic. Internal reflection on current pay practices to identify the factors contributing to it are critical to maintain top talent, improve morale amidst very difficult times and avoid wage and hour litigation.

Article By Dorothy Parson McDermott of Jackson Lewis P.C.

For more healthcare and health law legal news, click here to visit the National Law Review.

Jackson Lewis P.C. © 2021

Current Pandemic-Related Regulations for Business Travel to the United States, Germany, and the EU

Recently, due to the availability of COVID-19 vaccines, many countries decided to lift their entry restrictions or change them in such a way that travelers who had recovered from COVID-19 infections or been vaccinated were allowed entry. Here is an overview of some of the current entry requirements for international travel.

Entry Into the United States

Since November 8, 2021, individuals have been allowed to enter the United States again from Europe. For 20 months, an entry ban had been in place in the United States for travelers from Brazil, China, India, Iran, Ireland, the Schengen Area (26 countries), South Africa, and the United Kingdom. A proclamation issued by President Joe Biden on October 25, 2021—“A Proclamation on Advancing the Safe Resumption of Global Travel During the COVID-⁠19 Pandemic”—ended these entry restrictions and the need for national interest exceptions (NIE) to the restrictions. Travelers from most countries (a recent U.S. ban on travel from eight African countries took effect on November 29, 2021) may enter the United States if they are fully vaccinated and present negative coronavirus test results (via RT-PCR tests or antigen tests) that are no more than three days old at the time of departure.

Travelers must prove to their airlines that they have been fully vaccinated with internationally recognized vaccines prior to their departures. Currently, the United States recognizes vaccines the Pfizer-BioNTech, Oxford-AstraZeneca, Oxford-AstraZeneca/Covishield, Covaxin, Moderna, Johnson & Johnson/Janssen, BIBP/Sinopharm, and Sinovacvaccines. A traveler’s last vaccination must have taken place at least 14 days before the planned date of travel. The United States accepts the EU Digital COVID Certificate as proof of vaccination.

Exempt groups include persons on diplomatic or governmental foreign travel, children under 18 years of age, and persons who cannot be vaccinated with a COVID-19 vaccine for documented medical reasons. Persons exempt from the October 25, 2021, proclamation’s requirements may enter the United States without being fully vaccinated, but they must quarantine for seven days upon arrival and test for COVID-19 infection three to five days after entry.

Regardless of the COVID-19–related entry requirements, all travelers still need an Electronic System for Travel Authorization (ESTA) entry permit issued by U.S. Customs and Border Protection (CBP). CBP advises travelers to apply online for ESTA authorization at least 72 hours in advance of departure.

Requirements for Entry Into the European Union

The European Union (EU) has a common approach to travel from third countries to EU member states. Entry requirements are constantly being adapted to the pandemic situation as international travel gradually opens up. Currently, in principle, any person from a third country who has been fully vaccinated with a vaccine approved by the European Medicines Agency (EMA) (BioNTech-Pfizer, Moderna, AstraZeneca, and Janssen-Cilag) may enter the European Union. The last vaccination must have taken place at least 14 days before the planned entry.

EU citizens and residents as well as their family members are allowed to enter EU member states without being fully vaccinated. Further exceptions apply to persons for whom absolutely necessary reasons for entry exist. “Absolutely necessary reasons” may exist, among other things, for highly qualified employees from third countries if their labor is necessary from an economic point of view and their work cannot be postponed or carried out abroad.

The EU also maintains a list of countries where the epidemiological situation has improved sufficiently (the so-called “EU White List”), so that entry from these countries is possible regardless of an individual’s vaccination status. This list is constantly updated according to the epidemiological situation. The United States is not currently on the EU White List, so entry from the United States is only possible for fully vaccinated persons.

Each EU member state may set its own additional entry requirements. The EU’s “Re-open EU,” a clearinghouse of information regarding EU member states’ pandemic-related measures, offers an overview of the quarantine and testing requirements of the individual countries.

Requirements for Entry Into Germany

All travelers to Germany from third countries that are not on the EU White List and are not EU citizens or residents must be fully vaccinated. In exceptional cases, entry is possible if it is absolutely necessary.

In addition, all travelers aged 12 or older must provide proof of vaccination. Before crossing the border, proof of vaccination or convalescence, or a test result showing negative for infection (e.g., an antigen test that is no more than 48 hours old or an RT-PCR test that is no more than 72 hours old), must be presented for inspection by the carrier or at the request of the Federal Police.

For previous stays in high-risk or virus-variant areas, digital travel registration is also mandatory. The Robert Koch Institute provides a current list of all high-risk and virus-variant areas.

Nonvaccinated or recovered travelers entering from high-risk areas must also present a negative test upon entry and enter domestic quarantine for 10 days. The domestic quarantine can be ended prematurely if another negative test result is presented five days after entry.

At present, travel from a virus-variant area is not possible, as a travel ban is in force for countries where virus mutations are widespread. Entry is possible only in a few exceptional cases (for example, for German nationals and persons with residence and an existing right of abode in Germany, as well as their immediate family members). Irrespective of vaccination or convalescent status, these travelers are obliged to register their entries digitally, present negative test results upon entry, and go into quarantine for 14 days. Only vaccinated and recovered persons may shorten their quarantine periods by presenting further negative test results five days after entry.

Employer Inquiries Into Employees’ Vaccination and Recovery Status

These extensive regulations raise a question as to whether an employer may inquire into an employee’s vaccination status, or whether the employee has recovered from a COVID-19 infection in connection with an upcoming business trip.

The vaccination and/or convalescence status of an employee, under 9 (1) of the EU’s General Data Protection Regulation (GDPR), is considered health data and thus protected personal information according to Art. An employer may request and process this information only if there is a legal basis for doing so. If a business trip requires proof of an employee’s vaccination against COVID-19 (e.g., due to entry restrictions), an employer may request and process this information from the employee in individual cases. However, employers may only request the information in the context of specific business trips and are prohibited from retaining the information for any other purposes.”

The COVID-19–related entry regulations of many countries may largely determine the feasibility of a contemplated business trip, as the prospect for international business travel will likely depend on the vaccination status of the employees involved. This situation may result in a legitimate interest on the part of the employer to inquire into employee vaccination status because the employer would otherwise be unable to find out whether a particular employee met the entry requirements of the destination country. Only by inquiring into vaccination status can the employer ensure that the employee is not turned away at the border—i.e., that the employee can fulfill the duty to provide the contractually agreed upon work within the scope of the business trip.

Whether an employer’s query regarding an employee’s vaccination status is legitimate is therefore a case- and fact-specific inquiry, which depends above all on the entry regulations of the destination country. If the destination country requires complete vaccination for entry, it may be permissible from a data protection perspective to ask about an employee’s vaccination status.

Article By Cynthia Lange of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

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© 2021, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

CMS Removes All Nursing Home Visitation Restrictions as COVID-19 Cases Decrease

In order to continue addressing the impacts of COVID-19 on nursing home residents, the Centers for Medicare & Medicaid Services (CMS) recently issued a memo updating guidance for nursing home visitation. You can read the full memo here.

Early in the pandemic, CMS implemented visitation restrictions to mitigate the risk of visitors introducing COVID-19 to nursing homes. Now, CMS is updating its guidance and allowing visitation for residents at all times. CMS explained its decision to allow visitation is based upon data which shows approximately 86% of residents and 74% of staff are fully vaccinated, and the number of new COVID-19 cases each week in nursing homes has dramatically decreased.

Under the new guidance, nursing homes cannot limit the frequency and length of visits for residents, the number of visitors, or require advance scheduling of visits as mandated under the previous guidance. However, CMS is still directing nursing homes to follow infection-control policies and procedures. Visitors who have tested positive for COVID-19, have symptoms of COVID-19, or currently meet the criteria for quarantine, should not enter the facility. Nursing homes should still screen all visitors before entry.

Although not required, CMS is encouraging nursing homes in counties with substantial or high levels of community transmission to offer testing to visitors, if feasible. Nursing homes should also educate and encourage visitors to become vaccinated. Visitors should still wear face coverings and social distance at all times while in the nursing home. Nursing homes should stay diligent in their infection-control efforts.

Article By Sydney N. Pahren and Timothy Cahill of Dinsmore & Shohl LLP

© 2021 Dinsmore & Shohl LLP. All rights reserved.