The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) Is Enacted into Law

As the coronavirus outbreak continues to wreak havoc on markets and industries in the United States and around the world, businesses are now confronting significant and unique challenges. Successful navigation of these challenges will require thoughtful and comprehensive planning. Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources (see Foley’s Coronavirus Resource Center) and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries, including manufacturing, technology, solar, hospitality and travel, healthcare, food, fashion and apparel, and sports and entertainment.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) – Summary of Bill Language and Key Takeaways

On March 25, 2020, the Senate unanimously passed (96-0) the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), commonly known as “Phase Three” of coronavirus economic relief. The CARES Act provides much needed stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic. On March 27, 2020, the House of Representatives passed the CARES Act by voice vote. President Trump signed the bill into law that same day.

Additional information, updates, and analysis regarding the CARES Act will be posted on Foley’s Coronavirus Resource Center. Please check back frequently for updates. Foley is available to assist in interpretation of the CARES Act for your business and can help you find ways to claim and/or use available funding for your company.

The CARES Act

Top 10 Takeaways:

1. Provides stimulus to individuals, businesses, and hospitals in response to the economic distress caused by the coronavirus (COVID-19) pandemic.

Summary of the CARES Act:

A. Division A – Keeping American Workers Paid and Employed, Healthcare System Enhancements, and Economic Stabilization

1. Title I – Keeping American Workers Paid and Employed Act
Foley Title I Contacts : Jamie Class, Erin Toomey, Jessica Glatzer Mason, and Frank Murray

i. Paycheck Protection Program

The Paycheck Protection Loan Program, at a price tag of $349 billion, covers the period February 15, 2020 through June 30, 2020 and greatly expands SBA loan eligibility. The loan program will allow businesses suffering due to the coronavirus outbreak to borrow money for a variety of qualified costs related to employee compensation and benefits, including (i) payroll costs, (ii) continuation of health care benefits, (iii) employee compensation (of those making less than $100K), (iv) mortgage interest obligations, (v) rent, (vi) utilities and (vii) interest on debt incurred before the covered period.

ii. Entrepreneurial Development

• Provides funding to educate small businesses and their employees regarding (i) Federal resources available during this time, (ii) Hazards of COVID-19 and (iii) best practices around teleworking to prevent the spread of COVID-19.

iii. State Trade Expansion Program

• Allows for federal grant funds appropriated to support the State Trade Expansion Program (STEP) in FY 2018 and FY 2019 to remain available for use through FY 2021.

iv. Waiver of Matching Funds Requirement under the Women’s Business Center Program

• Eliminates the non-federal match requirement for Women’s Business Centers for a period of three months.

v. Loan Forgiveness

Establishes that the borrower under the Paycheck Protection Program shall be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date on (i) rent, (ii) payroll costs for workers making less than $100K, (iii) interest on a mortgage, and (iv) utility payments. The amount forgiven may not exceed the principal of the loan.

vi. Minority Business Development Agency

• Empowers the Department of Commerce, through the Minority Business Development Agency, to provide grants to minority business centers and minority chambers of commerce to provide education, training and advising related to accessing federal resources.

vii. United States Treasury Program Management Authority

• The Department of the Treasury, consulting with the Small Business Administration and the Chairman of the Farm Credit Administration shall establish criteria to allow other lenders to participate in the Paycheck Protection Program, so long as such participation does not threaten the safety and soundness of the lender, as determined in consultation with the relevant federal banking agencies.

viii. Emergency Economic Injury Disaster Loans (“EIDLs”)

For the period between January 31, 2020 and December 31, 2020 (the “covered period”) EIDL eligibility is greatly expanded to include any business with not more than 500 employees operating under a sole proprietorship or as an independent contractor, and any cooperative, ESOP and tribal small business concern with not more than 500 employees. The number of employees is determined together with affiliates.

ix. Subsidy for Certain Loan Payments

For loans under §7(a) of the Small Business Act, Title V of the Small Business Investment Act, and for loans made by an intermediary using §7(m) loans or grants, the Administrator shall pay the principal, interest, and fees owed for loans in regular servicing status for any such loans, whether on deferment or not, that were made before the enactment of the Act for the following 6-month period, and for any such loans that were made between the date of enactment of the Act and six months from such date. This does not apply to Payroll Protection loans or EIDL loans which have separate subsidy and repayment requirements.

x. Bankruptcy

• Section 1182(1) of Title 11 is amended to define “debtor” as persons engaged in commercial or business activities and their affiliates (excluding persons who primarily own single asset real estate) that have aggregate, noncontingent, liquidated secured and unsecured debts (at the date of petition filing or the order for relief) of $7,500,000 or less (excluding debts owed to affiliates or insiders), half or more of which arose from those activities.
  
• Exempt from this new definition are any members of a group of affiliated debtors that has aggregate, noncontingent, liquidated secured and unsecured debts over $7,500,000 (excluding debt owed to affiliates or insiders); corporations subject to 1934 Act reporting requirements; and affiliates of an issuer under the 1934 Act.
  
• National Emergency Act payments for COVID-19 by the President are exempted from “current monthly income” and “disposable income” when determining the power of courts to approve debtor plans rejected by trustees or claim holders.

2. Title II – Assistance for American Workers, Families, and Businesses
Foley Title II Contacts: Gregg Dooge, Julie Lutfi, Ashley May, and Dick Riley

i. Subtitle A: Unemployment Insurance Provisions

• Eligibility

• The law expands the scope of individuals who are eligible for unemployment benefits, including those who are furloughed or out of work as a direct result of COVID-19, self-employed or gig workers, and those who have exhausted existing state and federal unemployment benefit provisions.
  
  • The only individuals expressly excluded from coverage are those who have the ability to telework with pay and those who are receiving paid sick leave or other paid benefits (even if they otherwise satisfy the criteria for unemployment under the new law).
  • Administration of Benefit
    
    • The benefits are administered by each state and upon the state’s written agreement with the Secretary of Labor to provide the specific benefits. States that enter into such an agreement with the Secretary of Labor will be reimbursed in whole or in part for the cost of the benefits plus administrative expenses
    • Protections Against Fraud and Overpayment
      
      • Any fraudulent intent or misrepresentations to obtain payments to which an individual is not entitled will result in ineligibility for any other unemployment compensation benefits under the new law as well as criminal prosecution. Overpayments may be clawed back by the state agencies.
      • Social Security Treatment
        
        • The additional unemployment compensation provided is not considered “income” for purposes of Medicaid and CHIP.

        ii. Subtitle B: Rebates and Other Individual Provisions

        Tax Credits
        
        Beginning in 2020, “eligible individual” taxpayers can benefit from a tax credit equal to the sum of: (i) $1,200 for single filers ($2,400 for those filing a joint return) plus (ii) an amount equal to th eproduct of (a) $500 multiplied by (b) the number of qualifying children. However, the aforementioned tax credits will be “phased-out” by 5% of the amount by which such eligible taxpayer’s adjusted gross income exceeds: (i) $150,000 for joint-filers, (ii) $112,500 for heads of household, and (iii) $75,000 for all other types of filers.

        • “Coronavirus-Related Distribution”
          
          • A “coronavirus-related distribution,” as defined under the CARES Act, is generally defined as any distribution from an eligible retirement plan made: (i) on or after January 1, 2020 and before December 31, 2020, (ii) to an individual (a) who is diagnosed with COVID-19, (b) whose spouse or dependent is diagnosed with COVID-19, or (c) who experiences adverse financial consequences as a result of being quarantined, furloughed, laid off, had hours reduced, or other factors as determined by the Secretary of the Treasury during the COVID-19 pandemic.
          • Repayments of Coronavirus-Related Distributions
            
            • Any individual who receives a coronavirus-related distribution may generally, at any time during the three (3) year period beginning on the day after the date such coronavirus-related distribution was received, make one (1) or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary . The aforementioned repayments of coronavirus-related distributions for eligible retirement plans, will, to the extent of the amount of the contribution, be treated as having received the coronavirus-related distribution in an eligible rollover distribution,” and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within sixty (60) days of distribution.
            • Effects on the Limits on Loans from Qualified Employer Plans
              
              • The limitation on loans from any qualified employer plan made to qualified individuals during the 180-day period beginning on the date of enactment will be increased from $50,000 to $100,000 (or, if less, the qualified individual’s nonforfeitable benefit under the plan). In addition, should the due date of any loan occur between the date of enactment of the CARES Act and December 31, 2020, it will be delayed for one (1) year.

              iii. Subtitle C: Business Provisions

              Employee Retention Credit for Employer Subject to Closure Due to COVID-19
              
              Eligible employers will receive a credit against applicable employment taxes for each calendar quarter in an amount equal to 50% of the qualified wages with respect to each employee. The amount of qualified wages taken into account for each eligible employee, however, will not exceed $10,000 per calendar quarter and the credit will not exceed the applicable employment taxes owed for such calendar quarter. The aforementioned credit is not applicable if the employer is alto taking advantage of the small business interruption loan.

              • Delay of Payment of Employer Payroll Taxes
                
                • The CARES Act will allow for most employers to defer paying their share of applicable employment taxes from the time the CARES Act is signed into law through December 31, 2020. Half of this deferred amount would be due on December 31, 2021 and the other half by December 31, 2022.

                ii. For any taxable year beginning after December 31, 2020 and before January 1, 2026, any excess business loss of the taxpayer for the taxable year will not be allowed.

                • The corporate alternative minimum tax (AMT) was repealed as part of the Tax Cuts and Jobs Act, but corporate AMT credits were made available as refundable credits over several years, ending in 2021.
                  
                • The CARE Act accelerates the ability of companies to recover those AMT credits, permitting companies to claim a refund now and obtain additional cash flow during the COVID-19 emergency.
                • Modification of Limitation on Business Interest
                  
                  • The CARES Act temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30-percent limitation (as imposed under the Tax Cuts and Jobs Act) to 50 percent of taxable income (with adjustments) for 2019 and 2020. As businesses look to weather the storm of the current crisis, this provision will allow them to increase liquidity with a reduced cost of capital, so that they are able to continue operations and keep employees on payroll.
                  • Qualified Improvement Property
                    
                    • The CARES Act enables businesses, especially in the hospitality industry, to write off immediately costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building. The provision, which corrects an error in the Tax Cuts and Jobs Act, not only increases companies’ access to cash flow by allowing them to amend a prior year return, but also incentivizes them to continue to invest in improvements as the country recovers from the COVID-19 emergency.
                    • Temporary Exception from Excise Tax for Alcohol Used to Produce Hand Sanitizer
                      
                      • For distilled spirits removed after December 31, 2019 and before January 1, 2021, such distilled spirits will be free of tax for use in or contained in hand sanitizer produced and distributed in a manner consistent with any guidance issued by the FDA related to the outbreak of COVID-19.

                      3. Title III – Supporting America’s Health Care System in the Fight Against the Coronavirus
                      Foley Title III Contacts: Rachel O’Neil, Erin Horton, Anil Shankar, and Paul Joseph
                      

                      i. Subtitle A, Part I: Addressing Supply Shortages

                      Provides for the National Academies to examine and report on the security of the U.S. medical product supply chain in order to assess U.S. dependence on critical drugs and devices sourced outside of the U.S., and to develop recommendations to improve resiliency of the U.S. supply chain for critical drug and devices.

                      ii. Subtitle A, Part II: Access to Health Care for COVID-19 Patients

                      Permits group health plans and insurers to cover and reimburse providers of diagnostic testing relating to COVID-19 at pre-emergency-period negotiated rates, and sets reimbursement rates in instances without previously negotiated rates equal to the cash price for services listed on a publicly-available website or the plan or insurer can negotiate with a provider for a rate lower than such cash price. All providers of a diagnostic test for COVID-19 are required to publicize cash price for such tests. Failure to comply with these requirements could result in HHS assessing a civil monetary penalty of up to $300 per day.

                      iii. Subtitle A, Part III: Innovation

                      Provides for using competitive procedures to enter into transactions to carry out public-health emergency health related projects and prohibits canceling those contracts solely because the emergency ends.

                      iv. Subtitle A, Part IV: Health Care Workforce

                      • Approves appropriations for a variety of health professions-related programs, with particular focus on programs serving medically underserved populations (rural and geriatric).

                      v. Subtitle B: Education Provisions

                      Waives requirement for certain higher education institutions to match federal funding and allows certain institutions to transfer unexpended allotment.

                      vi. Subtitle C: Labor Provisions

                      • Paid Public Health Emergency Leave Minimums
                        
                        • Employers may, but are not required to, pay any more than $200 per day and $10,000 in the aggregate for each employee for public health emergency leave under section 110(b)(2)(B) of the Family & Medical Leave Act of 1993 as amended by the Emergency Family and Medical Leave Expansion Act.
                        • Rehire Eligibility for Paid Public Health Emergency Leave Employers
                          
                          • For purposes of public health emergency leave under the Emergency Family and Medical Leave Expansion Act, an eligible employee is an employee who has been employed for at least 30 calendar days by an employer with respect to whom leave is requested. The employee must be employed for at least 30 calendar days, which includes an employee who was laid off by that employer on or after March 1, 2020, had worked for employer for not less than 30 of the last 60 calendar days prior to the employees layoff, and was rehired by the employer.
                          • Emergency Paid Sick Leave Minimums
                            
                            • Employers may, but are not required to, pay any more than:

                            i. $511 per day or $5,110 in the aggregate for each employee when taking emergency paid sick leave if the employee is subject to a federal, state or local quarantine or isolation order related to COVID-19, the employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19, or the employee is experiencing symptoms of COVID-19 and seeking medical diagnosis; or

                            ii. $200 per day or $2,000 in the aggregate for each employee when taking emergency paid sick leave if the employee is caring for an individual who is subject to a federal, state or local quarantine order, or is caring for an individual who has been advised to self-quarantine due to concerns related to COVID-19, the employee is caring for the employee’s son or daughter, if the child’s school or childcare facility has been closed or the child’s care provider is unavailable due to COVID-19 precautions, or the employee is experiencing any other substantially similar condition specified by HHS in consultation with the Department of the Treasury and the Department of Labor.

                            • Advance Refunding of Payroll Credits for Required Paid Sick Leave and Required Paid Family Leave
                              
                              • Employers can apply a credit in the amount calculated under subsection (a) of section 7001 or 7003 of the Family First Coronavirus Response Act, subject to the limitations placed by subsection (b) of section 7001 and 7003, both calculated through the end of the most recent payroll period in the quarter. In anticipation of a credit, the credit may be advanced according to forms and instructions to be provided by the Secretary of Labor. The Act ensures employers that the Secretary of Treasury shall waive any penalty under section 6656 of the Internal Revenue Code of 1986 for failure to make a deposit of the tax imposed under section 3111 (a) or 3221(a) of such Code if failure was due to anticipation of credit allowed.

                              vii. Subtitle D: Finance Committee

                              An additional safe harbor provision is added to section 223(c)(2) of the Internal Revenue Code, providing that a plan shall not fail to be treated as a high deductible health plan (HDHP) by reason of failing to have a deductible for telehealth and other remote care services. Section 223(c)(1)(B) of the Internal Revenue Code is adjusted to include “telehealth and other remote care.” This addition allows an individual to have an insurance plan (for plan years beginning on or before December 31, 2021) that includes telehealth and other remote care without disqualifying the individual from owning an HDHP.

                              Menstrual care products are now included under the term “qualified medical expenses.”

                              • The amendment removes some limiting qualifications to section 1320b-5(b)(8), which allows for the Secretary of HHS to temporarily waive or modify the application of portions of the Social Security Act in the case of a telehealth service furnished in any emergency area during an emergency period. The provision that sets out the defined term “qualified provider,” which limited 1320b-5(b)(8), is removed in its entirety.
                              • Enhancing Medicare Telehealth Services for Federally Qualified Health Centers and Rural Health Clinics During Emergency Period
                                
                                • A new provision is added under Section 1834(m) of the Social Security Act (42 USC 1395m(m)), enhancing payment for telehealth services furnished via a telecommunications system by a federally qualified health center (FQHC) or rural health clinic (RHC) during an “emergency period” notwithstanding that the FQHC or the RHC providing the telehealth service is not at the same location as the beneficiary. Payment methods for FQHCs or RHCs that serve as distant sites shall be based on payment rates similar to the national average payment rates for comparable telehealth services under the physician fee schedule under section 1848.
                                • Temporary Waiver of Requirement for Face-to-Face Visits Between Home Dialysis Patients and Physicians
                                  
                                  • Amended section 1395rr(b)(3)(B) to allow the Secretary of HHS to waive the requirement that individuals with end stage renal disease receiving home dialysis must receive certain periodic face-to-face (non-telehealth) clinical assessments in order to be eligible to receive end stage disease-related clinical assessments via telehealth.
                                  • Use of Telehealth to Conduct Face-to-Face Encounter Prior to Recertification of Eligibility for Hospice Care During Emergency Period
                                    
                                    • Section 1395f(a)(7)(D)(i) is amended to allow a hospice physician or hospice nurse practitioner during an “emergency period” to conduct a face-to-face encounter via telehealth to determine recertification for continued eligibility for hospice care.
                                    • Encouraging Use of Telecommunications Systems for Home Health Services Furnished During Emergency Period
                                      
                                      • During an emergency period, the Secretary of HHS shall consider ways to encourage the use of telecommunications systems.
                                      • Improving Care Planning for Medicare Home Health Services
                                        
                                        • Certain Medicare sections are expanded from being limited to the services of a physician to include services of nurse practitioners, clinical nurse specialists, and physician assistants that provide home health services.
                                        • Adjustment of Sequestration
                                          
                                          • A temporary suspension of Medicare sequestration put into effect during the period of May 1, 2020 through December 31, 2020. The Medicare programs under title XVIII of the Social Security Act shall be exempt from reduction under any sequestration order during the period.
                                          • Medicare Hospital Inpatient Prospective Payment System Add-On Payment for COVID-19 Patients During Emergency Period
                                            
                                            • The Secretary of HHS will increase the weighting factor for coronavirus-diagnosed patients discharged during the emergency period. The weighting factor is used by the Secretary of HHS to reflect the relative hospital resources used with respect to discharges for a particular group compared to discharges within other groups.
                                            • Increasing Access to Post-Acute Care During Emergency Period
                                              
                                              • During the emergency period, the Secretary of HHS will waive the requirement that patients of inpatient rehabilitation facilities receive at least 15 hours of therapy per week. For long-term care hospitals furnishing services during the emergency period, the Secretary of HHS will further waive discharge percent requirements and the general application of site neutral payment rates.
                                              • Revising Payment Rates for Durable Medical Equipment Under the Medicare Program Through Duration of Emergency Period
                                                
                                                • The Secretary of HHS shall apply the transition rule, described in 42 C.F.R. § 414.210(g)(9)(iii), to items and services furnished in rural areas and noncontiguous areas as planned through December 31, 2020, and through the duration of the emergency period. For areas other than rural and noncontiguous areas, the Secretary of HHS shall apply the transition rule described in 42 C.F.R. § 414.210(g)(9)(iv) through the remainder of the emergency period.
                                                • Coverage of the COVID-19 Vaccine Under Part B of the Medicare Program Without Any Cost-Sharing
                                                  
                                                  • The term “medical and other health services” is expanded to include “COVID-19 vaccine and administration.” The deductible described in section 1395l(b) shall not apply with respect to a COVID-19 vaccine and its administration.
                                                  • Requiring Medicare Prescription Drug Plans and MA-PD Plans to Allow for Fills and Refills of Covered Part D Drugs for up to a 3-Month Supply
                                                    
                                                    • During the emergency period, a prescription drug plan or MA-PD plan shall permit a part D eligible individual reenrolled in such plan to obtain a single fill or refill the total day supply prescribed for such individual for a covered part D drug.
                                                    • Providing Home and Community-Based Services in Acute Care Hospitals
                                                      
                                                      • The prohibition that nothing in section 1395a allows the Secretary of HHS authorization to limit the amount of payment that may be made under a plan for home-and-community care is expanded to include home and community-based services, self-directed personal assistance services, or home and community-based attendant services. The provision is also expanded to clarify that the section shall not be construed to prohibit receipt of any care or services specified in paragraph (1) in an acute care hospital, provided certain requirements are met.
                                                      • Clarification Regarding Uninsured Individuals
                                                        
                                                        • The Families First Coronavirus Response Act, enacted last week, added subsection (ss) to section 1396a, which defined “uninsured individual” as those not described in section 1396a(a)(10)(A)(i) and not enrolled in certain health care programs. The CARES Act amends this definition to exclude subsection VIII if the individual is a resident of a state that does not furnish medical assistance as described.
                                                        • Clarification Regarding Coverage of COVID-19 Testing Products
                                                          
                                                          • The Families First Coronavirus Response Act, enacted last week, added COVID-19 testing to section 1396d, which provides medical assistance payments under certain conditions. The CARES Act amends this section by removing the requirement that the in-vitro diagnostic products administered are approved, cleared, or authorized under sections 510(k), 513, 514, or 564 of the Federal Food, Drug, and Cosmetic Act.
                                                          • Amendment Relating to Reporting Requirements with Respect to Clinical Diagnostic Laboratory Tests
                                                            
                                                            • The CARES Act extends the dates by one year for the reporting periods in section 1395m-1(a)(1)(B). The applicable prohibition that payment amounts determined under section 1395m-1 shall not result in a reduction in payments, as defined by the subsection, for a clinical diagnostic laboratory test is expanded to 2017 through 2024. The applicable percentages used to determine the limits on reductions in payment defined in 1395m-1(b)(3)(A) are adjusted to include a new clause for 2021, which makes the new applicable percentage zero (0) for 2021.
                                                            • Expansion of Medicare Hospital Accelerated Payment Program During the COVID-19 Public Health Emergency
                                                              
                                                              • Mandates that the Secretary of HHS expand the accelerated payment program to hospitals experiencing significant cash flow problems during the “emergency period.”
                                                              • Exception for Certain States from Enhanced FMAP Requirements
                                                                
                                                                • Provides that states may receive the temporary increase of Medicaid Federal Medical Assistance Percentage (FMAP) (authorized under the Families First Act enacted last week) notwithstanding the requirement to not impose premiums on beneficiaries, for a period of 30 days.

                                                                viii. Subtitle E, Part I: Medicare Provisions

                                                                • Extension of Funding for Quality Measure Endorsement, Input, and Selection
                                                                  
                                                                  • The Social Security Act is amended to increase the amount allotted for this fiscal year ending on October 1, 2020 from $4,830,000 to $20,000,000 and for the period beginning on October 1, 2020 and ending on November 30, 2020, the amount equal to the pro rata portion of $20,000,000.

                                                                  ix. Subtitle E, Part II: Medicaid Provisions

                                                                  • Extension of the Money Follows the Person Rebalancing Demonstration Program
                                                                    
                                                                    • The Deficit Reduction Act of 2005 section 6071(h)(1)(G) is amended to allocate $337,500,000 for the period beginning on January 1, 2020 and ending on September 30, 2020. For the period beginning on October 1, 2020 and ending on November 30, 2020, the amount available will be equal to the pro rata portion of $337,500,000.
                                                                    • Delay of DSH Reductions
                                                                      
                                                                      • This section removes the $4 billion DSH reductions for federal fiscal year 2020 and delays the cuts from taking effect December 1, 2020.

                                                                      x. Subtitle E, Part III: Human Services and Other Health Programs

                                                                      Extension of Sexual Risk Avoidance Education Program
                                                                      
                                                                      Section 510 of the Social Security Act is amended to extend the time through 2020 instead of ending in May 22, 2020 and to change the fiscal year to 2021.

                                                                      • Activities authorized by section 2008 of the Social Security Act shall continue through November 30, 2020.
                                                                      • Extension of the Temporary Assistance for Needy Families Program and Related Programs
                                                                        
                                                                        • Activities authorized by part 1 of title IV and section 1108(b) of the Social Security Act shall continue through November 30, 2020.

                                                                        xi. Subtitle E, Part IV: Public Health Provisions

                                                                        Extension for Community Health Centers, the National Health Service Corps, and Teaching Health Centers that Operate GME Programs
                                                                        
                                                                        The amount allocated for community health centers under the Patient Protection and Affordable Care Act is increased to $4,000,000,000 for fiscal year 2020 and $668,493,151 for the period beginning on October 1, 2020 and ending on November 30, 2020.

                                                                        xii. Subtitle F, Part I: Over-the-Counter Drugs

                                                                        xiii. Subtitle F, Part II: User Fees

                                                                        Declares that the fees paid pursuant to this section will be dedicated to FDA review of over-the-counter monograph drugs as set forth in the goals section and in letters from the Secretary of HHS to certain congressional committees.

                                                                        4. Title IV – Economic Stabilization and Assistance to Severely Distressed Sectors of the United States Economy
                                                                        Foley Title IV Contact: Christopher Swift, Rob Slovak, Michael Thomas, and Andrew Howell

                                                                        i. Title IV of the Coronavirus Aid, Relief, and Economic Securities Act provides the Secretary of the Treasury with the authority to make loans or loan guarantees to states, municipalities, and eligible businesses and loosens a variety of regulations created in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Economic Stabilization Act of 2008, and others.

                                                                        ii. Subtitle A – Coronavirus Stabilization Act of 2020

                                                                        Emergency Relief and Taxpayer Protections
                                                                        
                                                                        The Act authorizes the Treasury Secretary to make up to $500 billion worth of loans and loan guarantees to eligible businesses, states, and municipalities. No more than $25 billion can be loaned to passenger air carriers, no more than $4 billion to air cargo carriers, and no more than $17 billion to businesses important to maintaining national security. The remainder is to be used to support lending to eligible businesses, states, and municipalities. The term “eligible business” includes passenger air carriers or any other business that has not already received adequate economic relief in the form of loans or loan guarantees under other provisions of the Act.

                                                                        • The company intends to maintain at least 90 percent of their current workforce;
                                                                        • The company will not pay dividends or repurchase stock (or other equity securities);
                                                                        • The company will not outsource or offshore jobs during the loan period or two years thereafter;
                                                                        • The company will not abrogate existing collective bargaining agreements with labor unions; and
                                                                        • The company will remain neutral regarding current or future union organizing activity.
                                                                        • Continuation of Certain Air Services
                                                                          
                                                                          • The Secretary of Transportation may require any air carrier receiving loans or loan guarantees under Section 4003 to maintain scheduled air transportation services as the Secretary deems necessary to maintain service to any destination the carrier served before March 1, 2020. The needs of “small and remote communities” and “health care and pharmaceutical supply chains” are to be considered.
                                                                          • Suspension of Certain Aviation Excise Taxes
                                                                            
                                                                            • The Act suspends the imposition of aviation excise taxes as otherwise required under the Internal Revenue Code through December 31, 2020.
                                                                            • Debt Guarantee Authority
                                                                              
                                                                              • In order to backstop solvent depository institutions, the Act amends the Dodd-Frank Wall Street Reform and Consumer Protection Act to allow the FDIC to establish a program to insure these institutions without regard to a maximum amount. All such guarantees must terminate on or before December 31, 2020.
                                                                              • Temporary Government in the Sunshine Act Relief
                                                                                
                                                                                • In the event that unusual and exigent circumstances continue to exist, the Board of Governors of the Federal Reserve System may conduct meetings with less restrictive and formal meeting notification and record-keeping requirements until December 31, 2020.
                                                                                • Temporary Hiring Flexibility
                                                                                  
                                                                                  • Without regard to certain statutory hiring requirements, the Secretary of Housing and Urban Development and the Securities Exchange Commission are given flexibility to recruit and appoint candidates for temporary and term appointments as necessary to prevent, prepare for, or respond to COVID-19 during the “covered period” of the Act until the sooner of (1) termination of the national emergency declaration or (2) December 31, 2020.
                                                                                  • Temporary Lending Limit Waiver
                                                                                    
                                                                                    • The Comptroller of Currency may exempt any transaction or series of transactions from the total maximum amount of loans and extensions of credit upon a finding by the Comptroller that the exemption is in the public interest and consistent with the purposes of 12 U.S.C. 84.
                                                                                    • Temporary Relief for Community Banks
                                                                                      
                                                                                      • The federal banking agencies shall issue an interim final rule that sets the Community Bank Leverage Ratio (as defined in Section 201(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act) to 8% and provides qualifying community banks falling below this threshold a reasonable grace period to satisfy the leverage requirement.
                                                                                      • Temporary Relief from Troubled Debt Restructurings
                                                                                        
                                                                                        • The Act allows financial institutions to suspend GAAP requirements and loan determinations related to loan modifications that would be categorized as a troubled debt restructuring, if such loan modifications are related to COVID-19. Such suspensions cannot be applied to loans that were more than 30 days past due as of December 31, 2019.
                                                                                        • Optional Temporary Relief from Current Credit Losses
                                                                                          
                                                                                          • The Act suspends the requirement to comply with the Financial Accounting Standards Board’s rules regarding the “Measurement of Credit Losses on Financial Instruments” during the covered period.
                                                                                          • Non-applicability of Restrictions on ESF During National Emergency
                                                                                            
                                                                                            • The Act removes certain restrictions on the Exchange Stabilization Fund (ESF) until December 31, 2020, namely, the requirement the Treasury reimburse the ESF for any funds that are used for the Treasury Money Market Funds Guaranty Program and the prohibition of the establishment of any future guaranty program for the money market mutual fund industry. It further makes an appropriation to reimburse the ESF for any losses it incurs from the Treasury Money Market Funds Guaranty Program.
                                                                                            • Temporary Credit Union Provisions
                                                                                              
                                                                                              • The Act broadens the definition of the kinds of credit unions to beyond only those primarily serving “natural persons” and the eligibility requirements for those institutions to receive assistance from the National Credit Union Central Liquidity Facility. Specifically, a credit union may access liquidity if the obligation does not exceed 16 times the subscribed capital stock and surplus of the facility itself. The present restriction is 12 times the capital stock and surplus. These loosened restrictions will expire December 31, 2020.
                                                                                              • Conflicts of Interest
                                                                                                
                                                                                                • Any company in which the President, Vice President, an Executive Department head, Member of Congress, or any of such individual’s spouse, child, son-in-law, or daughter-in-law own over 20% of the outstanding voting stock shall not be eligible for loans, loan guarantees, or other investments provided under this Title.
                                                                                                • Temporary Moratorium on Eviction Filings
                                                                                                  
                                                                                                  • For 120 days beginning on the date of enactment, landlords are prohibited from initiating legal action to recover possession of a rental unit or to charge fees, penalties, or other charges to the tenant related to such nonpayment of rent where the landlord’s mortgage on that property is insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, or the Violence Against Women Act of 1994.

                                                                                                  iii. Subtitle B – Air Carrier Worker Support

                                                                                                  • Pandemic Relief for Aviation Workers
                                                                                                    
                                                                                                    • The Act provides financial assistance for the exclusive use of employee wages, salaries, and benefits in the amounts of up to $25 billion for passenger air carriers, up to $4 billion for cargo air carriers, and up to $3 billion for airline contractors up to $100 million of those funds may be used for administrative fees associated with providing the financial assistance.
                                                                                                    • Required Assurances
                                                                                                      
                                                                                                      • To be eligible for a financial assistance, recipients enter into an agreement with the Secretary of the Treasury that it will not, until September 30, 2020, conduct furloughs, reduce pay rates, buy back stock, pay dividends, and must meet requirements of Sections 4115 and 4117.
                                                                                                      • Protection for Collective Bargaining
                                                                                                        
                                                                                                        • The Act restricts the Secretary from conditioning financial assistance on a carrier’s implementation of measures to enter into negotiations with the certified bargaining representative of a class of employees regarding pay.
                                                                                                        • Limitation on Certain Employee Compensation
                                                                                                          
                                                                                                          • Under the Act, financial assistance is dependent upon compensation limits:

                                                                                                          i. Pay above $425,000 is frozen for two years.
                                                                                                          ii. No retirement or severance packages can exceed twice the maximum total compensation during 2019. Further, no officer or employee whose total compensation exceeded $3,000,000 in 2019 may receive in excess of $3,000,000 and 50% of the excess over $3,000,000 of the total compensation received in 2019. “Total compensation” includes salary, bonuses, awards of stock, and other financial benefits.

                                                                                                          • The Act allows the Secretary of Treasury to receive warrants, options, stock and other financial instruments to provide appropriate compensation for the government for the assistance.

                                                                                                          5. Title V – Coronavirus Relief Funds

                                                                                                          i. Coronavirus Relief Fund

                                                                                                          • Provides $150 billion to states, territories, and tribal governments to use for expenditures incurred due to the public health emergency with respect to COVID-19 in the face of revenue declines, allocated by population proportions, with a minimum of $1.25 billion for states with relatively small populations.

                                                                                                          6. Title VI – Miscellaneous Provisions

                                                                                                          i. COVID-19 Borrowing Authority for the United States Postal Service

                                                                                                          • The Secretary of the Treasury may lend the U.S. Postal Service up to $10 billion for current operating expenses but not to pay any existing debt obligations. The postal service shall prioritize delivery of products for medical purposes and may establish temporary delivery points in order to protect employees or individuals receiving the deliveries.

                                                                                                          Appropriations

                                                                                                          In addition to the above stimulus provisions, the Senate passed supplemental appropriations to help the government respond to the COVID-19 pandemic. Below is a quick summary of the appropriations provisions that are most likely to impact your business:

                                                                                                          USDA/Food and Nutrition Service – $25.06 billion. Child Nutrition Programs – $8.8 billion. The bill provides additional funding for food purchases and demonstration projects to increase flexibility for schools. Supplemental Nutrition Assistance Program (“SNAP”) – $15.51 billion. The bill provides additional funding for SNAP to cover waiver authorities granted in H.R. 6201 and anticipated increases in participation as a result of coronavirus.

                                                                                                          • Commodity Credit Corporation (“CCC”) – The bill includes language that replenishes the CCC borrowing authority by $14 billion.
                                                                                                          • Rural Business Cooperative Service – $20.5 million. The bill provides the necessary subsidy to make $1 billion in lending authority available for the Business and Industry Loan Guarantee Program, which provides much-needed financing to business owners who might not be able to qualify for a loan on their own.
                                                                                                          • Food and Drug Administration – $80 million. The bill provides additional funding to support the development of necessary medical countermeasures and vaccines, advance domestic manufacturing for medical products, and monitor medical product supply chains.
                                                                                                          • Distance Learning, Telemedicine (DLT) and Broadband Program – $25 million. The bill provides additional funding for the DLT grant program, which supports rural communities’ access to telecommunications-enabled information, audio, and video equipment, as well as related advanced technologies for students, teachers, and medical professionals.

                                                                                                          For more information about recommended steps, please contact your Foley relationship partner. For additional web-based resources available to assist you in monitoring the spread of the coronavirus on a global basis, you may wish to visit the CDC and the World Health Organization.

                                                                                                          Foley will continue to monitor and keep you apprised of relevant developments. Foley’s Coronavirus Resource Center provides continuous and updated insights and resources to support your business during this challenging time.

                                                                                                          We are grateful to the many Foley & Lardner attorneys who contributed to this summary, including: Jackie Acosta, Melina Bales, Josh Barrom, Lauren Carboni, Jamie Class, Julia Di Vito, Mike Donadio, Kate Foley, Debbie Green, Jake Heller, Erin Horton, Leah Imbrogno, Paul Joseph, Adam Kleinfeld, Sunny Levine, Justin Lauria-Banta, Tom Leonard, Peter Loh, Julie Lutfi, Jessica Glatzer Mason, Brandon Marx, Ashley May, Rachel O’Neil, Leslie Pinney, Jared Rifis, Dick Riley, E.J. Risley, Anil Shankar, Matthew Sierawski and Brantley Smith.

                                                                                                          • Frank S. Murray
                                                                                                          • Jared B. Rifis
                                                                                                          • Leah R. Imbrogno
                                                                                                          • Jamie N. Class
                                                                                                          • Kate M. Foley