Archive for February, 2021

Are You Ready for Your PPP Loan Audit?

Are You Ready for Your PPP Loan Audit?

By: Jim Hoover, Burr & Forman

PPP loans received by individuals and businesses under the CARES Act will be audited (“reviewed”) by the SBA.  PPP loans of $2 million or more will automatically be audited by the SBA.  Many PPP loans of less than $2 million will also be audited.

Borrowers will often receive notification of the audit through their lending bank, but the SBA is directly notifying PPP borrowers as well.  The SBA is receiving support from the Internal Revenue Service and other federal agencies in these audits such as the Department of Justice.  There have been several criminal investigations resulting from these audits.

PPP loan audits request documents and information from the borrower, including income and employment tax returns, payroll records, financial statements, and bank account statements including deposit and payment information in order to verify information reported by the borrower on its PPP loan application.  However, the SBA PPP loan audits focus on much more.

SBA audits of PPP loans have thus far focused on whether the individual or business was eligible to receive a PPP loan, and whether the borrower correctly calculated its PPP loan amount.  Specific issues being reviewed by the SBA in these audits include “economic necessity” for a PPP loan, and “head-count” related issues including affiliation with other businesses, the appropriate “NAICS” code for the business, and whether the business counted all employees – full-time, part-time, and even temporary – in filing the loan application.  The SBA is also looking at other “business-specific” issues of the borrower.

The PPP loan application contains a borrower certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant“.  This same certification is also required in new PPP loan applications under the “Economic Aid Act”.  For borrowers that received PPP loans of less than $2 million, the borrower is deemed by the SBA to have made this “economic necessity” certification in “good faith.” As a result, the SBA may not be looking specifically at this issue for borrowers that received loans of less than $2 million.  However, for PPP loans of $2 million or more, borrowers are not eligible for this “good faith economic necessity presumption”, and the SBA is auditing this certification issue.

Without being an alarmist, false certifications is the keystone issue for most False Claims Act prosecutions.  Accordingly, it is important for borrowers to carefully review and gather the documentation that supports the certification.  

The SBA is beginning many audits by sending out a “Loan Necessity Questionnaire” (SBA Form 3509), which the SBA first sends to the lending bank and then the bank sends the questionnaire to the borrower.  The borrower has a limited amount of time, 10 days, to complete and return the questionnaire to the bank, and the bank then provides the completed questionnaire to the SBA.

If a borrower applies for forgiveness of a PPP loan, the forgiveness application may be separately reviewed by the SBA and, as a practical matter, if a borrower files for forgiveness this will likely trigger or at least accelerate a full SBA audit of the PPP loan.

Once an SBA PPP loan audit is completed, and where an adverse audit determination is made by SBA, including that the borrower may not qualify for the loan, the borrower then has administrative appeal rights within the SBA to have the audit determination reviewed, which can lead to a hearing before a federal administrative law judge. Those appeal rights are the subject of a future article.  

______________________

Jim Hoover is a partner at Burr & Forman LLP and works exclusively within the firm’s Health Care Practice Group and predominantly handles healthcare litigation. Burr & Forman has a dedicated team to counsel individuals and businesses in government audits, investigations and defense-related to the PPP under the CARES Act, and also new PPP loans under the Economic Aid Act. The PPP and CARES Act Audit, Investigations and Defense Team represents and advises clients in audits and investigations involving PPP loans and tax benefits that may have been claimed under the CARES Act. This multidisciplinary team combines more than 230 years of legal experience and attorneys with previous government positions, including attorneys with IRS Chief Counsel, the United States Department of Justice, and United States Attorneys’ Offices.  More information can be found at www.burr.com.

Posted in: Coronavirus, Legal Watch, Management, MVP

Leave a Comment (0) →

2021 Legislative Session

2021 Legislative Session

Scope of Practice

  • ATHLETIC TRAINERS: This bill (SB73) provides for the licensing and regulation of athletic trainers relationship with a supervising physician, creates a joint committee of the two state boards, and expands the ability of athletic trainers to treat injuries sustained by physically active individuals. The Association worked with the ATs prior to the session and are supporting these bills. SB73 was signed by the Governor. 
  • OPTOMETRY: These bills (SB174 & HB402) would have allowed optometrists (who do not undergo any surgical residencies anywhere in the U.S.) to perform surgeries and injections on the eye. This legislation was being pushed by Senator Jim McClendon, the chairman of the Senate Health Committee and an optometrist himself. You may recall the controversy surrounding similar legislation last year when Sen. McClendon rammed the bill through committee without calling a proper vote (video). We stood opposed to these bills. Thank you for reaching out to your legislators! These bills did not pass.
  • PODIATRY: These bills (HB291 & SB371) would have allowed podiatrists who have completed as few as 2 years of podiatric residency (significantly less than a general orthopaedist and orthopaedic surgeon) to perform surgery on the foot and ankle. The same legislation was introduced last year but failed to receive a vote. We worked with the Alabama Orthopaedic Society to oppose this legislation.  Thank you for reaching out to your legislators! These bills did not pass.
  • PHYSICAL THERAPY:  This bill (SB237) was brought by Sen. Jim McClendon and expands the services a licensed physical therapist can render without a prescription or referral in two ways: (1) it extends the current time limit for which services can be provided from 90 days to 120 days; and (2)  it allows physical therapists to treat patients without referral upon their determination that the patient is “medically stable” and “deemed suited to receive physical therapy.” We believe that a medical diagnosis is important and should always come before treatment. This bill did not pass.

Public Health

  • EMERGENCY TIMEFRAME & AUTHORITY: This bill (SB97) limited the timeframe for which a state of emergency can be declared (by the State Health Officer or Governor) to only 14 days. The bill also gave the Legislature the sole authority to extend such declarations. This bill did not pass.
  • COUNTY HEALTH OFFICERS: These bills (SB184 and HB168) would prohibit a county health officer from issuing orders or directives during an epidemic or disease outbreak if the State Health Officer has issued one already. The bill also applies to orders or directives on the county level that are more protective than the state’s guidance. The Association supports County Health Officers and believes local physicians are best suited to make decisions for their local population. These bills did not pass.
  • ABOLISHING MLC & RESTRUCTURING BME: This bill (SB239) was brought by Sen. Jim McClendon and would abolish the Medical Licensure Commission, have the Board of Medical Examiners take on the duties of the Commission, and forbid leaders of any physician specialty organization from serving on the “new” board. By consolidating two, separate agencies into a single regulatory body, this legislation overhauls the current congressional representation requirements, revokes the appointment powers of the Lt. Governor and Speaker of the House, and decreases the board composition by more than half. The amount of issues the Association has with this legislation are lengthier than the bill itself. The bill was defeated by a vote of 8-3 in committee. Thank you to everyone who contacted their Senator and told them to oppose the bill!
  • ABOLISHING & RESTRUCTURING STATE BOARD OF HEALTH: This bill (SB240) was brought by Sen. Jim McClendon and would abolish the State Board of Health, the State Committee of Public Health, the County Boards of Health, and the position of the State Health Officer (among other things). With the two boards and physician oversight no longer existing, the bill creates a new State Health Advisory Board made up of a laundry list of individuals who have some type of relationship to healthcare. County Boards of Health are instantly gone, too, turning such over to the determination of the County Commission. Strangely enough, the State Health Officer position would not exist, but two roles take its place, with the highest (termed “Secretary of the Alabama Department of Public Health”) now appointed by the governor with no requirement that he/she be a physician. We support our state and local boards of health, we support our State Health Officer, and we will vehemently oppose this bill. Thank you for reaching out to your legislators! This bill did not pass. 
  • IMMUNIZATION REGISTRY (ImmPrint): This bill (HB184) by Rep. Paul Lee would require health care providers to report immunization data to the ImmPrint registry and to review the registry before a vaccine is administered. Annual influenza vaccinations are exempt from the review requirement for adults, but are still required to be reported. The Association worked with members of our President’s Council and other specialties in support of this bill. This bill did not pass.
  • COMMUNITY PARAMEDICINE: These bills (HB141 & SB115) would authorize ADPH to establish and administer a community paramedicine program that allows paramedics to provide certain services to patients. The Association worked ACEP and other specialties in drafting the bill. HB141 was signed by the Governor.
  • MEDICAL MARIJUANA: This bill (SB46) by Sen. Tim Melson, M.D. (R—Florence) would authorize medical marijuana in the state. The House Judiciary Committee, the first of two House committees expected to vet the bill, conducted a public hearing Wednesday. Rep. Mike Ball (R—Madison), a Judiciary Committee member and retired law enforcement officer, is shepherding the bill in the House. SB46 was signed by the Governor.
  • SEXUAL ASSAULT SURVIVORS BILL OF RIGHTS: This bill (HB137) creates the Sexual Assault Survivors Bill of Rights and provides certain rights to all victims of sexual assault. The bill also creates a task force responsible for developing recommendations for improving the coordination of the dissemination and implementation of best practices and protocols to hospital administrators, physicians, forensic examiners, and other medical associations and leaders in the medical community. The Association worked with the bill sponsor to amend the bill and ensure physician liability was not expanded. HB137 was sent to the Governor.
  • PHARMACY BENEFIT MANAGERS: This bill (SB227) would prevent practices of pharmacy benefit managers relating to patient steering to use mail-order pharmacies and would prevent price discrimination. It would also require the PBM to act as a fiduciary to clients and would prevent them from stopping pharmacists from disclosing prices. SB227 was signed by the Governor.

Lawsuits & Liability

  • COVID-19 LIABILITY PROTECTION: This bill (SB30) provides liability protection to physicians, health facilities, and businesses from claims arising from COVID-19 and the state’s response to the pandemic. The Medical Association, with the help of Starnes, Davis, Florie, LLP, worked with Sen. Arthur Orr in drafting this bill. SB30 was signed by the Governor. 
  • GENDER CHANGE THERAPY:  These bills (HB1 & SB10) would make it a felony for doctors to treat transgender youth with hormonal therapy and puberty blockers to help their transition. More specifically, the bills would prohibit the use of puberty-blocking drugs, hormonal therapy and surgery to treat transgender minors. Violators could face up to 10 years in prison. A House Judiciary committee amendment was added to narrow the focus of the bill and remove “counseling” a patient and “dispensing” medication to a patient from the list of prohibited activities. Read more on these bills at AL Daily News, AL.com, and KFF. These bills did not pass.
  • BORN ALIVE ABORTION: This bill (HB237) would make it a Class A felony if a physician does not exercise reasonable care to preserve the life of a child born alive after an abortion or attempted abortion in an abortion or reproductive health center. HB237 was sent to the Governor.
  • CHEMICAL ABORTION: This bill (HB317) expands a physician’s standard of care to mandate three types of required patient disclosures when performing or attempting to perform chemical abortions or abortions due to a medical emergency. A physician performing or attempting to perform an abortion who violates these rules recklessly or knowingly is guilty of a Class C felony, and does not have a medical emergency exception authorizing abortion to be “a claim or diagnosis that the woman will engage in conduct which she intends to result in her death or in substantial and irreversible physical impairment of a major bodily function.” This bill did not pass.
  • CHEMICAL ABORTION PROHIBITION ACT: This bill (HB377) would prohibit the manufacture, distribution, prescription, dispensing, sale, or transfer any type of generic or non-generic abortifacient medication in Alabama. HB377 has a public hearing in the House Judiciary Committee next week. We oppose. This bill did not pass.
  • GENITAL MUTILATION: This bill (HB252) creates the crime of “genital mutilation” as a Class B Felony in Alabama. Although the list of acts that constitute “genital mutilation” is long, nothing in the bill applies to procedures medically necessary procedures or procedures performed during labor. The legislation adheres to the ACOG position on genital mutilation and also contains Medical Association language explicitly stating that nothing shall be construed to establish a standard of care for hospitals or physicians. This bill did not pass.
  • MEDICAID FALSE CLAIMS ACT: This bill (SB241) was brought by Sen. Jim McClendon and prohibits certain fraudulent activities affecting the Alabama Medicaid program. Furthermore, liability for violations of these prohibitions includes (1) a civil penalty of $5,500-$11,000 per claim, and (2) treble damages. These prohibitions and penalties are different and much more drastic than what currently Medicaid and Medicare law provides, creating very serious liability and monetary concerns for physicians. This bill did not pass.
  • MINOR DNAR: This bill (HB224) would require physicians to obtain consent of parent or legal guardian of a minor prior to entering “do not attempt resuscitation” order. HB224 was sent to the Governor.
  • VACCINE PASSPORTS: This bill (SB267) as substituted would prohibit state and local government entities from requiring an individual to receive an immunization to receive certain government benefits. It would also prohibit businesses from refusing service based on immunization status. SB267 was sent to the Governor.

Finance & Taxation

  • CARES ACT TAX EXCLUSION: These bills (SB98 & HB170) exclude any money received from the CARES Act or other similar COVID-related relief measures from Alabama income tax. “We are not going to tax any of the stimulus monies that came in for businesses, for individuals, for anyone,” said Senator Dan Roberts (R-Mountain Brook). HB170 was signed by the Governor.

Federal Legislation

  • MEDICAID EXPANSION: On March 11, 2021, President Biden signed the American Recovery Act of 2021. The legislation includes a short provision outlining that states, for a length of five years, can extend Medicaid eligibility to women for 12 months after giving birth. The bill also provides an incentive for states that newly expand Medicaid by temporarily increasing the state’s base FMAP by 5% for two years. Please join the Cover Alabama Coalition in supporting Medicaid expansion in Alabama.

Posted in: Advocacy

Leave a Comment (0) →

ALAPAC-Supported Kirk Hatcher wins Democratic nomination for Senate District 26

ALAPAC-Supported Kirk Hatcher wins Democratic nomination for Senate District 26

Former State Rep. Kirk Hatcher won the Democratic nomination for Senate District 26, defeating former Rep. John Knight in a runoff with 74% of the vote. Hatcher will face Rep. William Greene in a special general election on March 2.

A Montgomery native and former English educator with 17 years of experience, Hatcher currently is the director of Head Start in Montgomery County. To learn more about Kirk Hatcher, check out his campaign website or his profile in the Montgomery Advertiser.

Hatcher was elected in 2018 to represent District 78 in the House and though only serving a short time as a representative, he believes that he is ready and capable to serve the people of District 26 in the Senate.

Hatcher raised more than $123,000 for the race between Oct. 1 and Dec. 8 (Knight raised a little over $39,000) and has gotten the backing of the Alabama Democratic Conference, the Medical Association of the State of Alabama, the Alabama Association of Realtors and the Alabama Grocers Association. Hatcher said he hopes to use those endorsements to improve the district.

As the political action committee for the Medical Association, ALAPAC supports candidates who best represent the interests of physicians and their patients. This is why ALAPAC supported Kirk Hatcher for Senate District 26.

Posted in: Advocacy, ALAPAC

Leave a Comment (0) →