Coronavirus Flash Update March 20, 2020

Coronavirus Flash Update: March 20, 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 FRIDAY, MARCH 20, 2020 

The Latest News

  • According to the CDC, U.S. COVID-19 cases exceed 10,442 and 150 U.S. deaths.
  • Stock market: after another roller coaster ride this week, Thursday ended with the Dow rising more than 100 points, S&P up by 11 points, and the Nasdaq up by more than 160 points.
  • President Donald Trump invoked the Defense Production Act to prioritize and expand the nation’s ability to produce key medical supplies such as ventilators and personal protective equipment. In addition, the Department of Defense announced the release of five million masks and other supplies from its reserves. For those wanting to understand the Act, read this A&B blog.
  • Last Friday, President Trump declared a national emergency under the Stafford Act, which allows the federal government to marshal additional resources and authorize greater regulatory flexibility to respond to the coronavirus outbreak.

Emergency Funding/Supplemental/Stimulus Legislation

  • On Wednesday, Congress passed the second Coronavirus Response Bill, H.R. 6201, with large majorities in both bodies. This so called 2.0 bill, followed on the heels of the $8.3 billion Emergency Supplemental package passed two weeks ago.
    • The first bill focused on additional funding for key federal agencies responding to the coronavirus epidemic.
    • The second bill, H.R. 6201, includes provisions on low-income food/nutrition assistance, unemployment insurance, expansion of paid leave, and employer tax credits to partially offset the costs of required leave.
  • Congress is moving quickly to a third bill, so called ”3.0 or stimulus,” which is focused on financial assistance in the billions of dollars for both individuals and industries hardest hit by the coronavirus. On Thursday, the Senate GOP leadership released a bill comprised of proposals from various Committees:
    • Senate Small Business Committee section;
    • Senate Appropriations Committee section;
    • Senate Finance Committee - Tax: section;
    • Senate HELP Committee section 1;
    • Senate HELP Committee section 2;
    • Among the many items proposed, the draft legislation would provide cash payments to taxpayers of $1,200, extend tax filing deadline to July 15, liberalize net operating loss rules, modify interest expense limitations for businesses and implement other tax code changes to assist individuals and businesses.
    • The Senate and House Democratic leadership is drafting their own 3.0 proposal which could be released today. The leadership of both bodies have indicated they want to move forward on a final package within days and we expect to see activity continue through the weekend.

Key Administrative and Regulatory Actions

Legal and Financial Issues

  • COVID-19 has had significant impact on business planning, and the Financial Industry Regulatory Authority (FINRA) published guidance for its broker-dealer members regarding the impact – for the full analysis read this advisory.
  • The Federal Financial Institutions Examination Council (FFIEC) issues updated guidance specific to pandemic planning.
  • Last week, the Department of Justice (DOJ) released a statement noting that the department is prepared to pursue “bad actors” who take advantage of the COVID-19 crisis.
  • Effective March 19, the Homeland Security Investigations announced that Immigration and Customs Enforcement (ICE) will suspend future service of NOIs until further notice and any employers who were served NOIs during the month of March, 2020 and have not already responded will be granted an automatic extension for 60 days from effective date.
  • Organizations for Economic Cooperation and Development (OECD) is continuing work (through virtual meetings) on digital tax issues with the objective of reaching a political decision on main elements at the July 1–2, 2020, OECD/G20 Inclusive Framework on BEPS meetings in Berlin.
  • On Wednesday the S. Alcohol and Tobacco Tax and Trade Bureau (TTB) issues tax exemption for production of hand sanitizers by distilled spirit permittees.
  • Internal Revenue Service (IRS) Notice 2020-17 Extending the time for Income Tax payments: The Treasury Department and IRS have extended the due date for Federal income tax payments due April 15, 2020, to July 15, 2020, for payments due of up to $10 million for corporations and up to $1 million for individuals—regardless of filing status—and other unincorporated entities. Associated interest, additions to tax, and penalties for late payment are also suspended until July 15, 2020.
  • IRS announced that coronavirus related testing and treatment costs can be covered by high-deductible health plans (HDHP) without jeopardizing their status.
  • U.S. Tax Court cancels trial sessions and closes court to the public. IRS suspended all non-essential travel for 30 days unless “mission critical,” and IRS Chief Counsel approved telework for employees.
  • On Tuesday the Federal Trade Commission (FTC) released a statement that they were taking a “variety of measures to respond to the new and challenging circumstances associated with the COVID-19 coronavirus crisis.”
  • The House Energy and Commerce Committee Chair Frank Pallone, Jr. (D-NJ), Judiciary Committee Chair Jerrold Nadler (D-NY), Subcommittee on Antitrust, Commercial and Administrative Law Chair David N. Cicilline (D-RI), and Subcommittee on Consumer Protection and Commerce Chair Jan Schakowsky (D-IL) sent the FTC a letter urging them to take steps to protect American consumers from price gouging during the COVID-19 pandemic.
  • Federal antitrust agencies to extend merger reviews. On March 17, the Department of Justice Antitrust Division (DOJ) announced it will be asking some merging parties to voluntarily grant the DOJ an additional 30 days to investigate. This comes one day after the director of the Federal Trade Commission’s (FTC) Bureau of Competition posted a notice explaining that parties should expect the FTC to reach out to discuss “appropriate modifications of statutory or agreed-to timing arrangements” in its antitrust investigations, while reserving the right to seek court relief if extensions are not provided. Also on March 17, the agencies began receiving federal pre-merger notification (Hart-Scott-Rodino Act) filings exclusively via electronic submission, and announced that no “early terminations” will be granted until further notice. Therefore, even transactions that don’t pose significant antitrust concerns cannot close before the expiration of the full statutory waiting period (typically 30 days).
  • Understanding how federal agencies will review merger transactions during the coronavirus outbreak has business and legal implications. The A&B mergers & Acquisitions Group examines what you need to know.
  • Mortgage-backed and asset-backed securities are beginning to feel the impact of the coronavirus outbreak. To understand the basic disclosures to consider with any securitization read this advisory.
  • Last week, the Securities and Exchange Commission (SEC) issued an order giving relief to some companies that cannot timely file their reports due to concerns, including the need to update risk disclosures in response to business threats.
  • The SEC released staff guidance last week to assist issuers’ compliance with federal proxy and annual meeting rules. Additional detail and analysis is provided in this A&B advisory.
  • Securities litigation is likely to be impacted by the coronavirus and is reviewed in this A&B advisory.
    • One securities class action lawsuit has already been filed against Norwegian cruise lines, its CEO and its CFO, as shareholders allege the company made false and misleading statements regarding the impact of the coronavirus and the company’s focus on customer safety during the outbreak of the coronavirus pandemic.
    • For the many Firm clients that have experienced sharp stock price drops in recent days, the C-level management and board members will be concerned about their personal liability. One important thing for them to consider is the scope of D&O insurance coverage for potential shareholder lawsuits, and we regularly assist clients in evaluating that coverage.
International Business and Trade  
  • With possible disruptions impacting business operations in China and elsewhere, as well as disruption for U.S. companies relying on the supply of both component parts and finished goods outside the U.S., the question is whether the coronavirus is a force majeure event that will excuse their nonperformance. For information see this A&B advisory.
  • No announcement or guidance has been released on COVID-19 related disruptions to imports or exports, but there has been some talk of U.S. trading agencies suspending some overseas travel. Per DHS/TSA/Coast Guard, shipping does not yet appear to be impacted—each U.S. port director is determining what ships to let in, and many are allowing all in (although prohibitions for certain crew members from leaving the ship while in U.S. ports has occurred).
  • Last week President Trump expanded the travel ban to include travelers from Europe, the U.K., and Ireland for 30 days (U.S. citizens and individuals legally in the U.S. are excluded).
  • Yesterday the U.S. State Department indicated they were set to announced a level four travel advisory applying to all international travel.
  • On a call held March 13, U.S. Customs and Border Protection’s (“CBP”) said cargo operations remain mostly unaffected by the COVID-19 pandemic.
    • There are no additional screening requirements for cargo because medical professionals have advised that COVID-19 is transmitted by people not cargo.
    • CBP headquarters staff have been directed to work from home, if able, starting March 16. If more CBP staff is exposed, ill, or impacted personally by school closures and the like, cargo processing could be affected.

Workplace & Home Issues  

  • Shelter-in Place orders are being released in multiple state and local jurisdictions initially started earlier this week in several California bay area counties. California’s Governor Gavin Newsom released a statewide order on Thursday and similar orders are being released in other state and communities, including the State of Nevada and counties in Colorado, Illinois, and Oregon.
    • For those asking how to define “federal crucial infrastructure sectors” the Department of Homeland Security’s Cyber Infrastructures division outlines 16 sectors.
    • These orders challenge business to understand who is an “essential business” and other implications and to understand the business and legal implications, read this A&B advisory.
  • Cyberhygeine has become a focus in the workplace and for those working from home—here are six practical tips to stay protected during the coronavirus outbreak.
  • The construction industry is confronting multiple coronavirus related crises—to understand the trends read this A&B advisory on the five best practices.
  • Environmental Protection Agency (EPA) has identified 274 disinfectant products that can be used against SARS-CoV-2 (the cause of COVID-19). Some products kill the virus in 15 seconds while others require at least 10 minutes.
  • EPA created a website, Coronavirus and Drinking Water and Wastewater, which states that the risk to water supplies from the COVID-19 virus is low, and “Americans can continue to use and drink water from their tap as usual.”
  • The Department of Labor (DOL) released guidance last week on preparing the workplace for COVID-19.
  • The Coronavirus Response Act requires certain employers to provide paid leave to employees impacted by the coronavirus and new refundable tax credits to employers. To understand these changes this A&B advisory provides FAQs on Emergency Paid Sick Leave Act, Emergency Family and Medical Leave Expansion Act, and the tax credits for employers related to both.
  • Employers and employees considering domestic travel decisions can find information in this A&B advisory.
  • On Thursday, the Cybersecurity and Infrastructure Security Agency (CISA) released guidance to help state and local jurisdictions and the private sector identify and manage their essential workforce while responding to COVID-19.
  • Occupational Safety and Health Administration (OSHA) updated its website, clarifying that no special precautions (beyond existing requirements) are required for municipal solid waste and recycling suspected or known to contain or be contaminated with COVID-19.
  • Large employers are assessing policies and potential liability to ensure a safe and secure workplace. The CDC has released guidance for employers related to employee information on COVID-19.

Cyber Security & Privacy 

  • On March 18, five Democratic senators sent letters to the White House and Google’s parent company, Alphabet, Inc., expressing concern about the privacy of users of the company’s COVID-19 screening site.
  • Responding to reports that the federal government is considering using customer location data from companies including Google, Facebook, IBM and others in combatting COVID -19, Senator Markey urged the White House Office of Science and Technology Policy to consider consumers’ privacy interests.
  • The Ohio Attorney General issued a warning about Coronavirus related scams and how consumers can avoid them.
  • With cybersecurity, there’s more than a virus in the air— there’s malware and spyware too. To better understand the proactive steps Health Insurance Privacy and Accountability Act (HIPAA) covered entities and business associates can take to protect their systems and their clients’ information during the coronavirus pandemic, read this A&B advisory.
  • The expanded use of working from home using remote access resources has companies increasing the need to guard against cybersecurity threats. For an overview of issues to consider and prepare for, visit COVID-19 and Cyber.

Healthcare 

  • On Thursday, Department of Health and Human Services Secretary Alex Azar hosted a call on COVID-19 response with his counterparts from the G7 countries.
  • Last Friday theS. Citizenship and Immigration Services posted an announcement clarifying that any treatment or preventive services related to COVID-19 will not negatively affect any individual as part of a future Public Charge analysis.
  • The Occupational Safety and Health Administration (OSHA) is providing this temporary guidance regarding required annual fit-testing allowing enforcement discretion, which is to take effect from the date of this memorandum and remain in effect until further notice.
  • Centers for Medicare & Medicaid Services (CMS) has created a website for all coronavirus related documents, including the CMS national emergency guidance. Several new items since last Wednesday include:
    • Waivers: Further information continues to be released on blanket waivers after the initial guidance last Friday following the national emergency executive order. A Wednesday A&B Advisory on the section 1135 waivers provides background, how to request them, EMTALA considerations, overview of Medicaid and CHIP 1135 waivers, and guidance for health care providers and suppliers.
  • On Tuesday, CMS approved its firs first 1135 waiver in Florida, and on Thursday, Washington State’s request was approved. CMS has posted a toolkit on 1135 waivers.
    • CMS released recommendations Wednesday on adult elective surgeries and non-essential procedures. This release provides details including that decisions will be made at the local level by the clinician, patient, hospital, and state and local health departments.
    • On Thursday, CMS announced that the implementation of the Minimum Data Set 3.0 v1.181 for nursing home and swing bed providers set for October 1, 2020 was now delayed.
    • To clarify COVID-19 coverage for the diagnosis and treatment, CMS released late Wednesday FAQs on Catastrophic Health Coverage; the agency states that it will not enforcement action against any health issuer that amends its catastrophic plans to provide coverage without imposing cost-sharing requirements for COVID-19 related services before an enrollee meets the catastrophic plan's deductible. CMS also notes that the use of enforcement discretion and the FAQs issued align with the IRS guidance released last week which provides flexibility to high deductible plans to provide COVID-19 health benefits without applying a deductible or cost-sharing.
  • New telehealth guidance was announced this week broadening access to Medicare telehealth service regardless of patient residence and covering a wide range of services. The telehealth waiver has been expanded, states can cover telehealth without approval, and HIPAA rules will be relaxed, and penalties waived. Factsheets related to these changes:
  • CMS released updated FAQs for state Medicaid and Children’s Health Insurance Program (CHIP) Agencies. The revised document includes answers to questions related to the flexibilities CMS is affording to states in managed care, benefits, financing, 1115 demonstrations, and leveraging “1135” waivers.
  • On Monday, CMS announced steps to improve testing of patients in emergency departments with a memorandum for Medicare participating hospitals, and the agency released a factsheet on telehealth benefits for Medicare beneficiaries. CMS also released a memorandum regarding EMTALA, allowing for alternative testing sites and other guidance.
    • CMS announces new guidance on nursing home patients and visitors.
    • Late Tuesday, CMS released guidance to Program of All-Inclusive Care for the Elderly (PACE) Organizations
    • Information and FAQs for individuals, issuers, and states on COVID-19 health coverage benefits.
    • Guidance for health care workers on protective masks. This release included a memorandum to state survey agencies who inspect nursing homes and other health care post-acute and acute facilities.
    • Guidance regarding health care workers in home health agencies and dialysis centers.
    • CMS issued guidance to help Medicare Advantage and Medicare Part D plans respond to COVID-19.
  • The Department of Health and Human Services (HHS) Office of the Assistant Secretary of Preparedness and Response (ASPR) announced last week that a diagnostic test for COVID-19 was nearing completion and would process up to 1,000 tests in 24 hours. Since this March 9 announcement, FDA has given four companies emergency approval for coronavirus diagnostic tests and assays (Roche Holding, Thermo Fisher, Hologic, and LabCorp).
  • One week after the Food and Drug Administration’s (FDA) announcement that it was postponing most foreign inspections through April, FDA Commissioner Hahn announced that the Agency will scale back domestic inspections for all FDA-regulated products, including drugs, devices, biological products, foods, animal feed and tobacco. For a deeper dive on industry considerations to these delays, review this A&B analysis.
  • On Thursday, during a White House FDA press briefing, President Trump provided optimism about accelerated testing of drugs to treat coronavirus, specifically referencing two drugs (chloroquine and hydroxychloroquine) that are currently approved to treat malaria and severe arthritis.  However, Commissioner Hahn harkened on his career as a cancer doctor and cautioned that while it was important to provide hope, it was equally important not to provide “false hope.” Commissioner Hahn stated that while a vaccine trial was underway, it was only in Phase 1, and that such trial would take at least 12 months to complete.
  • Speaking of clinical trials, earlier this week, FDA issued a “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic,” to assist sponsors in assuring the continued safety of trial participants, while minimizing risks to trial integrity, and maintaining compliance with good clinical practices (GCPs) during the pandemic.
  • FDA has added respirators to its authorized list.
  • To assist in the conservation of masks and gowns the FDA has provided strategies.
  • Earlier this week, FDA announced new authority for states to develop diagnostic tests for COVID-19 so that laboratories will not be required to engage with the FDA and for commercial developers once granted emergency use.
  • The FDA acknowledged the growing shortages of personal protective equipment, and an A&B analysis of the agency’s FAQs is available here.
  • Also last week, the FDA and the FTC issued warning letters to seven companies for selling fraudulent COVID-19 products.
    • The Health Resources and Service Administration (HRSA) launched an information collection effort on Wednesday to support the response to COVID-19 pandemic by surveying HRSA-funded health centers on their response. This information collection effort was initiated pursuant to today’s waiver of the Paperwork Reduction Act.
    • The Centers for Disease Control and Prevention (CDC) released its latest guidance on Personal Protective Equipment (PPEs). And on Wednesday, the CDC released updated guidance on strategies for optimizing the use of eye protection, isolation gowns, facemasks, and N95 respirators.
  • The CDC also updated it infection control
  • Developed new guidance on the use of respirators beyond manufacturer designated shelf life.
  • The CDC’s FAQs for health professionals.
  • The CDC’s latest guidance on Lab Biosafety Guidelines.

Other News

  • Hospitals and other providers are feeling the surge with many facilities at capacity. Many critical items are in short supply, including ventilators, N95 respirators, COVID-19 tests, swabs, and personal protective equipment. The need to expand the workforce, find space for testing and quarantines, and expand services is requiring a significant use of hospital reserves. The loss of elective services is further undermining the bottom line and can disproportionately impact small and rural hospitals.
  • The Joint Commission on Accreditation for Healthcare Organizations (The Joint Commission) announced it was suspending surveying in response to the coronavirus outbreak. The suspension is expected to last through April.
  • The National Waste & Recycling Association (NWRA) asked the Federal Highway Administration (FHWA) to issue guidance to states to allow hauling of extra heavy loads of COVID-19 waste via special permits.
  • The NWRA asked the Federal Motor Carrier Safety Administration (FMCSA) to include medical waste haulers in the exemption from Hours of Service regulations.
  • The Healthcare Waste Institute (HWI) of the NWRA has asked states to grant flexibility for Regulated Medical Waste (RMW) handling to extend maximum storage times at health care and treatment facilities and allow storage of large quantities at treatment facilities.

For background and the most up-to-date information, please visit the Centers for Disease Control and Prevention Coronavirus Disease 2019 website: HERE. The additional federal agency links are provided by the White House Coronavirus Task Force:   U.S. Department of Health and Human Services:

Centers for Disease Control and Prevention:

What you should know:

Situation Updates:

Information for Businesses:

Information for Travel and Transportation:

Information for Healthcare Providers, First Responders, and Research Facilities:

Information for Families and Households:

Information for Schools and Childcare Providers:

Information for Community Events and Gatherings:

Information for Military Response:

Alston & Bird Coronavirus Links

 


 

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