With the proliferation of electronic health records, medical providers are facing new challenges in the form of phishing and ransomware attacks and other cyber threats. Indeed, the U.S. Department of Health and Human Services (HHS), Office for Civil Rights (OCR) has been active recently in settling multiple matters involving cybersecurity breaches and attacks. Q: What Is Phishing and Are Medical Providers at Risk? A: Phishing occur when a third-party impersonates a legitimate organization via email or other electronic means, which entices the person to whom the communication is directed to click a link within the email or otherwise allow the third-party to gain access to or steal sensitive information. Phishing is the most common type of cyberattack likely to result in a data breach and cause major financial implications for health care organizations. For example, on December 7, 2023, OCR announced a settlement related to a cybersecurity breach that affected almost 35,000 patients in Louisiana. The subject of the investigation was the Lafourche Medical Group (Lafourche), which provides emergency and occupational services, and laboratory testing. Lafourche was the victim of a phishing attack involving electronic protected health information (PHI). Lafourche reported the breach to HHS on May 28, 2021, advising that a third-party had gained access to an email account which contained PHI. OCR investigated and found that Lafourche failed to conduct a risk analysis to identify potential threats or vulnerabilities in its system that could allow for access to PHI. Risk analysis is required under the Health Insurance Portability and Accountability Act (HIPAA). The government also determined that Lafourche failed to implement any policies or procedures to review its electronic system activity to safeguard against cyberattacks. As part of the settlement, Lafourche agreed to pay $480,000 and implement a corrective action plan to establish security measures, develop written policies and procedures to comply with HIPAA, and provide training to staff on HIPAA requirements. Q: What Is Ransomware and Are There Any Recent HIPAA/OCR Settlements? A: HHS defines ransomware as “type of malware (malicious software) distinct from other malware,” which “attempts to deny access to a user’s data, usually by encrypting the data with a key known only to the hacker who deployed the malware, until a ransom is paid.” Ransomware attacks can be costly for medical providers, as well as result in a breach of HIPAA when disclosure of PHI is implicated. In October, OCR settled a matter with Doctors’ Management Services (DMS), a Massachusetts-based medical management company. On December 24, 2018, DMS identified unauthorized access to its network that occurred over one year prior, on April 1, 2017. DMS waited nearly four months after discovery to report the breach to HHS, in April 2019. In its investigation, the government found that DMS failed to analyze and ascertain the potential risks and vulnerabilities to PHI maintained within the organization. OCR also found that DMS failed to monitor its activity to guard against a cyberattack, and that the provider neglected to implement policies and procedures to ensure compliance with the HIPAA Security Rule. Pursuant to its settlement with OCR, DMS agreed to pay $100,000 to implement a corrective action plan, implement a risk management plan, develop policies and procedures to comply with the Privacy and Security Rules, and provide training to its employees on HIPAA rules and compliance. Q: Has HHS Developed Any Steps to Assist Providers with Compliance? A: Yes, on December 6, 2023, HHS released a concept paper, which outlines its cybersecurity strategy for the health care industry. The paper amplifies the National Cybersecurity Strategy outlined by President Biden and focuses on strengthening resilience for medical providers and patients threatened by cyberattacks. The December 2023 concept paper outlines four primary actions, including: (1) publishing health care and public health sector cybersecurity performance goals to help institutions implement high-impact cybersecurity practices; (2) providing resources to financially incentivize and implement cybersecurity practices; (3) implementing an agency-wide strategy to support greater enforcement of cybersecurity standards and accountability; and (4) expanding the “one-stop shop” within HHS for health care sector cybersecurity and developing the Administration for Strategic Preparedness and Response’s coordination role as a “one-stop shop” for health care cybersecurity. Q: How Can I Work Toward Compliance With HIPAA Rules While Ensuring My Networks Are Secure? A: Start by reviewing current policies and consulting with your IT security provider and attorney to ensure ongoing compliance with HIPAA Privacy and Security Rules. Protect your organization by assessing which assets are vulnerable, implementing appropriate security measures, establishing a regular review process, developing written policies for preventing a breach of PHI, and designing and implementing appropriate training for all staff. Q: What Should I Do if I Discover a Cybersecurity Attack or Breach? A: If a breach is discovered, you should consult with your IT services and security provider to secure the network and identify and address any vulnerabilities. You should consult with your attorney as soon as possible to discuss whether unsecured PHI was compromised and, if so, whether a breach report requirement is triggered under HIPAA. Reprinted with permission from the February/March 2024 issue of The Bulletin from the Monroe County Medical Society and available as a PDF file here. Ericka B. Elliott is an attorney in Underberg & Kessler LLP’s Health Care and Litigation Practice Groups. She can be reached at eelliott@underbergkessler.com or 585.258.2830.

The new consumer protection law that amends and clarifies New York’s existing credit card surcharge law (NYS GBS § 518) went into effect on February 11, 2024.  The NYS Division of Consumer Protection (“DCP”) assists aggrieved consumers in the marketplace and the New York State Attorney General and local governments will have the authority to enforce the credit card surcharge law. The law, signed by Governor Hochul on December 13, 2023, provides greater transparency and protections for consumers by: Limiting credit card surcharges to the amount charged to the business by the credit card company; and Requiring businesses to post before checkout: the total price of an item or service inclusive of the credit card surcharge; or a two-tiered pricing option, which requires the credit card price to be posted alongside the cash price. The following practices and examples comply with the law’s credit card surcharge notice requirements: DO: The business lists the higher credit card price next to a lower cash price. The business lists the credit card price for items and services, then lets customers know they will receive a discount for using cash. The business changes all prices to the credit card price. DON’T: The business posts a sign on the door and at the register stating an additional 3.9% surcharge will apply for credit card purchases. “This business has a 4% cash discount incentive built into all pricing. Any purchases made with a credit or debit card will not receive the cash discount and an adjustment in cost will be displayed on your receipt.” A convenience fee, service fee, administration fee, non-cash adjustment, technology fee, processing fee, etc., is charged to credit card users and added as a separate line item on a customer receipt. The price tag of an item shows “$10.00, + 4% if paying with a credit card.” NOTE: This law does not apply to debit cards. The law will permit local governments to join in the enforcement of this law, providing consumers with additional resources for compliance and providing local governments with broader opportunities to promote consumer protections for their citizens. If there are any issues related to credit card pricing at the register, DCP encourages consumers to: File a complaint with DCP to receive a refund of any excess fees paid to a merchant in New York State, or File a complaint with the Attorney General or participating local governments for enforcement of a merchant you believe violated the law. If you have any questions regarding the law, please contact our Corporate & Business team at 585-258-2800 or email info@underbergkessler.com

We are pleased to announce that Leah Tarantino Cintineo has been appointed as chair of the Litigation department. Cintineo, who is the Family Law Practice Group leader, represents clients in divorce and post-divorce matters, pre-nuptial agreements, high conflict child custody litigation, and child support litigation. She also has years of experience handling divorce matters involving businesses, complex financial issues, and extensive marital estates, as well as preparing QDROs for the division of retirement assets at the completion of a divorce. Cintineo is active in community and industry groups as a member of the New York State Bar Association and its Matrimonial and Family Law Section, the Monroe County Bar Association and its Family Law Section and is a member of the 7th Judicial District Attorney Grievance Committee. She is also a member of the Greater Rochester Association of Women Attorneys (GRAWA), a member of the Collaborative Law Association of the Rochester Area (CLARA), and a member of the Ontario County Bar Association, where she recently was President of the Association. In addition, Cintineo served for eight years on the Society for the Protection and Care of Children Board of Directors, including two years as Board Chair. A graduate of Albany Law School, Cintineo has been selected as an Upstate New York Super Lawyers Rising Stars honoree from 2016-2023, she was the 2022 recipient of The Daily Record and Rochester Business Journal's Legal Excellence Award for Pro Bono Excellence and is a past recipient of the Rochester Business Journal’s "Forty Under 40" Award. Cintineo was named to both the 2022 and 2023 Daily Record's Power 20 in Family Law lists, and she was the 2017 recipient of the Honorable Michael F. Dillon Attorneys for Children Award for her work advocating for children in court proceedings. In 2016, Cintineo was named a finalist for the Rochester Business Alliance ATHENA Young Professional Award.

Since the onset of the COVID-19 pandemic in 2020, the number of workers performing services as independent contractors in the United States has risen.  In response, some states have stepped up efforts to reign in potential abuses of these arrangements by employers.  New York is no exception. In November 2023, Governor Kathy Hochul signed new legislation S.5026/A.6040, known as the “Freelance Isn’t Free Act” (“the Act”), which establishes new protections for independent contractors, as well as means for the Attorney General, the Department of Labor, and individual independent contractors to enforce its provisions. The Act, which will take effect on August 28, 2024 (originally planned for May 20, 2024), amends the New York Labor Law by adding Section 191-d, which governs the relationship between a “hiring party” and “freelance worker.”  A hiring party is any person, other than a governmental entity, who retains the services of a freelance worker.  A freelance worker is “any natural person or organization composed of no more than one person . . . that is hired or retained as an independent contractor to provide services in exchange for an amount equal to or greater than $800, either by itself or when aggregated with all contracts between the hiring party and [independent contractor] during the immediately preceding one hundred twenty days.” The Act exempts four categories of workers: (1) sales representatives, (2) lawyers in good standing engaged in the practice of law, (3) licensed medical professionals, and (4) “construction contractors” as defined in § 191-d (a). Importantly for employers, Section 191-d contains three new mandates that an employer must heed.  When hiring a freelance worker, New York employers must now: (1) enter a written contract containing certain provisions, (2) timely pay the agreed-upon wages, and (3) abstain from retaliating against an independent contractor who exercises his or her rights.  A failure to follow any of these mandates could be an expensive mistake. The Act provides that an independent contractor may bring a cause of action in any New York Court based upon a violation of Section 191-d’s provisions.  Thus, the new law increases the potential that an employer who retains an independent contractor will be subject to litigation and its attendant expenses.  Further, in the event the independent contractor prevails in that litigation, the employer may be liable to pay statutory damages and attorneys’ fees.  To avoid costly litigation and an expensive damages award, employers must take note of the Act’s new requirements. Necessity of a Written Contract New Labor Law Section 191-d (3)(a) provides that a hiring party must enter into a written contract with the independent contractor.  The Act further mandates that those contracts contain four provisions: (1) the names and addresses of the hiring party and independent contractor, (2) an itemization of all services to be provided, the value of those services, and the method for calculating the independent contractor’s compensation, (3) the date on which the independent contractor will be paid, or the mechanism for determining that date, and (4) the date by which the independent contractor must provide a list of services rendered to the hiring party.  There may be more required contractual clauses coming soon, as the Act authorizes the Department of Labor to adopt rules requiring additional mandatory terms.  Thankfully for employers, the new law requires the Department of Labor to provide model contracts for use by the public at no cost.  The model contracts will be published on the Department of Labor’s website when available. If the employer fails to offer a written contract or include the necessary terms, it will be liable to pay a $250 statutory penalty.  If a violation of subsection three is the only violation alleged by an independent contractor, such worker must prove that he or she requested a written contract.  However, any violation of subsection three and any other provision of Article 6 of the Labor Law may subject the employer to damages equal to the amount of the underlying contract. Wages Must Be Paid on Time Perhaps the most important new requirement of the Act for employers is the mandate that hiring parties pay independent contractors in a timely manner. “Timely” means that an employer pays the wages due on the date specified in the written contract or, if the contract does not specify such a date, “no later than thirty days after the completion of the freelancer’s services under the contract.” It is critical that employers pay independent contractors pursuant to the contract’s terms because the penalties for failing to do so may be severe.  A hiring party who fails to pay an independent contractor in a timely manner is subject to a statutory damage award of double damages, i.e., double the amount owed to the worker, plus the attorneys’ fees incurred by the independent contractor.  Given the expense of litigation, the employer could be liable for tens of thousands of dollars in damages if it does not pay an independent contractor’s wages when due. Discrimination and Retaliation Prohibited The Act also extends protections to independent contractors who exercise, or attempt to exercise, any of their rights under its provisions.  Specifically, the Act forbids a hiring party from taking any action that penalizes an independent contractor for, or is reasonably likely to deter an independent contractor from, taking advantage of his or her rights under the Act.  A violation of that section will expose the hiring party to a statutory damages award “equal to the value of the underlying contract for each violation.” Repeat Violations Finally, the new Act establishes penalties for hiring parties who repeatedly flaunt its provisions.  The law empowers the New York Attorney General to commence a civil action against a hiring party where there is reasonable cause to believe that the hiring party has engaged in a “pattern or practice of violations” of Section 191-d.  If the trier of fact in such proceeding determines that a pattern and practice of violations has been proved, it may fine the offending hiring party up to $25,000.  Such a fine may be imposed in addition to any damages that may be awarded to the independent contractor in a civil action based on the same facts. Accordingly, New York State employers who hire independent contractors should familiarize themselves with the provisions of the new “Freelance Isn’t Free Act” before they take effect in August 2024.  The failure to do could be a costly mistake. Matthew M. Simmonds is Senior Counsel in Underberg & Kessler LLP’s Litigation Practice Group.  A former Appellate Court attorney in the New York State Supreme Court, Fourth Judicial Department, and the Florida First District Court of Appeal, Matt has handled thousands of cases in nearly every area of civil and criminal law.  He can be reached at msimmonds@underbergkessler.com. Reprinted with permission from The Daily Record and available as a PDF file here.

The United States Department of Labor has issued a final rule, effective March 11, 2024, governing the analysis of whether a worker is an independent contractor or an employee. The rule adopts a six-factor, “totality-of-the-circumstances” analysis of the potential employer/worker relationship and is similar to the test already used by the New York State Department of Labor. All of the circumstances are analyzed as a matter of whether as an “economic reality,” the worker is economically dependent on the potential employer for work or is independently running his or her own business. Crucially, it must be understood that each Department of Labor will most likely use an employee friendly approach in applying all of the factors, which are equal in weight as to the ultimate decision. The six factors are: Opportunity for profit or loss depending on managerial skill; Investments by the worker and the potential employer; Degree of permanence of the work relationship; Nature and degree of control; Extent to which the work performed is an integral part of the potential employer’s business; and Skill and initiative. Given the factors and mindset, there are many workers wrongfully classified as independent contractors, and therefore tax withholding has not occurred, workers’ compensation and disability insurance premiums are unpaid, and New York State paid sick leave has not been provided, among other issues. Employers should therefore immediately audit their independent contractor relationships with Paul F. Keneally or another member of the Underberg & Kessler Labor & Employment Law Practice Group. If you have any questions regarding the final rule, please call Paul at (585) 258-2882 or email pkeneally@underbergkessler.com.

On November 30, 2023, the United States Environmental Protection Agency (“EPA”) issued proposed Lead and Copper Rule Improvements (“LCRI”) that will require the removal of all lead pipes from municipal water systems within 10 years. The rule is a draft and will be subject to public comments and potential revisions. However, if the rule is finalized, according to EPA it will cost an estimated $45 billion. External estimates by third parties put the cost of removing and replacing lead pipes from municipal water systems in excess of $115 billion. Lead pipes supplying drinking water have been regulated by the Safe Drinking Water Act (“SDWA”) since 1975.  In 1986, amendments to the SDWA prohibited lead pipes in drinking water systems. The rule was amended in 1991 requiring removal of lead service lines when testing revealed that lead in water systems exceeded 15 parts per billion (“ppb”). EPA has made addressing lead pipe systems a priority after drinking water in Flint, Michigan was contaminated with lead. Lead impacts in drinking water occurred after the city switched its water source, causing lead pipes to corrode. The proposed rule is a result of environmental groups legal action against the 2021 amendments to the LCRI. Last December, EPA decided to drop defense of the rule and promised to strengthen the rule by the fall 2024. This parallels other “sue-and-settle” challenges to environmental agency action brought by environmental groups in recent years in which EPA concedes challenges to existing or proposed rules and settles by making extensive concessions to litigious environmental groups. In announcing the rule, EPA Administrator Michael Reagan said that “[t]his is a public health concern that has unfortunately spanned generations and an issue that has disproportionately affected low-income communities. Our proposed improvements are a major advancement.” Additionally, EPA points to potential cognitive issues and health problems that may occur if excessive levels of lead exist in lead lines. Although lead pipes have been prohibited since the 1980s there are estimated to be about 9.2 million lead service lines in the United States. In addition to required replacement of lead pipes from the water mains in the street to houses, the rule has other components to address lead in water lines. The rule reduces the action level for lead pipes from 15 ppb down to 10 ppb for municipal testing and action to improve lead levels. The rule also changes the lead testing procedure so municipalities will have to sample the first draw and 5th liter from the tap to determine if water sitting in lead pipes has been impacted by lead. Significantly, the rule also requires municipalities to complete inventories of lead service lines by October 2024. The rule also prohibits municipalities from partially replacing lead service lines. As anticipated, environmental advocates, some of whom sued EPA over the prior version, are praising the new rule. The Natural Resources Defense Council, Senior Strategic Director Erik Olson called the rule “a ray of hope that we are approaching the day when every family can trust that the water from their kitchen tap is safe, regardless of how much money they have or their zip code.” Mona Hanna-Attisha, a Michigan State University professor and pediatrician that helped research the Flint water crisis said “[i] am overjoyed on behalf of kids everywhere-kids in Flint, in Newark, Chicago, Milwaukee, Washington DC and Jackson and places we know of and don’t know of.” The Association of Metropolitan Water Agencies (“AMWA”) said its members “are committed to providing clean and safe drinking water to all Americans” but noted that removing lead pipes required cooperation between water systems and homeowners, as well as adequate state and federal funding and technical expertise. CEO Tom Dobbins said “AMWA urges EPA to focus on providing drinking water systems with the resources and tools necessary to achieve this ambitious goal, and working toward eliminating the real barriers that exist for many utilities.” Although there has been pressure on EPA to require removal of lead pipes since the Flint, Michigan water crisis, the scope and cost has been a considerable obstacle. EPA’s announcement points to funding from the Bipartisan Infrastructure Law which dedicated $15 billion for lead pipe removal. While the proposed rule does not require municipal water systems to remove lead service lines on private property, to access the grant money the municipalities must remove both public and private lead lines. EPA also points to another $11.7 billion in drinking water funding that is available to states under the Drinking Water State Revolving Fund that can be used for this purpose. Despite EPA’s reference to funding sources, the AMWA cautioned that requiring all lead service lines to be replaced “would represent a massive unfunded mandate.” Further, that if municipalities do not receive funding under the infrastructure law it “would likely have to turn to increased customer rates.” Similarly, former EPA officials such as Brent Fewell, a Deputy Assistant EPA Administrator during the George W. Bush administration, noted that “[a]bsent more resources, it’s unrealistic and a pipe dream to think that removal of all lead service lines will be accomplished in 10 years. While it’s a laudable goal, the LCRI’s deadline is simply too aggressive with the current level of funding and technical assistance available to communities.” While some cities such as Newark, New Jersey, have made progress replacing lead pipes in the water system, the nation’s largest cities face substantial challenges meeting the ambitious proposal.  Large cities such as New York and Chicago are estimated to have more lead pipes than any other areas. Based on the level of work required, the LCRI exemptions for the 10 year deadline may be applied for water systems that must replace more than 10,000 lead service lines per year. In whatever form the final LCRI rule takes following public comments and adoption by EPA, the rule is likely to be one of the most expensive regulatory actions ever mandated by the federal government. There is little doubt that the aggressive schedule will cause financial hardship to municipal water systems and increased costs to water users. George S. Van Nest is a Partner in Underberg & Kessler LLP’s Litigation Practice Group and Chair of the firm’s Environmental Practice Group. He focuses his practice in the areas of environmental law, development, construction, and commercial litigation. George can be reached at gvannest@underbergkessler.com. Reprinted with permission from The Daily Record and available as a PDF file here.

The IRS and the New York State Department of Taxation recently announced the 2024 exemption and exclusion amounts related to Federal Estate Tax, Federal Annual Gift Tax Exclusion Amounts, and New York State Estate Tax: Federal Estate Tax Exemption Amount 2024 $13,610,000.00 per person ($27,220,000.00 for a U.S. married couple) Federal Annual Gift Tax Exclusion Amount 2024 $18,000.00 per U.S. client ($36,000.00 for a U.S. couple) New York State Basic Exclusion Amount 2024 $6,940,000 per person The 2024 exemption and exclusion amounts are at a record-setting high, providing perhaps the most favorable tax environment to date for tax planning. The continued increase to the federal estate tax exemption and gift exclusion amounts provides estate planners and clients with added planning options. Individuals looking to make lifetime gifts should consider fully utilizing their annual gift tax exclusion, and individuals who are projected to be above the federal estate tax exemption, should consider utilizing their lifetime gift tax exclusion before it is too late. Regarding annual gifts, a U.S. individual can gift up to $18,000.00 per donee in 2024. So, if a U.S. couple has four children, they can gift up to $144,000.00 tax free. Annual gifting can be a highly effective strategy to reduce the taxable estate of a person who is projected to have an estate greater than the federal estate tax exemption. Regarding lifetime gifts, while the federal estate tax exemption is at a record high, the 2017 Tax Cuts and Jobs Act included a sunset provision, which will revert the federal estate tax exemption back to where it was prior to its passage. The anticipated post 2025 federal estate tax exemption, adjusted for inflation, is expected to be somewhere around $7,000,000.00 come January 1, 2026. Consequently, in 2026, each U.S. individual is set to lose at least $6,000,000.00 of exemption. So, for high-net worth U.S. citizens, now is the time to consider making substantial lifetime gifts utilizing their unified credit toward the currently record high federal estate tax exemption. Failing to do so may result in substantial federal estate taxes, which could be as high as 40%. Further, large gifts made prior to 2026 will not be subject to IRS “clawback,” so this is a true “use it or lose it” scenario. New York State has not yet released the anticipated post 2025 state estate tax exemption, adjusted for inflation, but historically, the New York State amount has equaled or been less than the federal estate tax exemption amount. Need Help with Tax Exemptions and Exclusions? Underberg & Kessler’s Estates & Trusts attorneys can work with you to formulate the best estate planning strategy to meet your goals and to take advantage of your options. For more information, contact Joshua B. Beisker at jbeisker@underbergkessler.com or 585-258-2879.

We are pleased to announce that Patrick L. Cusato, a longtime partner with the Firm, has been elected to serve as Managing Partner. He succeeds Thomas F. Knab, who has served as Managing Partner of the firm since 2022 and who will continue to focus his practice on complex business litigation. “It has been a privilege to serve as the Managing Partner of Underberg & Kessler and to lead our accomplished team,” Knab said. “I have the utmost confidence in Pat. He is ideally suited to build on the Firm’s strong financial position, core values, and outstanding client focus.” Cusato has been with Underberg & Kessler for 36 years and focuses his practice on commercial and residential real estate, mortgage banking, and tax credit development and finance projects. He serves as the Real Estate & Finance Practice Group Chair, a member of the Executive and 401K Committees, and is the Financial Management Partner for the Firm. A strong proponent of being active in community and industry groups, Cusato is an Executive Board member of the Mortgage Bankers Association, Vice President to the Board of Directors of the Bishop Sheen Ecumenical Housing Foundation, past Chair of the Foundation's annual fundraising gala, and past Chair of the Monroe County Bar Association Real Estate Section. He also serves as the Vice President of the Board of Directors of the Lakefront Soccer Club and President of the Board of Directors of the Sports Association of Webster, Inc. Cusato has been recognized in the 2013-2024 editions of The Best Lawyers in America® for his work in Real Estate Law and he has also been selected as an Upstate New York Super Lawyers honoree from 2007-2010 and 2021-2023. In 2022 and 2023, he was recognized by The Daily Record in the Power 20 in Real Estate Law list, and he was the recipient of The Daily Record's Leaders in Law Award in 2018, honoring attorneys who have shown dedication to the legal profession and tireless commitment to the community. Cusato is also a recipient of the 2009 Rochester Business Journal's "Forty Under 40" award. "It has been and continues to be a great honor to be part of this organization, to deliver the best results for our clients, and to act as a valued advisor. I am grateful for Tom’s leadership and dedication. I look forward to building on his legacy and collaborating with my colleagues as we evolve to meet the changing demands and opportunities that lie ahead,” Cusato said.

Congratulations to Tom Knab for being selected to the Rochester Business Journal’s 2023 Power 50 Law list for the second year in a row. The Power 50 list contains a number of lawyers who are managing a Rochester law firm or the Rochester office of a law firm, and also includes judges, civil legal services leaders, and more. “The people on this list help make sure the legal needs of Rochester’s companies and residents are met, and they have helped the local legal community adapt to the changes the COVID-19 pandemic caused. They are working to push the Rochester legal community forward during a time of uncertainty and adaptation, and we are excited to see what they are able to accomplish going forward.” stated Ben Jacobs, Associate Publisher and Editor of the Rochester Business Journal. Tom served as Underberg & Kessler’s Managing Partner from 2022-2023 and is the past Chair of the Firm’s Litigation Practice Group. He has practiced in the New York State and Federal Courts for over 35 years, handling jury and non-jury trials, appeals, arbitrations, and mediations. Tom is well known in the legal community for his practical advice on negotiating and litigating contracts; construction and real estate disputes; drafting and litigating restrictive covenants and employment agreements; representing founders, owners, and executives in partnership, LLC, and corporate disputes; constitutional challenges to governmental actions; and defense of legal malpractice claims. Tom has been recognized in the 2021-2024 editions of The Best Lawyers in America® for his work in Commercial Litigation, Litigation-Construction, Litigation-Insurance, and Litigation-Labor & Employment. He was honored as the 2024 Best Lawyers® “Lawyer of the Year” for Litigation–Construction in Buffalo, NY. From 2021 through 2023, Tom was recognized by the Rochester Business Journal/Daily Record in the Power 20 Litigation list.

Q: Since the COVID-19 pandemic, I have noted an increase in the number of my patients seeking mental health and addiction treatment. However, many do not pursue care because their insurance coverage will not pay for it, including those with employee health plans.  Are there options to assist these patients? A: In late July, the Departments of Health and Human Services, Labor, and the Treasury, announced an expansive new rule to strengthen the federal government’s Mental Health Parity and Addiction Equity Act (“MHPAEA”).[1]  The rule, named “Requirements Related to the Mental Health Parity and Addiction Equity Act,” is intended to increase enforcement of MHPAEA by enhancing restrictions on insurers who provide employer group health plans from limiting coverage for addiction and behavioral health treatment.[2]  The overarching goal of the “landmark” rule is to improve and “strengthen mental and physical health parity requirements and improve mental health care access for more than 150 million Americans...with private health insurance.”[3] The new measures would allow these individuals increased access to insurance benefits for mental health and addiction treatment. The MHPAEA was enacted in 2008 to ensure that patients’ access to mental health treatment is equivalent to their ability to receive care for medical conditions.[4]  In general, MHPAEA precludes private health insurers from adding requirements or restrictions (e.g., additional copayments or authorizations) that are not required for medical care or surgical procedures, in order to receive behavioral health or addiction treatment benefits.[5] However, since the implementation of MHPAEA, patients seeking insurance coverage for mental health or substance use disorder treatment have continued to face more hurdles compared to when seeking medical treatment. Under the new rule, insurance carriers will be required to analyze and confirm that they are complying with MHPAEA. This includes mandating that insurers “analyze the outcomes of their coverage to ensure there’s equivalent access to mental health care, including provider networks, prior authorization rates and payment for out-of-network providers” and to then come into compliance with MHPAEA as necessary.[6]  In addition, the rule clarifies when carriers are precluded from using methods that limit a patient’s access to mental health care (e.g., copayments, prior authorizations). Finally, the new rule will apply to and require additional insurance carriers to come under MHPAEA compliance.[7] Along with the release of the proposed “Requirements Related to the Mental Health Parity and Addiction Equity Act” this summer, the Departments of Health and Human Services, Labor, and the Treasury published a “Technical Release”[8] which establishes principles and invites public comment.  The period for comment was recently extended to the middle of October 2023.[9] Once the comment period is closed, the agencies will analyze the comments and determine if the proposed rule requires revisions.[10]  A “final rule” will then be published in the Federal Register and made available online at  http://www.federalregister.gov.  Unless there is an exemption, the rule will go into effect no sooner than 30 days after its publication in the Federal Register.[11] If the proposed “Requirements Related to the Mental Health Parity and Addiction Equity Act” survives the Federal Register’s comment analysis without significant revisions and is published in the coming months, then care providers should be encouraged that their patients will soon have more accessible insurance benefits for their behavior health and addiction treatment needs. Reprinted with permission from the October/November 2023 issue of The Bulletin from the Monroe County Medical Society and available as a PDF file here. David H. Fitch is a Partner in Underberg & Kessler LLP’s Health Care, Litigation, and Municipal Law Practice Groups. He can be reached at dfitch@underbergkessler.com or 585.258.2840. [1] https://www.healthaffairs.org/content/forefront/new-federal-rules-seek-strengthen-mental-health-parity [2] https://www.healthaffairs.org/content/forefront/new-federal-rules-seek-strengthen-mental-health-parity [3] https://www.whitehouse.gov/briefing-room/statements-releases/2023/07/25/fact-sheet-biden-harris-administration-takes-action-to-make-it-easier-to-access-in-network-mental-health-care/ [4] https://www.dol.gov/newsroom/releases/ebsa/ebsa20230725?_ga=2.267791883.404641303.1696096499-463050911.1696096499 [5] https://www.dol.gov/newsroom/releases/ebsa/ebsa20230725?_ga=2.267791883.404641303.1696096499-463050911.1696096499 [6] https://www.politico.com/newsletters/politico-pulse/2023/07/25/biden-proposes-sweeping-mental-health-changes-00107931 [7] https://www.politico.com/newsletters/politico-pulse/2023/07/25/biden-proposes-sweeping-mental-health-changes-00107931 [8] FR Doc. 2023–21177 Filed 9–27–23; 8:45 am [9] https://www.federalregister.gov/documents/2023/09/28/2023-21177/requirements-related-to-the-mental-health-parity-and-addiction-equity-act-extension-of-comment [10] https://www.regulations.gov/learn [11] http://www.federalregister.gov

Earlier this year, the New York State Legislature passed, and Governor Hochul signed, a minimum wage increase that will take effect beginning on January 1, 2024. These statutory increases – which will impact all employers in New York State - are as follows: While nothing has yet been announced regarding new minimum wages for tipped employees, employers should note that previously required cash wages and tip credits were equal to the regular minimum wage in each of the geographic locations identified above. It is anticipated that this will be the same for 2024. The minimum wage will continue to increase by $0.50 each year in 2025 and 2026. Beginning in 2027, any increases to the minimum wage will be determined by the U.S. Department of Labor Consumer Price Index and published by the New York Department of Labor (“NYSDOL”) on October 1 each year for the rate to take effect January 1 of the following year. To that end, there will be no increase for a given year if the inflation index is negative, if New York State’s unemployment rate increases by half a percentage point from its low during the preceding year, or if the number of total non-farm state employees decreases over the prior six months. Last week, the NYSDOL published proposed regulations that are required to accompany the minimum wage increases. These proposed regulations also contained new minimum salary requirements for qualifying employees exempt from the New York Labor Law (“NYLL”) minimum wage and overtime requirements under an Executive or Administrative exemption. The proposed hourly, weekly, and yearly salary thresholds necessary to meet the Executive and Administrative exemptions are as follows: Although these proposed regulations by the NYSDOL are subject to a comment period, they are likely to be finalized without significant changes. Following the comment period, the new salary thresholds would take effect with the previously finalized minimum wage raises on January 1, 2024. Further, effective March 13, 2024, there are new minimum salary requirements for clerical and other exempt employees under Article 6 of the NYLL. Pursuant to the new requirement, the minimum salary for covered employees to be exempt from weekly pay requirements – essentially, allowing an employee to be accurately classified as a non-manual worker – will increase from $900/week (or $46,800/year) to $1,300/week (or $67,600/year). If you have any questions regarding this article, please contact the Underberg & Kessler attorney who regularly handles your legal matters, or Ryan T. Biesenbach at (585) 258-2865 or rbiesenbach@underbergkessler.com.

A new federal law taking effect in 2024 and a proposed New York State law will both require certain business entities to file reports providing information on the beneficial ownership of the entity. Frequently asked questions regarding both laws are answered below: Corporate Transparency Act: Q: What agency monitors this federal law? A: Reports will be made to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). Q: Who will be required to make reports under this law? A: Corporations and LLCs, in addition to various other business entities. There are twenty-three categories of entities that are exempt from the reporting requirement. Examples of entities that are not required include banks, credit unions, and tax-exempt entities registered with the IRS. Q: What is a “beneficial owner”? A: A beneficial owner is an individual with substantive control over the company, owning or controlling at least 25% of the ownership interest. Q: Where will the data be stored? A: FinCEN will store the reported information in a secure non-public database. Q: When is this law effective? A: January 1, 2024. Companies created before January 1, 2024, will have until January 1, 2025, to file their initial reports. Companies created on or after January 1, 2024, will have 30 days to file their initial reports. Q: What will happen if my company does not follow this law? A: There may be civil and criminal penalties for violations, including a fine of up to $10,000. New York State LLC Transparency Act: As of the date of this article, the New York State LLC Transparency Act has not been signed into law by Governor Hochul. We will continue to monitor developments and keep you informed as the legislation progresses and any changes to the proposed law. The questions and answers below are based upon the proposed law, so remain subject to change. Q: Who will be required to make reports under this New York law? A: Only limited liability companies are required to report their owners. Q: When will this law come into effect? A: The NYS legislature passed the Act in June 2023 and Governor Hochul is expected to sign the Act into law. The law would become effective one year after it is signed. Companies formed on or before the effective date of the Act would be required to file their reports by January 1, 2025. Companies formed after the effective date will have 30 days to file their reports. Q: Can my business use the same report we filed for the federal Corporate Transparency Act? A: Yes, a reporting company may satisfy its disclosure requirements by submitting a copy of the report it submitted to FinCEN pursuant to the Corporate Transparency Act. Q: Where will the data be stored? A: In a publicly available database. Certain personal and identifying information will be kept confidential, except for the purposes of law enforcement or as otherwise required to be disclosed pursuant to a court order. What Should Companies Do to Prepare? These Acts will bring significant new reporting and monitoring burdens that will impact many businesses. Understanding your obligations and staying informed will be essential in navigating this regulatory landscape. For existing entities. Review your current business structure in consultation with your attorney to confirm your understanding of these new laws and to create a plan for filing the proper paperwork. For any new entity formed after January 1, 2024, you should consult with your attorney to ensure the new filing requirements are completed as part of the entity formation process. As noted above, we will be monitoring the progress, implementation, and compliance challenges of these new requirements. Please contact Joshua B. Beisker or any of our Corporate & Business attorneys with questions at (585) 258-2800 or visit underbergkessler.com.