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COVID Nation: Our Health from Sea to Shining Sea

Op Ed
By Jose Julio Divino, MPH

August 2020 – It has been seven months since the coronavirus, or “COVID-19” as coined by the World Health Organization (WHO), was declared a public health pandemic, yet the politicization of this deadly virus continues to ravage our country, killing nearly 180,000 and infecting almost six million of our fellow Americans so far, according to the US Centers for Disease Control and Prevention (CDC).  These mortality and prevalence rates correspond to the entire population of US cities like Fort Lauderdale (FL), Providence (RI) and Newport News (VA) being decimated, and twice the population of urban centers like Houston and Chicago testing positive for the coronavirus.  

Set against the background of “Black Lives Matter”, the resulting downward economic spiral since the coronavirus lockdown – not seen since the Great Depression – has come to symbolize the “new normal” among many vulnerable families and individuals, especially among communities of color.  The decision on whether to have a nutritious meal or scrimp on expenses just so households (many of which are headed by single parents with young children or seniors on a fixed income) can have enough to pay rent and avoid eviction from their homes has risen to epidemic proportions. According to The Hamilton Project and Future of the Middle Class Initiative at the Brookings Institute, there are about 14 million children in the US that are not getting enough to eat 

The food insecurity situation is, moreover, exacerbated for persons with serious underlying medical conditions (e.g., heart disease, diabetes, lung disease) who will now have to choose whether to prioritize their monthly rent or grocery budgets over medical expenses. For our elders, already considered to be most at high-risk, social distancing can prove to be a further obstacle in accessing adequate and nutritious food. It is a scientific fact that persons who experience food insecurity are likely to be less healthy.   

Psychosocial adversity and mental illness in the COVID era have also increased. As a direct consequence of elevated stressors and anxieties, be it for frontline workers, members of communities of color, people who have lost their jobs or unpaid adult caregivers, worse mental health outcomes, increased substance use and elevated suicidal ideation have been documented, according to the CDC. 

It is highly probable that the COVID blame game will only crescendo. “To wear or not to wear” face coverings will remain a hotly contested conversation. Until a cure or a vaccine is identified, it is only by being supportive of each other and, in celebrating empathy, will we be able to win the fight against COVID-19.   

It is time to take responsibility for our actions. While there is now mounting evidence that COVID-19 does not discriminate based on age (younger individuals are increasingly becoming infected and dying), there remains a cohort staunchly opposed to social distancing. In wearing a mask, we are saying that “I respect you.” 

As the proverbial saying goes, “united we stand, divided we fall.”

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Paycheck Protection Program Update

SBA Issues Guidance on Good-Faith Certification

In order to receive a Paycheck Protection Program (PPP) loan, borrowers must generally certify that current economic uncertainty renders such a loan necessary to support ongoing operations. Throughout the month of May, the Small Business Administration (SBA) has been updating its PPP FAQs as they relate to this certification. On May 13, 2020, the SBA again updated its FAQs to address certification of economic uncertainty in light of COVID-19. Specifically, this update provides further guidance on the consequences of the failure to certify appropriately, including the requirement to repay any PPP loan. Additional guidance on how the SBA will approach the certification issue is outlined below.

Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?  Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue:  Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.  SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.  Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance.

SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.  

By Stacy Bauer

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Force Majeure Contract Clauses

COVID-19 has caused us to take a deeper look at many of our business practices, including the physical workplace, business plans, and emergency contingency plans. Business contracts are another area that need review.

Business agreements routinely include boiler plate language, such as a force majeure clause. This language protects the parties in the event of an unlikely circumstance that would significantly impair either or both parties’ ability to perform, such as fire, war, flooding, earthquake and the like. While these clauses have rarely been relevant, the pandemic requires us to take another look.

One of the benefits of force majeure clauses is that they protect a party that is unable to perform from claims of breach of contract and related damages resulting from non-performance. The events listed in force majeure clauses differ from a breach of contract scenario because the party did not choose to not perform, rather circumstances beyond its control caused its inability and thus failure to perform.

If your business cannot perform under a contract due to COVID-19, either because of the virus itself or the government’s response to it (shelter in place orders, quarantine or other governmental restraints), look at your existing contracts to determine whether each has a force majeure clause and, if so, whether it is broad enough to include the current pandemic, and how the parties agreed to proceed in the event the clause is triggered. If there is no force majeure clause, or if it is not broad enough to cover COVID-19, there are other legal defenses that can help you, such as frustration of purpose and impracticability.

And while force majeure clauses and other defenses may be available, the best first strategy is to communicate with the other party to the agreement. Using common sense, issues related to non-performance or inability to perfom can hopefully be resolved without resorting to legal action.

Until now, virus, pandemic, quarantine and the like have not typically been listed in force majeure clauses. Many businesses are taking the time now to update their contracts to include such circumstances as a hedge against future unknowns.

By Stacy Bauer

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Re-Opening Ohio

Friday, May 1: Hospital, medical, dental and veterinary services that don’t require an overnight hospital stay.

Saturday, May 2: Retail businesses that have been closed can open for curbside pickup, delivery and appointment-only shopping limited to 10 customers at a time.

Monday, May 4: Construction, distribution, manufacturing, offices

Tuesday, May 12: Consumer, retail and service businesses

Friday, May 15: Hair salons, barbershops, day spas, nail salons, tanning salons, bar and restaurants outdoor and patios can open.

Thursday, May 21: Restaurant dine-in locations and bar interiors can open.

What remains closed: Child care centers for most children, movie theaters, gyms, campgrounds, tattoo parlors, laser tag facilities, roller skating rinks, ice skating rinks, arcades, indoor miniature golf facilities, auditoriums, stadiums, arenas, parades, fairs, festivals, bowling alleys and more.