Coronavirus Flash Update June 11, 2020

Coronavirus Flash Update: June 11, 2020

Alston & Bird’s Coronavirus Flash provides updates on policy and regulatory actions under consideration across many important industries being monitored by our teams. Links to key government and legal resources are provided throughout the report.

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UPDATED 9:00 AM ET ON MONDAY, JUNE 11, 2020

The Latest News

  • U.S. COVID-19 cases exceed 1,990,548 and 111,333 U.S. deaths. (Source: CDC) (Updated 6/11/20)
  • U.S. stock market: On Wednesday, the major U.S. benchmarks posted mixed results, with the Dow and S&P dropping 282 and 17 points, respectively, while the Nasdaq gained 66 points. (New)
  • The Congressional Budget Office’s monthly budget review reports that the U.S. federal deficit hit $424 billion in May. The report noted the significant impact of falling federal revenue (receipts totaled $175 billion last month compared with $232 billion in May 2019) and the cost of the emergency stimulus packages. (New)
    • While the timing of the next emergency relief package has slipped to possibly late July, the President noted in his jobs report press briefing last week that he would ask Congress to enact another stimulus bill and hoped it would include a payroll tax cut.
  • HHS announced three new Provider Relief Fund allotments completing the initial $100 billion authorized by the CARES Act, however the $75 billion authorized by the Paycheck Program and Healthcare Enhancement Act remains. These most recent targeted allotments are: $15 billion for Medicaid providers, $10 billion for safety net providers, and a second round for high impact providers ($10 billion). Additional detail is provided in the HHS Provider Relief Fund section of this edition of the Flash. (6/9/20) (New)

COVID-19 Federal & State Legislation  

  • Bill 4.0: The House and Senate have conducted a series of virtual hearings this week related to COVID-19, and one of the notable hearing exchanges occurred during a discussion on the Paycheck Protection Program between Senator Susan Collins and Treasury Secretary Steven Mnuchin. In the exchange (according to the Bloomberg News), Treasury Secretary Mnuchin said he would “very seriously” look at the possibility of allowing some businesses to seek more PPP aid if Congress wished to consider. (New)
  • The focus on liability protection for employers remains a priority in both congressional bodies, and Senator John Cornyn has confirmed that Senate Republicans are drafting legislation to let employers choose which government COVID-19 safety guidelines to follow in order to be protected from lawsuits if their customers or employees contract the virus. This issue is expected to be a key area of contention in discussions between the Democrats and Republicans as the next stimulus bills begins to take shape. (New)
  • Congressional questions about pandemic election year voting grow after the recent primary election in Georgia revealed the difficulties of social distancing voting. (New)
  • Bill 3.5: Paycheck Protection Program and Health Care Enhancement Act, (R. 266) was enacted on April 24. Also available are a section-by-section summary and an overview of the health care provisions.
    • A&B detailed summaries are below:
      • A&B Summary – 5 Small Business Provisions
      • A&B Summary – 5 Health Care Enhancement Provisions
  • Bill 3.0: Coronavirus Aid, Relief, and Economic Security (CARES) Act, (R. 748) passed on March 27. A congressional section by section summary is available here.
  • Congress has passed three coronavirus emergency response bills and the first two are below:
    • Bill 1.0: Coronavirus Preparedness and Response Supplemental (CPPRS) (R. 6074) passed on March 5
    • Bill 2.0: Families First Coronavirus Response Act (FFCRA) (R. 6201) passed on March 18

Transition to “Reopening”  

Federal Communications Commission  

  • The FCC has approved another 67 telehealth funding applications to health care providers totaling $20.18 million. (6/10/20) (New)

Department of Health and Human Services  

  • The Department of Health and Human Services (HHS) Coronavirus toolkit page has been updated. (Updated 6/9/20)
  • HHS has a tracking feature that allows public viewing of all COVID-19 HHS grants and cooperative agreement awards on its website. The grants were distributed through programs in the ACF, ACL, ASPR, CDC, DHHS/OS, HRSA, IHS, NIH, and SAMHSA. (Updated 6/8/20)
  • The NIH has launched a project to evaluate drugs prescribed to children with COVID-19. (6/10/20) (New)
  • The HHS Office of Biomedical Advanced Research and Development Authority (BARDA) has announced a partnership with OraSure Technologies to develop an in vitro diagnostic test for SARS-CoV-2 in oral fluids. (6/10/20) (New)
  • BARDA has announced a collaboration with AstraZeneca to development a novel COVID-19 Therapeutic. (6/9/20) (New)
  • The HHS Office of Civil Rights (OCR) has announced it had reached Early Case Resolution with the State of Connecticut after the state issued an executive order regarding non-visitation policies for short-term hospitals and outpatient clinics to ensure that people with disabilities are not denied reasonable access to needed support persons after it agreed to grant a 73-year old woman with aphasia access to support persons to help. OCR also reached an agreement with Hartford Hospital with her communication and comprehension in her treatment. (6/9/20) (New)
  • HHS released a fact sheet on the departments steps to address the disparate impact of COVID-19 on Black and other racial or ethnic minorities. (6/8/20) (New)
  • The Substance Abuse and Mental Health Services Administration (SAMHSA) awarded $66 million in grants to provide training, education, and resources to improve the delivery of mental and substance use disorder treatment, especially for those impacted by COVID-19. (6/5/20)

Centers for Disease Control and Prevention  

Centers for Medicare & Medicaid Services  

  • The Centers for Medicare and Medicaid Services (CMS) latest news alerts. (Updated 6/9/20)
    • And for the latest COVID-19 related CMS guidance and FAQs visit the CMS Current Emergencies webpage. (Updated 6/10/20)
  • CMS guidance and FAQs for State Survey Agencies and non long-term care providers and suppliers providing care for individuals with disabilities. (6/10/20) (New)
  • CMS had posted the first set of nursing home COVID-19 data resulting from data reporting and inspections. They also provided FAQs to explain the data. (6/4/20)

HHS/CDC/CMS/HRSA CARES Act Provider Relief Funds  

  • HHS announced three new Provider Relief Fund allotments completing the initial $100 billion authorized by the CARES Act. The additional $75 billion for the Provider Relief Fund authorized by the Paycheck Protection and Healthcare Enhancement Act remains to be distribution and neither the breakdown nor the disbursement formulas are known. (6/9/20) (New) The three new allotments are:
    • $10 billion for safety net hospitals – for purposes of this disbursement, safety net hospitals are defined as those with a Medicare Disproportionate Share Payment percentage of 20.2 % or greater, and an average uncompensated care per bed of $25,000 or more, and profitability of 3 percent or less as reported to CMS. HHS has posted the state-by-state breakdown. (6/9/20) (New)
    • $10 billion is a second round funding for hot spot hospitals. To determine eligibility for this funding, hospitals must submit their information by June 15, 2020 at 9:00 pm ET and to be submitted through the teletracking portal. On Monday, June 8, HHS sent communications to all hospitals asking them to update information on their COVID-19 positive-inpatient admissions for the period January 1, 2020 through June 10, 2020. This information will be used to determine the second round of funding for COVID-19 hotspot hospitals. (6/9/20) (New)
    • $15 billion for Medicaid and Children’s Health Insurance Program (CHIP) providers that participate in state Medicaid and CHIP programs and have NOT received a payment from the Provider Relief Fund General Allocation. The Provider Relief Fund portal will soon be open to allow eligible Medicaid and CHIP providers to report their annual patient revenue, which will be used as a factor in determining their payment. The payment to each provider will be at least 2 percent of reported gross revenue from patient care. The final amount each provider will receive will be determined after the data is submitted, including information about the number of Medicaid patients providers serve. (6/9/20) (New)
  • HHS - the CARES Act Provider Relief Fund (PRF) webpage and Portal (Updated 6/10/20)
    • And the PRF FAQs (Updated 6/10/20) have been updated and capture numerous modifications. Note: The updated FAQs provide additional detail on eligibility and process for the 3 new targeted allotments.
  • The CDC has posted an updated dataset of provider recipient specific payment from the Provider Relief Fund general distribution high impact targeted allocation and/or rural targeted allocation. The dataset includes who has attested to receiving one or more payments and agreed to the terms and conditions as of June 3. $49.875 billion of the $72 billion allocated to these distribution pools has been attested to. (Updated 6/5/20)
  • The COVID-19 Provider Relief Fund – the A&B General Distribution Attestation and Application Process Guide has been updated. (Updated 5/27/20)
  • The CARES Provider Relief Fund hotline is (866) 569-3522.

Food and Drug Administration  

  • FDA provides a daily roundup on COVID-19 related actions. The latest announcements. (Updated 6/10/20)
    • FDA updated its FAQs on Testing for SARS-CoV-2, including posting a list of antibody tests that are being removed from the “notification list” of tests being offered. (Updated 6/5/20)
    • FDA maintains its COVID-19 FAQs for the general public. (Updated 6/3/20)
    • FDA webpage for health professionals. (6/2/20)
    • The agency also maintains a public database of drug shortages. (Updated 6/5/20)
    • The FDA has published a new webpage on COVID-19 Educational Resources. (6/9/20) (New)
  • The FDA has approved an abbreviated new drug application for succinylcholine chloride injection. (6/10/20) (New)
  • The FDA has issued a Emergency Use Authorization to Illumina, Inc. for the first COVID-19 diagnostic test utilizing next generation sequence technology. (6/10/20) (New)
  • The FFA has issued guidance on the distribution of drug samples during COVID-19. (6/9/20) (New)
  • The FDA has added the BioMed Innovations SuppleVent Ventilator to the list of authorized ventilators. (6/9/20) (New)
  • The FDA reissued an emergency use authorization revising which types of respirators can be decontaminated for reuse. (6/7/20)
    • The FDA has also announced it has reissued two emergency use authorizations covering imported respirators by tightening other criteria in the Non-NIOSH-Approved Filtering Face piece Respirators Manufactured in China and Imported, Non-NIOSH-Approved Disposable Filtering Face piece Respirators. (6/9/20) (New)
  • The FDA has developed a resource on testing supply substitution strategies. (6/5/20)
  • The FDA announced it had issued an emergency use authorization to Roche Diagnostics for Elecsys IL-6, an in vitro diagnostic test for the quantitative measurement of IL-6 in human serum and plasma. (6/5/20)
  • The FDA approved a new antibiotic to treat hospital-acquired bacterial pneumonia and ventilator-associated bacterial pneumonia. (6/5/20)
  • The FDA approved a new drug to treat ventilated patients. (6/5/20)

Department of Homeland Security/FEMA/DOD  

  • The Department of Homeland Security (DHS) posts a weekly update of its response to COVID-19. (Updated 6/8/20)
  • FEMA has released guidance on providing Mass Care during a pandemic. (6/10/20) (New)
  • FEMA announced that the Emergency Food and Shelter Program (EFSP) will begin disbursing $320 million in aid to community organizations dedicated to food, shelter, and supportive services. This funding was authorized by the CARES Act. (6/9/20) (New)
  • FEMA has released a fact sheet on COVID-19 and historic preservation compliance. (6/5/20)
  • FEMA releases the latest state-by-state data on PPE. (6/5/20)

Department of Justice/Federal Trade Commission/Litigation  

  • The Department of Justice maintains an anti-price gouging and anti-fraud webpage with information on reporting complaints and resources on prevention. (Updated 6/6/20)

Small Business Administration  

  • Small Business Administration (SBA) – In response to the CARES Act requirements, the SBA Paycheck Protection Program (PPP) website has updated its FAQs for lenders and borrowers. (Updated 5/27/20)
    • The Summary of Paycheck Protection Program Lending (Updated 6/6/20)
    • The SBA, jointly with the Department of Treasury announced Paycheck Protection Program changes in response to the recent passage of the Paycheck Protection Flexibility Act. (6/9/20) (New)
    • These changes include (New):
      • Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness. Borrowers who have already received PPP loans retain the option to use an eight-week covered period.
      • Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75 percent of the loan forgiveness amount must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.
      • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to worker or customer safety requirements related to COVID–19.
      • Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.
      • Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.
      • Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender (or, if the borrower does not apply for loan forgiveness, 10 months after the end of the borrower’s loan forgiveness covered period).
      • In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.

Department of Treasury/IRS/Federal Reserve  

  • The Department of Treasury website for CARES Act business assistance programs.
  • The Federal Reserve announces expansion of its Main Street Lending Program and reaffirms its commitment to provide assistance during the pandemic. (6/9/10) (New)
  • The Internal Revenue Service (IRS) released a reminder that the deadline for those who pay estimated taxes has been delayed until July 15. (6/10/20) (New)
  • The IRS issued warnings for the public to guard against tax fraud and other schemes related to COVID-19. (6/9/10) (New)
  • A&B Federal Tax Group provides guidance on a little-known rule that could allow disaster losses from 2020’s COVID-19 pandemic to be used as losses for 2019. Read more here. (6/1/20)

Other Agencies  

  • The U.S. Department of Agriculture has announced an extension of the waiver allowing flexibility in child nutrition programs through the summer. (6/10/20) (New)
  • The Environmental Protections Agency’s (EPA) Office of Enforcement and Compliance Assurance issued a compliance advisory on products claiming to kill coronavirus. The advisory states that products claiming to kill viruses are pesticides and must be registered with EPA. The advisory also notes that EPA is receiving tips and complaints about pesticidal products with potentially false or misleading claims and is considering enforcement actions. (5/29/20)
  • The Department of Housing and Urban Development has announced the final allocation of Emergency Solutions Grants funding to support homeless programs and low-income housing. (6/10/20) (New)
  • The Department of Labor announced a webinar on Coronavirus-related paid sick leave requirements for business owners and employers. It is scheduled for June 12 from 11:00am – 12:00pm CDT. (6/9/20) (New)
  • The Department of Labor has awarded nearly $239 million in Dislocated Worker grants. (6/9/20) (New)
  • The Department of Labor Wage and Hour Division:
    • announced that a West Point, Georgia company has paid an employee after it was determined the employer wrongly denied emergency paid sick leave related to the coronavirus. (6/9/20) (New)
    • announced a Maryland electrical contractor has reinstated an employee after an investigation found the employer denied paid sick leave under the provisions from the Families First Coronavirus Response Act. (6/9/20) (New)

Trade and International Business Issues

  • The Export-Import Bank of the United States (EXIM) has revised key features of two short-term export credit insurance products to allow for streamline application during the pandemic. (6/9/10) (New)
  • U.S. Customs and Border Protection (CBP) seizing counterfeit and unapproved COVID-19 Treatment Products. CBP continues to identify and seize large numbers of counterfeit or unapproved COVID-19 treatment products. Through June 1, CBP seized more than 107,300 FDA-prohibited COVID-19 test kits, 750,000 counterfeit face masks, 2,500 prohibited anti-virus lanyards, and 11,000 FDA-prohibited chloroquine tablets. (6/5/20)
  • The USTR: “A post-coronavirus pandemic U.S. industrial policy” S. Trade Representative Robert Lighthizer said the United States should establish a post pandemic industrial policy, such as by increased tariffs and subsidies, to restore supply chains in a time of crisis to achieve more independence on material that is “really important to the country,” during a webinar hosted by the Economics Club of New York on June 4. (6/4/20)
  • World Trade Organization (WTO) looks at impact of COVID-19 pandemic on trade in services, such as tourism, transport, retail, and health. A WTO report highlighted that the pandemic has led to greater reliance on online services in many sectors as consumers develop new habits with social distancing measures. The report noted that disruption in the supply of services had an impact on social and economic inclusiveness, as well as that trade of services such as telecommunications and computing will be key to economic recovery globally. (5/28/20)

Insurance Issues  

  • For a 50-state review of business interruption insurance related issues see this new COVID-19 Insurance Litigation and Regulatory Issues tracker. The tracker is updated weekly. (Updated 6/5/20)
  • Recent claims pertaining to COVID-19 and business interruption losses continue to be filed, while dispositive motion practice has kicked off in some previously-filed actions. Notable filings and orders include:
    • On May 29, In-N-Out Burgers filed suit against its insurer Zurich American Insurance Company in the Central District of California, alleging that it was prohibited by government order to provide dine-in services, that it suffered business interruption losses despite being able to continue drive-through operations, and that Zurich wrongfully denied its claims for business interruption coverage. In-N-Out argues that its policy “expressly includes coverage for many type of contamination, including . . . virus, pathogen, or pathogenic organism, and disease-causing illness or agent.” In-N-Out seeks damages for breach of contract and a declaratory judgment outlining the scope of Zurich’s obligation to pay under the policy. The case is IN-N-Out Burgers v. Zurich Am. Ins. Co., No. 8:20-cv-1000 (C.D. Cal.).
    • On June 2, Geragos & Geragos APC (“Geragos”) moved to dismiss the declaratory judgment action filed by Travelers Casualty Insurance Company of America in the Central District of California. Geragos argues that dismissal is warranted because Travelers has engaged in forum shopping by filing the action in federal court after Geragos had filed several suits on behalf of itself and various clients in California state court, and that the Central District should decline to entertain the suit as it raises “novel and unsettled questions of state law” better resolved by the state courts. The case and docket entry are Travelers Cas. Ins. Co. of Am. v. Geragos & Geragos APC, No. 2:20-cv-03619-PSG-E (C.D. Cal.), Dkt. 16.
    • On June 3, Flor Expo LLC and Kendal Floral Supply, LLC filed suit against their insurer Travelers Property Casualty Company of American in the Southern District of California, alleging that the insurer used COVID-19 as a pretense to deny Plaintiffs claims for physical loss of flower inventory in a form-denial letter, despite Plaintiffs allegedly not having referenced either COVID-19 or business interruption in their claim submissions. Instead, Plaintiffs allege that government orders prohibited Plaintiffs from accessing their warehouses where imported flowers were stored, and Plaintiffs were unable to move their inventory before it perished. Plaintiffs seek declaratory relief and damages for breach of contract and breach of the covenant of good faith and fair dealing. The case is FlorExpo LLC et al. v. Travelers Prop. Cas. Co. of Am., No. 3:20-cv-01024-JLS-DEB (S.D. Cal.)

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