• Underberg & Kessler Adds Washburn

    Andrew M. Washburn has joined Underberg & Kessler LLP as an associate in the real estate practice group. He was formerly an associate with Adelman Matz P.C. in Manhattan serving as a corporate and entertainment law attorney, assisting on transactional-based matters. Andrew also served as an intern at the Monroe County District Attorney’s Office. As an outstanding student at Fordham University, he was a Notes and Articles Editor for Fordham Law’s Intellectual Property, Media & Entertainment Law Journal and a Communications Editor for the Fordham Sports Law Forum. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

  • Do the Due (Diligence)

    This article was published in The Daily Record on September 22, 2020 - Download the Reprint “Do. Or do not.” - Yoda In most corporate acquisitions and commercial real estate purchase transactions, the buyer contracts for the right to conduct due diligence. In a corporate acquisition, due diligence involves the buyer’s comprehensive appraisal of the business being purchased, to establish its assets and liabilities and the accuracy and completeness of the seller’s financial information. In a commercial real estate transaction, the buyer must thoroughly inspect the fundamentals of the property in order to reduce or mitigate financial uncertainties, and the buyer’s lender will require an encompassing due diligence process to ensure that the property that will serve as collateral for the loan justifies the amount of financing sought. A prospective buyer of commercial real estate can perform due diligence before signing a contract, but it is often the better practice to include due diligence provisions in the purchase contract, because the seller is then contractually obligated to provide specified information and give the buyer physical access to the property. A seller’s failure to provide that information or allow that access would give the buyer grounds to terminate the contract. Moreover, due diligence provisions usually give the buyer the right to terminate the contract without liability (and recover its deposit) if the due diligence process generates negative information about the property. At minimum, the seller could seek to negotiate a reduction in the purchase price based on any such negative information. From the seller’s perspective, the existence of a buyer’s contractual right to conduct due diligence as to the physical condition and appraised fair market value of the property should relieve the seller from having to give any warranty as to the property’s physical condition or its economic viability. Typical due diligence provisions in commercial real estate contracts require the seller to deliver to the buyer documents such as: contracts, leases, rental agreements and other agreements related to the property; prior engineering reports, environmental reports and appraisals; and instruments concerning easements, rights of way and other restrictions on or interests in the property. Most due diligence provisions also give the buyer a certain amount of time to complete its physical inspections and any other due diligence it may wish to perform, including but not limited to environmental and other engineering inspections, studies and investigations, and appraisals. They also require that the seller give the buyer access to the property to conduct an appraisal and any environmental, engineering and structural studies and investigations. Once the seller contracts to allow due diligence, the buyer has sole control over decisions about what property inspections and other financial analyses, investigations or appraisals will be done, and, ultimately, whether the transaction will go forward. For example, during due diligence on the sale of commercial rental property, the seller must effectively “open its books” and its property to the buyer; any denial of specified information or physical access to the property by the seller would raise a red flag that could well justify the buyer’s cancellation of the contract. At the same time, a buyer’s contractual right to conduct due diligence provides substantial protection to the seller in the event the buyer develops post-closing remorse and sues to try to recover on fabricated damage claims based on alleged problems with the property. New York retains the doctrine of caveat emptor, which imposes no liability on a seller for failing to disclose information regarding the property when the parties deal at arm’s length, unless there is some conduct on the part of the seller which constitutes active concealment; mere silence alone is not actionable. In addressing, and dismissing, claims of breach of contract or fraudulent inducement arising from real property transactions, the New York Courts regularly hold that claims of misrepresentation will not lie if the representation allegedly relied upon by the buyer was not a matter within the peculiar knowledge of the seller, and could have been discovered by the buyer through the exercise of due diligence. When a buyer has a contractual right to conduct due diligence, but fails to exercise that right in whole or in part, it cannot establish justifiable reliance on any alleged representation by the seller. Moreover, when the buyer is given access to the property and performs property condition assessments, environmental investigations and similar inspections as part of its due diligence, and then proceeds to a closing, the seller may not claim justifiable reliance on any oral representation of the seller concerning the physical condition of the property when that physical condition was not peculiarly within the seller’s knowledge and the buyer had the means available to ascertain the truth or the real quality of those representations. If you have any questions regarding the issues discussed above, or if you have any other Litigation concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Tom Knab, the author of this piece, here or at (716) 847-9104.

  • Do the Due (Diligence)

    “Do. Or do not.” - Yoda In most corporate acquisitions and commercial real estate purchase transactions, the buyer contracts for the right to conduct due diligence. In a corporate acquisition, due diligence involves the buyer’s comprehensive appraisal of the business being purchased, to establish its assets and liabilities and the accuracy and completeness of the seller’s financial information. In a commercial real estate transaction, the buyer must thoroughly inspect the fundamentals of the property in order to reduce or mitigate financial uncertainties, and the buyer’s lender will require an encompassing due diligence process to ensure that the property that will serve as collateral for the loan justifies the amount of financing sought. A prospective buyer of commercial real estate can perform due diligence before signing a contract, but it is often the better practice to include due diligence provisions in the purchase contract, because the seller is then contractually obligated to provide specified information and give the buyer physical access to the property. A seller’s failure to provide that information or allow that access would give the buyer grounds to terminate the contract. Moreover, due diligence provisions usually give the buyer the right to terminate the contract without liability (and recover its deposit) if the due diligence process generates negative information about the property. At minimum, the seller could seek to negotiate a reduction in the purchase price based on any such negative information. From the seller’s perspective, the existence of a buyer’s contractual right to conduct due diligence as to the physical condition and appraised fair market value of the property should relieve the seller from having to give any warranty as to the property’s physical condition or its economic viability. Typical due diligence provisions in commercial real estate contracts require the seller to deliver to the buyer documents such as: contracts, leases, rental agreements and other agreements related to the property; prior engineering reports, environmental reports and appraisals; and instruments concerning easements, rights of way and other restrictions on or interests in the property. Most due diligence provisions also give the buyer a certain amount of time to complete its physical inspections and any other due diligence it may wish to perform, including but not limited to environmental and other engineering inspections, studies and investigations, and appraisals. They also require that the seller give the buyer access to the property to conduct an appraisal and any environmental, engineering and structural studies and investigations. Once the seller contracts to allow due diligence, the buyer has sole control over decisions about what property inspections and other financial analyses, investigations or appraisals will be done, and, ultimately, whether the transaction will go forward. For example, during due diligence on the sale of commercial rental property, the seller must effectively “open its books” and its property to the buyer; any denial of specified information or physical access to the property by the seller would raise a red flag that could well justify the buyer’s cancellation of the contract. At the same time, a buyer’s contractual right to conduct due diligence provides substantial protection to the seller in the event the buyer develops post-closing remorse and sues to try to recover on fabricated damage claims based on alleged problems with the property. New York retains the doctrine of caveat emptor, which imposes no liability on a seller for failing to disclose information regarding the property when the parties deal at arm’s length, unless there is some conduct on the part of the seller which constitutes active concealment; mere silence alone is not actionable. In addressing, and dismissing, claims of breach of contract or fraudulent inducement arising from real property transactions, the New York Courts regularly hold that claims of misrepresentation will not lie if the representation allegedly relied upon by the buyer was not a matter within the peculiar knowledge of the seller, and could have been discovered by the buyer through the exercise of due diligence. When a buyer has a contractual right to conduct due diligence, but fails to exercise that right in whole or in part, it cannot establish justifiable reliance on any alleged representation by the seller. Moreover, when the buyer is given access to the property and performs property condition assessments, environmental investigations and similar inspections as part of its due diligence, and then proceeds to a closing, the seller may not claim justifiable reliance on any oral representation of the seller concerning the physical condition of the property when that physical condition was not peculiarly within the seller’s knowledge and the buyer had the means available to ascertain the truth or the real quality of those representations. If you have any questions regarding the issues discussed above, or if you have any other Litigation concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Tom Knab, the author of this piece, here or at (716) 847-9104.

  • Former Senior Court Attorney at the New York State Court of Appeals Joins Underberg & Kessler

    Stephanie B. Hoffmann has joined Underberg & Kessler LLP as an associate attorney in our Rochester, New York law office. She's currently assisting the labor & employment and litigation practice groups. She will be helping clients navigate through the complexity and nuance of litigation, with a focus on labor and employment law. Prior to joining Underberg & Kessler, Stephanie was a senior court attorney at the New York State Court of Appeals. She earned her B.A. from the State University of New York (SUNY) at Binghamton, and her J.D. from Albany Law School. As always, if you have any questions, please feel free to contact us here or call us at 585.258.2800.

  • Paid COVID-19 Leave Requirements Under the Families First Coronavirus Response Act Revisited

    The U.S. Department of Labor (DOL) issued revised regulations, effective September 16, 2020, for the Families First Coronavirus Response Act (FFCRA) paid leave provisions. These revisions elaborate on the requirements for FFCRA leave in response to a ruling from a New York federal court that invalidated portions, as per the DOL’s interpretation, of the DOL’s temporary rules. The revisions updated the employee notice requirement by clarifying the timeline when employees must provide notice of the need for COVID-19 leave and supporting documentation. Notice and supporting documentation are not required prior to leave. Notice for the use of emergency paid sick leave may only be required after the first workday that the employee uses paid sick leave. After the first workday, notice and supporting documentations may be required “as soon as practicable.” However, the regulations state that if the leave is foreseeable “it will generally be practicable to provide notice prior.” The DOL reaffirmed that employees may only take FFCRA leave if the employer has work available for the employee. For example, if an employee was not scheduled to work because of a furlough or business closure that employee is not entitled to FFCRA leave. The regulations emphasized that the FFCRA qualifying reason must be the actual reason that the employee is unable to work. The regulations also confirmed that intermittent COVID-19 leave still requires employer consent. Relatedly, the DOL stated that for the purposed of FFCRA, a school closure did not create an intermittent need for leave, but a new reason for leave each day of the school’s closure. The regulations also revisited the definition of a healthcare provider and revised the definition to any employee (1) deemed a healthcare provider under the Family Medical Leave Act, or (2) who is capable of providing health services, i.e., diagnostic services, treatment services, or other services that are integrated with and necessary for the provision of patient care. The revisions include examples of qualifying and non-qualifying employees. The regulations remain in effect until December 31, 2020. For additional information about the issues discussed above, or if you have any other Labor & Employment Law concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Stephanie Hoffmann, the author of this piece, here or at (585) 258-2814.

  • 2021 Paid Family Leave Benefits and Contributions Set

    The New York State Department of Financial Services (“NYSDFS”) announced on September 1, 2020 the Paid Family Leave (“PFL”) benefit and contribution amounts to take effect on January 1, 2021. While these amounts were previously published, the NYSDFS could have delayed their implementation if it so desired. The new weekly paid family leave benefit amount will be up to 67% of the New York State average weekly wage for 2021 ($1,450.17), a maximum of $971.61, up from the current $840.70. Assuming a PFL-qualifying reason (discussed below), the benefits will last for as much as 12 weeks, up from the current 10 weeks. New York State states the following reasons qualify for paid family leave: Bonding with a newly born, adopted or fostered child Caring for a family member with a serious health condition Assisting loved ones when a spouse, domestic partner, child or parent is deployed abroad on active military service. You can see more about NYS’s PFL program on their website. The employee contribution rate shall increase from the current 0.27% of wages per pay period to 0.511% of wages per pay period, up to a maximum of $385.34 per year. This contribution rate for 2021 includes a 0.005% risk adjustment for the payment of COVID-19 claims. If you have any questions regarding these new amounts, PFL eligibility or the concurrent running of PFL and federal Paid Family and Medical Leave (“FMLA”), or if you have any other Labor & Employment Law concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Paul Keneally, the author of this piece, here or at (585) 258-2882.

  • Ask An Attorney - Physician Life Cycle

    Question: I am a provider acutely aware that the physician life cycle has been altered by the coronavirus pandemic. What strategies can physician practices employ to weather the financial storm associated with the pandemic? Answer: In the last few years, mergers and acquisitions, value-based care, and industry consolidation has made durability of the physician practice challenging. But the COVID-19 pandemic greatly threatens it’s survival. Since being declared a public health crisis in early 2020, the highly contagious novel coronavirus has upended operations for the entire health care industry. Hospitals had to build up staff, capacity, and essential supplies to treat the anticipated surge in infected patients. While physician practices had to cancel or postpone many procedures and services that keep people healthy and subsequently generate revenue. People have stopped seeking primary care out of fear of exposure, which has led to a loss in physician practice revenue. As a result of decreased patient volume and related revenue-generating services, physicians have suffered reduced hours, compensation, and some have been furloughed. Experts agree that the coronavirus will not disappear soon, so it is critical that physician practices find new ways to connect with their patients while also generating revenue. The shift to telehealth systems during the pandemic has been one way for providers to keep afloat. But telehealth alone is not enough to save the industry. Other strategies physician practices can employ include: limit spending to practice enhancements related to the COVID-19 pandemic, such as PPE, physical barriers or partitions, or upgraded air filtration systems; institute safety measures for patients and employees; and collaborate with local community partners. Sharing resources such as PPE, staff, training and education and best practices, across a community will lessen the burden on individual practices. Also, unique legal issues will arise. Consider new legal implications in the areas of privacy, confidentiality, and employment obligations. It is important to review policies and procedures in place and consider updating them in response to the pandemic. Physician practices are experiencing tremendous negative financial impact from the coronavirus pandemic. As coronavirus continues to evolve, practices should employ strategies now to better prepare for the uncertainties ahead. For additional information regarding new legal implications related to the pandemic, contact your attorney. If you have any questions, please contact us here or at 585-258-2800. You can view more COVID-19-related posts in our COVID-19 Resource Area here.

  • OCR Issues Advisory to Assist Providers in Avoidance of HIPAA Violations

    The Office of Civil Rights of the U.S. Department of Health and Human Services (OCR) is charged with the enforcement of the Health Insurance Portability and Accountability Act (HIPAA). On August 26th 2020, the OCR issued an advisory to assist providers in the avoidance of HIPAA violations. HIPAA contains two parts – the Privacy Rule and the Security Rule. Most of the focus of healthcare providers (“covered entities” in HIPAA parlance) is on the Privacy Rule. However, covered entities are responsible for assuring compliance with the Security Rule as well. Many covered entities employ a variety of devices to access electronic protected health information (ePHI) of patients. Often these devices cache user names and passwords, and may also download files that have been stored for reading on the device when the device may be offline. A physician may use his or her tablet while making rounds, a desktop PC in the office and a smartphone while on the go. Files may also be stored on thumb drives. Each of these devices is a potential point of breach, through hacking, theft or loss. Under HIPAA, covered entities are required to make periodic assessments of their risk of violating both the Privacy and the Security Rules. OCR’s advisory suggests conducting an inventory of devices and servers (owned by the covered entity or by its business associates such as billing services and EHR providers) that contain or have the ability to access ePHI as a way to reduce the risk of HIPAA violations. For additional information about the issues discussed above, or if you have any other Health Care Law concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Helen Zamboni, the author of this piece, here or at (585) 258-2844.

  • Feds “Double Down” on Nursing Homes to Contain COVID-19

    The federal Centers for Medicare and Medicaid Services (CMS) issued a press release yesterday (August 25, 2020) about its proposed interim final rule to require all nursing homes to conduct COVID-19 testing of staff (including volunteers and those “under arrangements” such a hospice workers who have physical contact with residents) and residents. The Secretary of Health and Human Services is to issue parameters for this testing, including frequency, the criteria for testing asymptomatic persons (based on the positivity rate for the county in which the facility is located), response times for tests and other factors as determined by the Secretary. The new requirements, once actually in place, will be added to the infection control requirements in 42 CFR 483.80 applicable to nursing homes that participate in Medicare and Medicaid. In this proposed rule, CMS is seeking comments on the parameters that are to be set by the HHS Secretary for the testing protocols. As New York requires nursing homes to conduct testing of its staff at least once a week, these testing requirements are not likely to have much practical effect on New York facilities. The proposed rule now requires that nursing homes report each week on their testing results and includes new civil money penalties (CMP) for failure to do so in a timely manner. The minimum CMP will be $1,000 for the first time a facility fails to comply, with a $500 incremental increase for each subsequent failure. So, for example, a facility that fails to report in week 1 will be assessed $1,000. If it fails to report again in week 2, it will be assessed $1,500. If it reports as required in week 3, but then again fails to report in week 4, the CMP will be $2,000, and so on, up to the maximum per occurrence of $6,500. Each failure to timely report will also be deemed a level “F” deficiency. These new reporting requirements are in addition to, and do not override existing New York State reporting requirements or penalties. Because of the public health emergency declared by the President, CMS is putting the new weekly reporting requirements and the CMP into effect immediately upon its publication in the Federal Register. There is no announced date for this publication, but it is expected soon. For additional information about the issues discussed above, or if you have any other Health Care Law concerns, please contact the Underberg & Kessler attorney who regularly handles your legal matters or Helen Zamboni, the author of this piece, here or at (585) 258-2844.

  • David M. Tang Selected to Become a Fellow of the American Bar Foundation

    David M. Tang, a partner of Underberg & Kessler LLP, has been selected to become a Fellow of the American Bar Foundation. The Fellows of the American Bar Foundation limits membership to one percent of the licensed U.S. attorneys. The Fellows are an international honorary society of lawyers, judges, law faculty, and legal scholars. Fellows are recommended by their peers and approved by the Board of the American Bar Foundation. As stated by the American Bar Foundation, "Nomination as a prospective Fellow is evidence of a professional distinction and constitutes a professional honor" As a Fellow, David will contribute to the objectives of the American Bar Foundation which include: the study, improvement, and facilitation of the administration of justice and the rule of law; the promotion of the study of law and research thereon; the continuing education of lawyers and judges; the publication and distribution of addresses, reports, treatises, and other works on legal subjects; and the promotion of suitable standards of legal education. Upon receiving news of his selection, David stated: "I am especially honored to join the Fellows of the ABF and excited to support the Foundation’s efforts to advance the profession and promote access to justice in the communities in which we practice." David M Tang is the chair of Underberg & Kessler's Health Care practice group. You can learn more about David here and more about the American Bar Foundation here.

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