Alerts

Hurricane Harvey Special Alert

Alerts / August 31, 2017

Hurricane Harvey has left our Houston and Texas communities with significant recovery and restoration needs. As attorneys, we struggle with how we can be most helpful. It is in this spirit, that we have compiled this Special Alert to help our clients, friends, family and community. In the days and weeks ahead, our work will become even more defined, but for now, we hope that this information may be of immediate assistance. Please do not hesitate to call upon us at BakerHostetler to help. We grieve alongside our friends and colleagues in Houston and its surrounding communities.

Important topics covered:

Issues Impacting Healthcare, Health Facilities and Providers

On Aug. 26, 2017, U.S. Health and Human Services (HHS) Secretary Tom Price declared a public health emergency, effective Aug. 25, 2017, paving the way for several waivers that could be granted, relaxing laws and regulations applicable to providers and others and enabling them to do whatever was necessary to address the public health needs.

On Aug. 26, 2017, Secretary Price issued a Waiver under Section 1135 of the Social Security Act (42 USC § 1320b-5) of certain requirements under the Medicare, Medicaid and CHIP laws. This waiver is provided “to ensure that sufficient health care items and services are available to meet the needs of individuals enrolled in the Medicare, Medicaid and CHIP programs and to ensure that healthcare providers that furnish such items and services in good faith, but are unable to comply with one or more of these requirements as a result of Hurricane Harvey, may be reimbursed for such items and services and exempted from sanctions for noncompliance, absence any determination of fraud or abuse.”

The 1135 waiver impacts hospital conditions of participation, Medicare certification requirements, requirements that physicians or healthcare professionals hold licenses in the state in which they provide services, EMTALA Sanctions, Section 1877(g) of the Social Security Act relating to physician referrals, certain out-of-network limitations on payment under Medicare Advantage plans, and sanctions under Section 1135(b)(7) of the Social Security Act arising from noncompliance with certain HIPAA privacy regulations.

The 1135 waiver specifically applies to the following Texas counties: Aransas, Atascosa, Austin, Bastrop, Bee, Bexar, Brazoria, Brazos, Burleson, Caldwell, Calhoun, Cameron, Chambers, Colorado, Comal, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Guadalupe, Hardin, Harris, Jackson, Jasper, Jefferson, Jim Wells, Karnes, Kerr, Kleberg, Lavaca, Lee, Leon, Liberty, Live Oak, Madison, Matagorda, Montgomery, Newton, Nueces, Polk, Refugio, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller, Washington, Wharton, Willacy, and Wilson.

It is important that providers maintain records with regard to the 1135 waiver, as the determinations of how the waiver applies will be made by the Centers for Medicare and Medicaid Services (CMS) on a case-by-case basis. Thus, any transfers of patients, use of volunteer out-of-state physicians or other healthcare practitioners, usage of facilities, or other unconventional acts should be documented and used for support post-hurricane.

The Texas Hospital Association (THA) has a terrific website with information and resources that can also be accessed and notices and information also can be found on the Texas Health and Human Services site.

Texas Health and Human Services Commissioner Charles Smith also requested waivers of requirements associated with the state’s Medicaid Section 1115 Waiver regarding Medicaid and CHIP eligibility requirements. At this publication, the request has not yet been approved.

Texas Gov. Greg Abbott also took several actions that paved the way for seamless emergency services. He approved a request from the Texas Department of State Health Services (TDSHS) to waive hospital licensing rules, 25 TAC § 133.21; 25 TAC § 26(A); 25 TAC §163(B) relating to bed limits and number of beds in patient suites to allow hospitals to house and treat more patients than their license would otherwise allow, effective through Sept. 25, 2017.

In addition, the governor temporarily suspended all necessary statutes and regulations allowing healthcare providers in good standing and licensed in another state to practice in Texas. Hospitals should ensure they have submitted the out-of-state providers’ name, provider type, state license and identification number to the applicable state licensing entity.

Gov. Abbot also approved an emergency dispensing protocol to allow emergency medications to be filled when the prescriber cannot be reached.

In addition, HHS has established a 250-bed Federal Medical Station at the George R. Brown Convention Center in Houston;. Many area physicians, nurses and physician extenders are volunteering at that site and many others around the city.

Court Deadlines and Litigation Issues

For those wondering what to do about pending court cases and deadlines, we provide the following information:

For state court matters, the Texas Supreme Court and the Court of Criminal Appeals jointly issued an Emergency Order Authorizing Modification and Suspension of Court Procedures in Proceedings Affected by Disaster, on Aug. 28, 2017. Recognizing that court proceedings in the 50 Texas counties that have been declared a state of disaster, and other counties throughout Texas may be affected in the aftermath of Hurricane Harvey, the order provides that, pursuant to Section 22.0035(b)1 of the Texas Government Code, “all courts in Texas should consider disaster-caused delays as good cause for modifying or suspending all deadlines and procedures – whether prescribed by statute, rule, or order – in any case, civil or criminal.” The order remains effective through Sept. 27, 2017, unless further extended. The full text of the order is available online. Because the order itself does not modify existing deadlines, parties seeking relief from current deadlines should confer with opposing counsel and file the appropriate motions as soon as reasonably convenient.

Access to courts and clerks’ offices may be extremely limited over the next few days. In Harris County, the County Clerk’s Office, District Clerk’s Office, and all courts are closed until further notice, as are the First and Fourteenth Courts of Appeals. A complete list of courthouse closures and delays is available online.

For federal court matters, the United States District Court for the Southern District of Texas issued an order on Aug. 29, 2017, finding that the United States Courthouse and Office of the Clerk for the Houston, Galveston and Victoria divisions are inaccessible for the purposes of Federal Rule of Civil Procedure 6(a) and Federal Rule of Appellate Procedure 26(a) from Aug. 28, 2017 through Aug. 31, 2017. This means that filing deadlines falling within this time period are only extended to Friday, Sept. 1, 2017, pending further order of the court. The court issued a separate order on Aug. 29, 2017, for the Corpus Christi Division finding that the United States Courthouse and Office of the Clerk were inaccessible on Aug. 25, 2017, and from Aug. 28 to Aug. 30, 2017. This means that all filing deadlines falling within this time period are only extended to Thursday, Aug. 31, 2017, pending further order of the court. Both orders also temporarily exclude all criminal cases for the time requirements of the Speedy Trial Act, 18 U.S.C. § 3161.

Similarly, the United States Bankruptcy Court for the Southern District of Texas issued an order on Aug. 28, 2017, finding that, for purposes of Bankruptcy Rule 9006(a)(3), the Clerk’s Office is declared to be inaccessible from Aug. 28, 2017, through Friday, Sept. 1, 2017. Thus, for this rule, filing deadlines falling within this period are extended to Tuesday, Sept. 5, 2017 (because courts are closed on Monday, Sept. 4, 2017, in observance of Labor Day). In addition, any temporary stay imposed under 11 U.S.C. § 362(c) is extended to Sept. 7, 2017, pending further order. The order applies to all cases and proceedings in the Galveston, Houston and Victoria divisions.

Information regarding the operational status of the District and Bankruptcy Courts in the Southern District of Texas, including links to court orders issued up to the time of publication, is available online.

The United States Court of Appeals for the Fifth Circuit has cancelled all oral arguments scheduled from Aug. 28 through Aug. 31, 2017, and will advise counsel regarding further proceedings in affected matters. Information regarding the court operations of the United States Court of Appeals for the Fifth Circuit is available online.

Information regarding the operational status of the District and Bankruptcy Courts in the Southern District of Texas, including links to court orders issued up to the time of publication, is available here.

Price Gouging and Looting

While we have witnessed many heartwarming acts of community during this time, we also are aware that bad actors use disasters to take advantage of consumers. For you or your employees, we include the following information to address and educate concerning incidents of price gouging and looting.

Taking advantage of a disaster declared by the governor is unlawful. The Texas Attorney General’s Office Consumer Protection Division protects consumers from false, misleading or deceptive acts or practices in the conduct of trade or commerce, such as price gouging. Texas has established a hotline to report suspect price gouging: 800.621.0508.

According to Section 17.46(b)(27) of the Texas Business and Commerce Code, it is unlawful to take advantage of a disaster declared by the governor by:

  • Selling or leasing fuel, food, medicine, or another necessity at an exorbitant or excessive price; or
  • Demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine, or another necessity.

Complaints may be filed with the Consumer Protection Division of the Texas Attorney General’s Office. Upon receipt of a complaint and following a thorough investigation, the Consumer Protection Division files lawsuits to protect the public interest and protect consumers. To file a consumer complaint, it is necessary to obtain:

  • The name of the business or individual against whom you are filing the complaint;
  • The business or individual’s complete address, including ZIP code; and
  • A detailed description of your complaint.

Complaints against a regulated business or licensed professional should be addressed to the appropriate regulatory agency. The Texas Department of Licensing and Regulation is the umbrella occupational regulatory agency for the state and receives complaints concerning unlicensed individuals or companies.

With regard to looting, we wish to provide the following information that may be of use to those that may have or may be impacted by looting that has occurred in and around Houston. Under Texas law, punishment increases for certain crimes if they are committed in a declared disaster area or evacuated area. Specifically, Texas Penal Code Section 12.50 increases the punishment for assault, robbery, burglary and theft. For example, the standard punishment range for burglary of a habitation is two years to 20 years in prison. Applying the disaster enhancement, the new punishment range for a burglary of a habitation is five years to life in prison. The Harris County District Attorney’s Office has indicated that it will seek punishment enhancements in accordance with Texas law.

Loan Assistance

If a business or private nonprofit organization has suffered physical damage or economic injury after a disaster, assistance is available from the Small Business Administration (SBA).

SBA provides financial assistance in the way of low-interest loans and working capital loans. Application for assistance is available online, in-person at its disaster center, or by mail.

Three types of disaster loans are available:

  • Business Physical Disaster Loans, which may be used to repair or replace disaster-damaged property owned by the business, including real estate, inventories, supplies, machinery and equipment. Businesses of all sizes are eligible for the loans and nonprofits and charities are included.
  • Economic Injury Disaster Loans, which provide working capital to help to meet the needs of the business’ normal operational and financial obligations that cannot be met as a result of the disaster.
  • Home Disaster Loans, which are made to homeowners to repair or replace disaster-damaged real estate and personal property, including automobiles.

Applicants must have a credit history that is acceptable to the SBA and be able to repay all loans, as well as have collateral for loans that exceed $25,000.

The process requires three steps and an applicant does not have to accept the loan once they are approved. Therefore, there is no harm in applying for the loans. The process may take some time due to the volume of activity and therefore, it would be prudent to make application as soon as possible. The application process is well-described on the SBA website, where its Frequently Asked Questions provide significant detail relating to several aspects of the business, including whether existing mortgages can be refinanced through the SBA, which is possible.

In addition to SBA loans, Fannie Mae (FNMA) has announced that it will implement a 90-day foreclosure sale suspension and a 90-day eviction suspension for borrowers with properties located within a FEMA-declared disaster area that are eligible for FEMA Individual Assistance.

Homeowners may qualify for a forbearance, a temporary suspension or reduction of their mortgage payment for up to six months. Homeowners with Fannie Mae loans are eligible for free information and assistance through the Fannie Mae Mortgage Help Network or by telephone at 800.232.6643. To find out if a loan is owned by Fannie Mae, visit www.knowyouroptions.com.

If a loan is not held by Fannie Mae, Freddie Mac may hold the loan. Freddie Mac advises that a mortgage company is authorized to:

  • Suspend mortgage payments for up to 12 months.
  • Waive assessments of penalties or late fees against borrowers with disaster-damaged homes.
  • Suspend reporting forbearance or delinquencies caused by the disaster to the nation's credit bureaus.

As a result of the devastation caused by Hurricane Harvey, Freddie Mac also announced that all evictions and foreclosures on homes secured by Freddie Mac-owned or guaranteed mortgages in eligible areas impacted by Hurricane Harvey have been suspended. Freddie Mac additionally announced that it will be working with loan servicers to ensure that no property inspection costs resulting directly from Hurricane Harvey will be passed on to borrowers.

The Federal Housing Administration (FHA) announced that it would make mortgage insurance available to its 200,000 insured homeowners. Additionally, FHA will allow mortgage servicers to suspend or reduce a homeowner’s payments for up to 90 days if the servicer believes the value of the property has been affected or the disaster has impeded the owner’s ability to make payments.

Finally, The U.S. Department of Housing and Urban Development provides assistance concerning:

  • Reallocating federal resources toward disaster relief to expedite the repair and replacement of damaged housing.
  • Granting a 90-day moratorium on foreclosures and forbearance on foreclosures of FHA-insured home mortgages.
  • FHA insurance to disaster victims who have lost their homes and are rebuilding or buying another home.
  • A loan program to enable persons who have lost their homes to finance the purchase or refinance of a house and to enable homeowners who have damaged houses to finance the rehabilitation of their existing home.
Issues Relating to Environmental Compliance

Nearly all federal and state administrative orders and facility operating permits (National Pollution Discharge Elimination System (NPDES) wastewater or storm water discharge, Clean Air Act, corrective action, etc.) have notification requirements relating to force majeure events that are defined, generally, as permit upsets or events beyond the control of the respondent or permittee that prevent performance or cause delay. These allowances generally call for prompt timely verbal notification to the relevant agency followed by written notification.

Natural disasters, including floods and storms, are force majeure events and companies should provide prompt notification to the relevant agencies in order to defense against potential enforcement actions or citizen suits. All affected companies should review their permits and give such notification. Companies should also immediately notify their insurance carriers under any applicable policies of insurance including environmental policies and/or third party casualty insurance.

Insurance Issues

Business and residential owners should review their insurance policies to determine coverage and impact of each policy’s terms, conditions and applicability. The following types of insurance policies should be reviewed or may be applicable:

  • Standard homeowners insurance (for residences)
  • First-party property and third-party property and casualty insurance policies
  • Business interruption insurance (for businesses)
  • Windstorm insurance
  • Federal flood insurance
  • Automobile insurance

Notification Alert: Effective Friday, Sept. 1, 2017, a new Texas law (House Bill 1774) takes effect that governs Texas insurance claims. Specifically, there are differences in this new law that could affect Texas policyholders who suffer claims involving “forces of nature.” The new law lessens penalties against insurance companies that fail to pay valid claims, pay less than amounts owed or fail to timely pay such claims. Because of the impending law, policyholders that have suffered property damage and or/business interruption due to the effects of Harvey should make a written claim submission (by electronic mail or other written instrument) to their insurers by Aug. 31, 2017 in order to avoid any impacts of the new law. There has been some controversy on the impact of this new law, as it applies to the filing of lawsuits, in particular. While the law should not affect the date for filing of claims, it may ultimately impact recoveries or issues associated with a lawsuit that may result from a claim against an insurance company.

Flood Insurance. The National Flood Insurance Program (NFIP) offers flood insurance through the federal government and some private insurers. The following are guidelines provided for those impacted.

First and most important, proof of loss under the NFIP must be filed within 60 days of the flooding event. Thus, claims should be filed promptly, to the extent coverage is afforded the property. In general, it is important to ensure that loss is properly and thoroughly documented through pictures, receipts, diaries and any other available and reasonable means. A national flood adjuster will be assigned to the claim and will need to obtain all such information. The NFIP maintains strict deadlines. Therefore, it will be important to ensure tracking of such deadlines. Public adjusters are an available resource that can be utilized to help navigate and ensure accurate information that may be provided by flood adjusters.

Once rebuilding proceeds, it is important to hire only licensed, bonded, referenced and thoroughly vetted contractors.

Commercial Coverage: Commercial policyholders may have insurance claims for property damage, loss of business income and extra expenses incurred to continue or resume operations. Policyholders should be aware that they may have insurance coverage for business income losses and extra expenses even if their own insured property has not been physically damaged, including where access to the insured property has been impeded, where operations have been impacted by government-ordered evacuations and curfews, and where third-party property of customers has been damaged. Policyholders should immediately determine whether they have an insurance policy that would provide coverage for business losses and property damage caused by Harvey, and review the notification and other requirements of the insurance policy.

Windstorm Damage. In 14 coastal counties and parts of Harris County, the Texas Windstorm Insurance Association is the only provider of windstorm insurance that would cover the damage directly caused by wind. Claims under this insurance can be initiated online.

For more information, contact your regular BakerHostetler attorney or any of the following contributing authors: Susan Feigin Harris, Michael J. Pappert, Matthew W. Caligur, Rachel Palmer Hooper, Paul S. Francis, Christopher H. Marraro.


[1] “Notwithstanding any other statute, the supreme court may modify or suspend procedures for the conduct of any court proceeding affected by disaster during the pendency of a disaster declared by the governor. An order under this section may not extend for more than 30 days from the date the order was signed unless renewed by the supreme court.”

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