Volume 4 | April 2020
SPECIAL EDITION
Another month, another COVID-related "Special Edition" of our newsletter. We join everyone in hoping that there won't be a need for too many more special editions, but until then, we are committed to bringing important COVID-related news and legal alerts to our clients and friends.

We continue to work at full capacity (including a new addition to our firm as announced below), albeit remotely, and stand ready and able to assist you with any legal needs, so please do not hesitate to contact us. Please continue to stay safe and healthy.


THE ATTORNEYS AND STAFF AT CHILIVIS GRUBMAN
Georgia Law Enforcement Agencies Announce Formation of COVID Fraud Task Force
On April 7, 2020, the three United States Attorneys Offices in Georgia, along with the Georgia Attorney General’s Office and the Office of the Governor, announced a new COVID-19 Fraud Task Force, which they say is “aimed at better protecting the citizens of Georgia from criminal fraud arising from the pandemic.” From the   DOJ’s press release:

"The task force will enhance communication between partner agencies and more rapidly share information about COVID-19 fraud, while ensuring each fraud complaint is reported to the appropriate prosecuting agency. Task force member agencies include the Office of the Governor of Georgia, the Office of the Attorney General of Georgia, the U.S. Attorney’s Office for the Northern District of Georgia, the U.S. Attorney’s Office for the Middle District of Georgia and the U.S. Attorney’s Office for the Southern District of Georgia. Georgia’s three U.S. Attorneys, the Attorney General of Georgia and the Executive Counsel for the Governor’s Office serve on the task force."

The Press Release lists the following as examples of COVID-19-related fraud that the Task Force will be targeting:

  • Treatment scams: Scammers are selling fake vaccines, medicines, and cures for COVID-19.
  • Supply scams: Scammers are claiming they have in-demand products, like cleaning and household supplies, and medical supplies, but when an order is placed, the scammer takes the money and never delivers the order.





  • Charity scams: Scammers are fraudulently soliciting donations for non-existent charities to help people affected by the COVID-19 crisis. Scammers often use names that are similar to the names of real charities.
  • Phishing scams: Scammers, posing as national and global health authorities, such as the World Health Organization (WHO) and the Centers for Disease Control and Prevention (CDC), are sending fake emails and texts to trick the recipient into sharing personal information like account numbers, Social Security numbers, and login IDs and passwords.
  • App scams: Scammers are creating COVID-19 related apps that contain malware designed to steal the user’s personal information.
  • Provider scams: Scammers pretending to be doctors and hospitals demand payment for COVID-19 treatment allegedly provided to a friend or family member of the victim.
  • Investment scams: To promote the sale of stock in certain companies—particularly small companies, about which there is little publicly available information—scammers are making false and misleading claims that those companies can prevent, detect or cure COVID-19.

The formation of this Task Force, in combination with other recent statements by the DOJ and State AGs regarding combating COVID-19-related fraud, demonstrates that detecting and punishing such fraud is the government’s top law enforcement priority at this time, and will be for the considerable future. We expect to see a drastic increase in criminal prosecutions and civil and administrative enforcement actions moving forward.  

Recipients Beware: The CARES Act and the Birth of a New Inspector General

On March 27, 2020, President Trump signed into the law the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which included $500 billion for assistance to eligible businesses, states, and municipalities. As with prior economic stimulus laws, the CARES Act contained several provisions establishing strict oversight over the distributed funds, and dedicating resources to detecting and punishing fraud, waste, and abuse in relation to those funds.

One of the layers of oversight is creation of the Special Inspector General for Pandemic Relief (“SIGPR”), which will be housed within the Treasury Department and will be tasked with auditing and investigating the funds that are distributed under the Act. As with other Inspector Generals (“IGs”), the SIGPR will be tasked with detecting and preventing fraud, waste, and abuse in connection with funds distributed under the Act, and will have all of the powers given to other IGs under the Inspector General Act, including issuing subpoenas. The SIGPR is to be appointed by the President and confirmed by the Senate. On April 3, President Trump nominated Brian Miller – currently Senior Associate Counsel in the Office of White House Counsel – to fill the position of SIGPR. Before joining the White House legal team, Miller served as the IG for the General Services Administration. Miller’s nomination is currently awaiting Senate confirmation.

In addition, the CARES Act also contains a provision establishing a Pandemic Response Accountability Committee (“PRAC”), which has the purpose of overseeing all spending, lending, and other outflows appropriated under the Act, and under any past or future COVID-19 related measures, including preventing and detecting fraud, waste, abuse, and mismanagement. The PRAC is composed of inspector generals from various agencies, including the Departments of Defense, Education, Health and Human Services, Homeland Security, Justice, Labor, and the Treasury, as well as the Small Business Administration and the SIGPR, once confirmed. Like the SIGPR, the PRAC will have all of the powers of other IGs contained in the Inspector General Act, including subpoena powers.

Finally, the CARES Act also creates the Congressional Oversight Commission, which will be composed of individuals chosen by Senate majority and minority leaders, the Speaker of the House, and the House minority leader. Senate Majority Leader Mitch McConnell and Speaker of the House Nancy Pelosi will appoint a chair, in consultation with Senate and House minority leaders. The Commission will oversee implementation of the Act’s economic relief provisions, hold hearings, and submit monthly reports to Congress.  

If prior experience is any guide, SIGPR and PRAC will lead to a plethora of investigations and enforcement proceedings related to the distribution of CARES Act funds. For example, the Emergency Economic Stabilization Act of 2008 (often called the “bank bailout”) created the Troubled Asset Relief Program (“TARP”), which contained similar provisions creating various boards and committees to oversee the distribution of TARP assets, including the Special Inspector General for TARP (or “SIGTARP”). Investigations conducted by SIGTARP, which is still actively conducting investigations and audits related to the distribution of TARP funds, have thus far led to the recovery of over $11 billion and the conviction of 381 defendants, including 76 bankers. 

Chilivis Grubman News
Chilivis Grubman Welcomes Jeremy Berry

We are excited to announce the addition of attorney Jeremy Berry as a Partner. Jeremy focuses his practice on government contract and procurement issues, campaign finance and election law, governmental and regulatory affairs matters, charter schools, investigations, and government and public policy litigation. H e has counseled clients with issues related to the performance of their contracts with the government and represented clients seeking government contracts, including filing and defending bid protests on the state, county, and municipal levels. As part of his practice, Mr. Berry represents and counsels elected officials, campaign committees, businesses, and political action committees regarding state and federal campaign finance laws and ethics. 

Prior to joining the firm. Jeremy served as City Attorney for the City of Atlanta, where he provided legal counsel to the Mayor, City Council, and every department, committee, and board of the City, and managed the Department of Law, which consisted of 85 employees (45 lawyers) and administered a $20.9 million annual department budget. Prior to his role as City Attorney, Jeremy practiced with a large, international law firm.


Jeremy received both his undergraduate and law degrees from Emory University, and currently serves on the Board of Visitors of Emory University, the Emory University Alumni Board, and is active in the Jewish Federation of Greater Atlanta.

After joining the firm, Jeremy wasted no time achieving great results for his clients. Jeremy led the legal team that successfully represented Cobb County Sheriff candidate Craig Owens in his effort to be reinstated on the ballot for the Democratic primary election. Upon a challenge by another candidate, on March 26, the Cobb County Board of Elections and Registration voted to disqualify Owens for failing to file an affidavit to prove when and from what high school he graduated. Owens’ legal team filed a petition in superior court on April 2 and their hearing brief on Sunday, April 5 arguing that the affidavit was not required to qualify as a candidate. After an in-person hearing, Senior Judge Tambra Colston (sitting by appointment) reversed the Election Board’s decision and ordered that Owens be placed on the ballot as a candidate. You can read more about the decision here.

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New Publications

Chilivis Grubman partner Scott Grubman has had two articles published by the American Health Law Association (AHLA) this month.

The first article was published on April 3 and covers CMS’s Stark Law waivers related to the COVID-19 crisis.

The second article was published on April 10 and covers the terms and conditions to which healthcare providers must agree in order to receive funds from the CARES Act Public Health and Social Services Emergency Fund.
On April 27 at 1 pm EST, Chilivis Grubman attorneys Scott Grubman and Christian Dennis, along with Raj Shah, Senior Regulatory Attorney for MAGMutual Insurance Company, will be presenting a webinar for HCCA (Health Care Compliance Association) covering various COVID-related healthcare topics, including AKS and Stark waivers, new telehealth rules, the relaxing of HIPAA enforcement, and DOJ enforcement activity related to COVID fraud schemes. If you are interested in attending, please email us and we will send you the registration link as soon as it becomes available.
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HHS-OCR Warns of Phony Investigator
On April 3, HHS' Office of Civil Rights ("OCR") issued an alert warning of an individual posing as an OCR investigator. From OCR's Alert:

"It has come to OCR’s attention that an individual posing as an OCR Investigator has contacted HIPAA covered entities in an attempt to obtain protected health information (PHI). The individual identifies themselves on the telephone as an OCR investigator, but does not provide an OCR complaint transaction number or any other verifiable information relating to an OCR investigation. 

HIPAA covered entities and business associates should alert their workforce members, and can take action to verify that someone is an OCR investigator by asking for the investigator’s email address, which will end in @hhs.gov, and asking for a confirming email from the OCR investigator’s  hhs.gov  email address. If organizations have additional questions or concerns, please send an email to:  OCRMail@hhs.gov .

Suspected incidents of individuals posing as federal law enforcement should be reported to the Federal Bureau of Investigation (FBI). The FBI issued a public service announcement about COVID-19 fraud schemes at:

Feds Charge Texas Man With Terrorist-Related Crime For Online COVID Hoax

On April 8, the United States Attorneys' Office for the Western District of Texas issued a press release announcing charges against a 39-year old San Antonio man for allegedly posting a "threat" on Facebook in which he claimed to have paid someone to spread coronavirus at grocery stories in the San Antonio areas. According to the DOJ's press release, the defendant made his posts "because he was trying to deter people from visiting the stores, purportedly in order to prevent the spread of the virus."

The man was charged via criminal complaint with one count of violating 18 U.S.C. § 1038, which criminalizes false information and hoaxes related to weapons of mass destruction. He was arrested and now faces up to five years in federal prison. The FBI’s Weapons of Mass Destruction Squad and the Joint Terrorism Task Force are investigating this case.

QUOTE OF THE MONTH

Life isn't about waiting for the storm to pass...It's about learning to dance in the rain.


- Vivian Greene

CMS Issues Blanket Stark Law Waivers and HHS-OIG Follows Suit

On March 30, 2020, as part of the federal government’s continuing efforts to lessen the regulatory burden on healthcare providers during the pendency of the COVID-19 crisis, the Centers for Medicare and Medicaid Services (CMS) issued  blanket waivers  of certain self-referral prohibitions contained in the federal Stark Law, 42 U.S.C. § 1395nn. The waivers have a retroactive effective date of March 1, 2020.

In general, the Stark Law, also known as the physician self-referral law, prohibits (1) a physician from making referrals for certain designated health services (DHS) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and (2) an entity from submitting a claim for payment to Medicare for such DHS furnished pursuant to a prohibited referral. The Social Security Act, which contains the Stark Law, permits the Secretary of the Department of Health and Human Services (Secretary) to waive or modify certain requirements relating to federal healthcare programs when the President has declared a national emergency and the Secretary has declared a Public Health Emergency, both of which have occurred as a result of the ongoing COVID-19 crisis.   

Pursuant to his authority, the Secretary has waived sanctions under the Stark Law and related regulations for referrals and claims that fall into the following categories:  

  • Remuneration from an entity to a physician that is above or below fair market value (FMV) for services personally performed by the physician;
  • Rental charges paid by an entity to a physician that are below FMV for the entity’s lease of office space or equipment from the physician, or vice versa;
  • Remuneration from an entity to a physician that is below FMV for items or services purchased by the entity from the physician;
  • Remuneration from a physician to an entity that is below FMV for the use of the entity’s premises or for items or services purchased by the physician from the entity;
  • Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the typical limits set forth by federal law;
  • Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the typical limits set forth by federal law;
  • Remuneration from an entity to a physician resulting from a loan to the physician with an interest rate below FMV or on terms that are unavailable from a lender that is not a recipient of the physicians’ referrals or business generated by the physician, or vice versa;
  • The referral by a physician owner of a hospital that temporarily expands its facility capacity above the number of operating rooms, procedure rooms, and beds without the typical prior approval required by federal law;
  • Referrals by a physician owner of a hospital that converted from a physician-owned ambulatory surgical center (ASC) to a hospital on or after March 1, 2020, as long as certain specified requirements are met;
  • The referral by a physician of a Medicare beneficiary for the provision of DHS to a home health agency that does not qualify as a rural provider under federal law and in which the physician (or immediate family member) has an ownership or investment interest;
  • The referral by a physician in a group practice for medically necessary DHS furnished by the group practice in a location that does not qualify as a “same building” or “centralized building” as typically required by federal law;
  • The referral by a physician in a group practice for medically necessary DHS furnished by the group practice to a patient in his or her private home, an assisted living facility, or independent living faculty where the referring physician’s principal medical practice does not consist of treating patients in their private homes;
  • The referral by a physician to an entity with which the physician’s immediate family member has a financial relationship if the patient who is referred resides in a rural area; and 
  • Referrals by a physician to an entity with whom the physician has a compensation arrangement that does not satisfy the typical writing or signature requirements of an applicable Stark Law exception, as long as the arrangement satisfies each other requirement of the applicable exception, unless such requirement is also waived by this blanket waiver.

Importantly, the waivers apply only to financial relationships and referrals “that are related to the [COVID-19 outbreak].” However, that does  not  mean that the referral or service at issue has to  directly  relate to treating COVID-19. Instead, the Secretary has made clear that a service is related to the COVID-19 outbreak for purposes of the Stark Law waivers if it falls into one of the following fairly broad categories:

  • Diagnosis or medially necessary treatment of COVID-19, whether or not the patient is diagnosed with a confirmed case;
  • Securing the services of a physician or other healthcare practitioner to furnish medically necessary patient care services, including services not related to the diagnosis and treatment of COVID-19, in response to the COVID-19 outbreak;
  • Ensuring the ability of healthcare providers to address patient and community needs due to the COVID-19 outbreak, and expanding the capacity for healthcare providers to address such needs;
  • Shifting the diagnosis and care of patients to appropriate alternative settings due to the COVID-19 outbreak; and
  • Addressing medical practice or business interruption due to the COVID-19 outbreak in order to maintain the availability of medical care and related services for patients and the community.   

In issuing these blanket waivers, the Secretary stated that “CMS will pay claims for [DHS] that, but for satisfying the conditions of a blanket waiver, would violate the physician self-referral law.” The Secretary also stated that parties utilizing these blanket waivers “must make records relating to the use of the blanket waivers available to the Secretary upon request” and that parties are encouraged to “develop and maintain records in a timely manner as a best practice.” Finally, the Secretary noted that “[f]or each blanket waiver, the waiver . . . is limited to the circumstances described in the individual blanket waiver, and health care providers must satisfy all conditions of the blanket waiver in order to rely on the blanket waiver.”

A few days later, the Department of Health and Human Services’ Office of Inspector General (“OIG”), followed suit. On April 3, 2020, the OIG released a  policy statement  stating that it will not impose administrative sanctions under its exclusion and civil monetary penalty (“CMP”) authorities related to violations of the federal Anti-Kickback Statute (“AKS”) with respect to the remuneration covered by CMS’ blanket waivers. According to the OIG, by issuing the policy statement, the OIG “seeks to avoid the need for parties to undertake a separate legal review under the [AKS] for arrangements protected by the Blanket Waivers.” The OIG is careful to note, however, that the policy statement “has no bearing on arrangements that implicate the [AKS] that are not covered by the Blanket Waivers” and gives a specific example of an arrangement that would  not  be covered by the policy statement: “direct financial relationships between pharmaceutical or device manufacturers and physicians or between providers where there is no physician involved.”

Although the blanket Stark waivers are retroactive to March 1, 2020, the OIG’s Policy Statement applies only to conduct that occurs on or after April 3, 2020, and “[p]arties may not rely on the Policy Statement for conduct that occurs after the expiration of the Blanket Waivers and [the] Policy Statement,” which will coincidence with when the COVID-19 public health emergency declaration expires or is terminated.

Can COVID-19 Excuse a Party From Performing it's Obligations Under a Contract? Perhaps.

The COVID-19 pandemic has caused the closing of thousands of offices, retail stores and restaurants nationwide. Can the pandemic also affect the enforceability of the millions of contracts through which we all conduct business? Perhaps. 

There are two possible ways in which the COVID-19 pandemic may affect the enforceability of a contract in Georgia. The first is contractual, through a contract provision commonly known as a “force majeure” clause; the second is statutory, through the doctrine of “impossibility” which is codified at OCGA § 13-4-21. Though somewhat similar in effect and intent, force majeure and impossibility are different concepts, and therefore require separate discussion.

FORCE MAJEURE

As every attorney surely recalls from his/her first year contracts class, the term “force majeure” means “superior force.” Contracts often have “force majeure clauses” that determine which party bears the risk of a contract not being completed due to some “superior force.” This “superior force” can be any event which the parties wish to address, although such a “superior force” usually is an event beyond the parties’ control. For instance, construction contracts often have “force majeure” clauses that determine the extent to which the builder will be excused from completing construction on time due to some type of natural event, such as a hurricane or tornado; the loan agreement likely will have a similar clause. Force majeure clauses are not, however, limited to some type of natural event – thus, a manufacturing contract may determine whether a manufacturer is excused from completing an order if a nation which is the sole source of a necessary raw material refuses to export that raw material. Force majeure clauses also may address such situations generally, such as by stating which party bears the risk of an “unanticipated increase in labor costs” or “an act of God.” 

Each contractual force majeure clause, of course, is unique. Whether any particular contract’s force majeure clause will excuse a party’s performance of its obligations under a contract will be determined by applying the standard rules of contract interpretation to the force majeure clause.  See Lodgenet Entertainment Corp. v. Heritage Inn Assocs., L.P., 261 Ga. App. 557 (2003). This means that a court faced with this decision will follow the usual “three steps of contract construction” rule – first, if the force majeure clause is clear and unambiguous, the Court will enforce the clause according to its terms; second, if the Court finds a force majeure clause to be ambiguous, the court will attempt to resolve the ambiguity by applying the usual rules of construction; finally, if the ambiguity cannot be resolved by the application of those rules, a question of fact will be presented for a jury to determine whether the reason for a party’s failure to perform satisfies a contract’s force majeure clause.  See generally , Larkins, Georgia Contracts: Law and Litigation § 9:1 (2 nd Ed.).

IMPOSSIBILITY

“If performance of the terms of a contract becomes impossible as a result of an act of God, such impossibility shall excuse nonperformance, except where, by proper prudence, such impossibility might have been avoided by the promisor.” OCGA § 13-4-21. The term act of God “applies only to events in nature so extraordinary that the history of climatic variations and other conditions in the particular locality affords no reasonable warning of them.”  Sampson v. Gen’l. Elec. Supply Co., 78 Ga. App. 2 (1948). Neither World War II, Felder v Oldham , 199 Ga. 820 (1945) nor the Great Recession of 2008, Elavon Inc. v. Wachovia Bank, N.A ., 841 F. Supp. 2d 1298 (N.D. Ga. 2011), satisfy this standard.   

Whether a pandemic or epidemic would be considered “an act of God” has not been addressed by the Georgia courts; therefore, whether a party would be excused from performance under a contract due to the COVID 19 pandemic appears to be an open question. Notably, however, the Georgia Supreme Court has held that the obligation to pay money under a contract is not excused, even if the reason for non-payment is that the payor fell ill and, as a result thereof, became incapacitated and died.  Hipp v. Fidelity Ins. Co ., 128 Ga. 491 (1907). The basis for this decision is that impossibility which is simply personal to a party and not inherent in the act to be performed will not excuse performance. This principle, known as “subjective impossibility,” continues to be applied to hold that a party’s inability to pay or obtain money will not satisfy the standard for impossibility . E.g., Hampton Island LLC v HAOP, LLC 306 Ga. App. 542 (2011).

Therefore, if a party is obligated to pay money under a contract, that obligation almost certainly will not be excused by anything resulting from the COVID 19 pandemic. If, however, a party’s obligation is something other than merely to pay money, the impact of COVID-19 may well excuse that performance under Georgia’s “impossibility” rule. 

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