The ongoing coronavirus pandemic has pushed telehealth and mHealth to center stage as healthcare providers of all sizes look to provide care on virtual platforms. But the emergency – and the legislative and policy measures enacted to deal with it – won’t last forever. Nadia de la Houssaye contributed to a mHeathIntelligence roundup of experts
CARES Act Funds for Hospitals and Other Providers: Where We Are Now?
Recent congressional action has included significant additional funding for healthcare providers. The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), the massive stimulus legislation passed on March 27, appropriated $100 billion to the Department of Health & Human Services (HHS) for the Public Health and Social Services Emergency Fund (the Relief Fund) to be distributed to hospitals and healthcare providers on the front lines of the COVID-19 response. This was followed on April 24 by an additional $75 billion appropriated for healthcare providers under the Paycheck Protection Program and the Health Care Enhancement Act. In addition, the CARES Act expanded the existing Medicare accelerated and advance payment programs (AAP Programs) to allow qualified hospitals and other providers to obtain, as a lump sum or in periodic payments, up to six months of advance Medicare payments (based on prior-period experience) as a loan to stabilize cash flow.
So, what has actually happened with this new funding in the ensuing weeks? The following sections summarize what we know so far.
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Main Street Lending Program Now Open for Lender Registration
On June 15, 2020, the Federal Reserve Bank of Boston (FRBB) announced that the Main Street Lending Program (MSLP) is now open for lender registration and encouraged eligible lenders to start making MSLP loans “immediately.” The MSLP is not yet fully operational, as the Federal Reserve’s special purpose vehicle (Main Street SPV) is not ready to purchase participations from lenders under the program; however, it is anticipated that the FRBB will open its loan intake portal in the coming days.
Accordingly, eligible lenders that propose to make loans under one or more of the MSLP facilities (the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF)) should now register for the MSLP in order to avoid delay in their participation in loans to the Main Street SPV once the loan intake portal opens. A link to the FRBB’s lender registration page is here.
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New Louisiana Law Grants COVID-19 Liability Protection to Businesses
As businesses attempt to navigate the post-COVID-19 landscape, one issue of concern is the possibility of claims for alleged COVID-19 exposure being brought by both customers and employees. These concerns have been complicated by the often conflicting guidance or requirements being placed on businesses from local, state, and federal governments or agencies. While there is ongoing discussion at the federal level of legislation to provide some liability protections for businesses in certain circumstances, several states are stepping into the void and enacting legislation of their own. Louisiana has now followed Oklahoma, North Carolina, and several other states in enacting legislation that grants liability protections for businesses from these type of claims.
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Enactment of Paycheck Protection Flexibility Act of 2020
On June 5, President Trump signed the Paycheck Protection Program Flexibility Act of 2020 (the Flexibility Act). The act revised, in certain important respects, elements of the Paycheck Protection Program (PPP) that had appeared in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as supplemented by a series of interim final rules and FAQs published by the Small Business Administration (SBA). Below is a summary of the changes.
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Main Street Lending Program — Revised June 8 Term Sheets
On June 8, 2020, the Federal Reserve Board (Federal Reserve or FRB) announced a number of changes to the terms and conditions for three Main Street Lending Program (MSLP) facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). The Federal Reserve anticipates lender registration to be open in the coming days.
In response to feedback received from industry groups and others, the Federal Reserve made the following changes to the MSLP, which will make the program available to more small and medium-sized businesses:
- Reducing the minimum loan size for the MSNLF and MSPLF from $500,000 to $250,000
- Increasing the maximum loan size for all facilities
- Increasing the term of each loan option from four to five years
- Deferring the initial principal payments for two years, rather than one
- Reducing the lenders’ risk retention in the MSPLF from 15% to 5%; as a result, the MSLP special purpose vehicle will purchase a 95% participation in qualifying loans under all three facilities
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Main Street Lending Program — Federal Reserve Bank of Boston Issues Required Forms and Revised Guidance
On May 27, 2020, the Federal Reserve Bank of Boston (FRBB) released the legal forms and agreements for eligible borrowers and eligible lenders to participate in the Main Street Lending Program (MSLP). The FRBB also published updated Frequently Asked Questions (FAQs), which include numerous new questions and answers regarding eligibility, loan terms and conditions, borrower certifications and covenants, regulatory requirements and reporting, and other issues.
On April 30, 2020, the Federal Reserve Board (Federal Reserve) had issued the terms and conditions for three MSLP facilities: the Main Street New Loan Facility (MSNLF), the Main Street Priority Loan Facility (MSPLF), and the Main Street Expanded Loan Facility (MSELF). Copies of all documents can be found on the FRBB’s Main Street Lending Program Forms and Agreements webpage.
In the May 27 release, the term sheets for the three MSLP facilities were not amended from the forms released on April 30, and the definitions of “Eligible Borrower” and “Eligible Lender” remain unchanged. An overview and summary of the previously issued term sheets, including eligible borrower and eligible lender requirements, can be found here. A list of covenants and commitments required to be made by eligible borrowers and lenders — including compliance with the CARES Act’s compensation, stock repurchase, and capital distribution restrictions — is also detailed.
Although the MSLP has not yet been launched, the documents, checklists, and revised guidance issued on May 27 appear to be final, subject to future Federal Reserve interpretation and refinement. Accordingly, eligible borrowers and eligible lenders should review the available guidance and documentation, and address potential issues surrounding the facilities’ terms and conditions with their counsel now. We expect that the Federal Reserve and FRBB will announce the program start date in the coming days.
New Interim Final Rule on SBA Loan Review Procedures and Related Lender Responsibilities Regarding the Paycheck Protection Program
On Friday, May 22, 2020, the Small Business Administration (SBA) released two new Interim Final Rules (collectively, the Rules) governing Paycheck Protection Program (PPP) loans: (1) the Loan Forgiveness Requirements (Forgiveness Rule) and (2) the SBA Loan Review Procedures and Related Borrower and Lender Responsibilities (Lender Responsibility Rule). These Rules provide lenders of PPP loans (Lenders) some of the first clear answers on their responsibilities with respect to processing PPP Loan Forgiveness Applications, and it is fair to say that those responsibilities likely exceeded what many Lenders expected, much less desired. This memorandum summarizes the requirements and procedures the new Rules place on Lenders for reviewing PPP loans and Loan Forgiveness Applications, and suggests some unanswered questions raised by them.
IRS and DOL Issue Sweeping Deadline Relief for Benefit Plan Participants and Plan Sponsors
In accordance with emergency powers granted in the wake of the COVID-19 pandemic, the Internal Revenue Service (IRS) and US Department of Labor (DOL) recently issued guidance temporarily extending a number of benefit plan-related deadlines and providing other relief for participants and plan sponsors having difficulty complying with these requirements during the COVID-19 pandemic. Below is a summary of the guidance, which is posted in the Employee Benefits Resources Section.
DOL and IRS Final Rule
The May 4, 2020, Final Rule generally suspends certain benefit plan deadlines for the duration of the “Outbreak Period,” which is an open-ended period beginning March 1, 2020, and ending 60 days after the end of the COVID-19 national emergency. The relief under the Final Rule is generally aimed at participants and beneficiaries, and mostly affects group health plans.
Update: NYSE Provides Additional Temporary Relief from Shareholder Approval Requirements during COVID-19 Pandemic
On May 14, 2020, the Securities and Exchange Commission (SEC) approved the New York Stock Exchange’s (NYSE) request to make additional temporary modifications to certain shareholder approval requirements during the COVID-19 pandemic, which are similar to recent modifications made by the Nasdaq Stock Market (NASDAQ) (previously summarized here).
Together with the NYSE’s prior temporary relief (previously summarized here), these additional temporary modifications to the shareholder approval requirements are intended to enhance NYSE-listed companies’ access to capital during the COVID-19 pandemic. The NYSE’s and the NASDAQ’s temporary relief from the shareholder approval requirements are now closely aligned through June 30, 2020.