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Practical Advice: COVID-19's Impact on the Construction Industry

Client Alert

As a member of the American Bar Association, Forum on the Construction Industry, BMD participated in a COVID-19 Construction Leadership Roundtable discussion with over 450 other construction attorneys representing nearly every voice in the industry. Here is the top practical advice and key takeaways: 

  1. Safety. Safety is the overriding imperative on all construction projects. Employers should designate and empower a COVID-19 Compliance Coordinator and post on site the CDC guidelines in English and other appropriate languages. The six-foot social distancing requirement, portable handwashing, wearing gloves, prohibiting carpooling to the jobsite, and closing jobsites to the public are now considered best practices and mandatory expectations for all employers. In some states, governmental agencies are spot checking jobsites and removing individuals who are not in compliance with the CDC guidelines. The Occupational Safety and Health Administration has issued guidance for protecting employees against workplace exposures to COVID-19. Employers should also be aware of OSHA standards which may apply to workplace exposures and when a case of COVID-19 is OSHA recordable. Learn more here from BMD’s March 20, 2020 OSHA and COVID-19: Workplace Exposures, Citations and Recording Client Advisory. 
  1. Notice. Give notice early and often! After providing notice, follow up with timely reports, cost information and detailed schedule impact data. Maintain detailed records if you want to preserve any chance of recovering for delay impacts. It is not enough to generally argue that your work has been delayed by COVID-19. It must be written in a way to prevent or discourage escalation, including litigation. Be prepared to demonstrate how and when delay impacts occurred, such as utilization of a measured mile analysis to prove loss of efficiency and productivity. Helping the owner or general contractor understand the unique circumstances which caused the delay will increase your chances to cooperatively resolve the problem. 
  1. Suspension or Termination of Work. Suspension or termination of work remains an option on a case-by-case basis. Work is generally proceeding but is being impacted by CDC guidelines. Each project is unique and requires the owner’s willingness to work with prime contractors, subcontractors, suppliers, and design professionals. It has been rare for attorneys to counsel clients to stop work. There have been some suspensions of work, but often work resumes if employers and workers take appropriate CDC precautions. For example, work is proceeding at the City of Tampa, Florida airport where virtual inspections are being conducted by using affidavits, video or digital images, or in-person inspections per CDC guidelines. Some third-party inspections have been allowed and some government agencies are deferring inspections. Materials onsite are being sanitized. By contrast, due to the large number of coronavirus cases in New York and New Jersey, most private and public construction projects in those areas have been shut down. 
  1. Collaboration. Because the phrase “unchartered waters” does not begin to describe the impact that COVID-19 is having on construction projects, the best advice for prime contractors and subcontractors is to try to row in the same direction. This is no time for battles or disputes between general contractors and subcontractors. Prime contractors should ascertain the cash flow status of their subcontractors to determine whether they will be able to perform under the current revenue-starved environment. A key element for project success is that all parties need to work together to identify risks, loss of productivity, schedule impacts, supply chain issues, safety issues, etc. In fact, it has been perceived that many owners are being more forgiving on product substitutions and developing creative solutions to deal with impacts resulting from coronavirus delays – so take advantage of it while you can by being collaborative! 
  1. Liquidated Damages, Force Majeure, and Excusable Delays. How courts will interpret construction contract delay clauses, force majeure clauses and common law rights with respect to the delay impacts associated with COVID-19 remains to be seen, and it will likely be determined on a case-by-case basis. Because many courts are holding civil disputes in abeyance, immediate relief from the judicial system is unlikely. For this reason, as well as solid business judgment, it makes good sense for the parties to cooperatively engage in direct and timely discussions regarding how to proceed with construction and manage delay impacts in a mutually beneficial way. Issuance of change orders or schedule extensions may relieve some of the time and cost impacts. Prudent owners welcome timely notice because they can attempt to manage these issues and risks. Excellent communication is the key to identify problems. Deliver timely written notice and detailed substantive documentation, offer creative solutions, and try to manage the difficult circumstances together. Rather than pulling the trigger on default clauses, it is generally advisable to push across the project finish line and properly document all cost and time impacts. As we advised in the BMD Client Advisory on March 17th, the extent to which COVID-19 excuses or extends contractual obligation(s) is a fact-specific determination that will depend on the nature of the obligations and the specific language of the contract. 
  1. Project Financing. “Cash is king,” and if the availability of private and public funding is impaired, work may cease and sureties may be required to take over on payment and performance bonded projects. Conduct adequate due diligence before committing to business relationships. On an ongoing basis, be sure to request and receive adequate assurances of financial ability to pay whenever possible. 

Please feel free to reach out to Bob Hager, Justin Alaburda, David Scott, Jeff Miller, Steve Matasich or Brandon Pauley if you have any questions or comments on these issues. This is intended as general advice and should not be interpreted as legal advice. Each situation is unique and requires specific analysis of relevant contracts, facts and legal obligations.

New York, Kansas, Massachusetts, and Delaware Become the latest States to Adopt Full Practice Authority for Nurse Practitioners

While the COVID-19 pandemic certainly created many obstacles and hardships, it also created many opportunities to try doing things differently. This can be seen in the instant rise of remote work opportunities, telehealth visits, and virtual meetings. Many States took the challenges of the pandemic and turned them into an opportunity to adjust the regulations governing licensed professionals, including for advanced practice registered nurses (APRNs).

Explosive Growth in Pot of Gold Opportunity for Bank (and Other) Cannabis Lenders Driving Erosion of the Barriers

Our original article on bank lending to the cannabis industry anticipated that the convergence of interest between banks and the cannabis industry would draw more and larger banks to the industry. Banks were awash in liquidity with limited deployment options, while bankable cannabis businesses had rapidly growing needs for more and lower cost credit. Since then, the pot of gold opportunity for banks to lend into the cannabis industry has grown exponentially due to a combination of market constraints on equity causing a dramatic shift to debt and the ever-increasing capital needs of one of the country’s fastest growing industries. At the same time, hurdles to entry of new banks are being systematically cleared as the yellow brick road to the cannabis industry’s access to the financial markets is being paved, brick by brick, by the progressively increasing number and size of banks that are now entering the market.

2021 EEOC Charge Statistics: Retaliation & Impact of Remote Work

The U.S. Equal Employment Opportunity Commission (EEOC) released its detailed information on workplace discrimination charges it received in 2021. Unsurprisingly, for the second year in a row, the total number of charges decreased as COVID-19 either shut down workplaces or disconnected employees from each other. In 2021, the agency received a total of approximately 61,000 workplace discrimination charges - the fewest in 25 years by a wide margin. For reference, the agency received over 67,000 charges in 2020, and averaged almost 90,000 charges per year over the previous 10 years.

Ohio’s Managed Care Overhaul Delayed – New Implementation Timeline

At the direction of Governor Mike DeWine, the Ohio Department of Medicaid (ODM) launched the Medicaid Managed Care Procurement process in 2019. ODM’s stated vision for the procurement was to focus on people and not just the business of managed care. This is the first structural change to Ohio’s managed care system since the Centers for Medicare & Medicaid Services' (CMS) approval of Ohio’s Medicaid program in 2005. Initially, all of the new managed care programs were supposed to be implemented starting on July 1, 2022. However, ODM Director Maureen Corcoran recently confirmed that this date will be pushed back for several managed care-related programs.

Laboratory Specimen Collection Arrangements with Contract Hospitals - OIG Advisory Opinion 22-09

On April 28, 2022, the Department of Health and Human Services, Office of Inspector General (“OIG”) published an Advisory Opinion[1] in which it evaluated a proposed arrangement where a network of clinical laboratories (the “Requestor”) would compensate hospitals (each a “Contract Hospital”) for specimen collection, processing, and handling services (“Collection Services”) for laboratory tests furnished by the Requestor (the “Proposed Arrangement”). The OIG concluded that the Proposed Arrangement would generate prohibited remuneration under the federal Anti-Kickback Statute (“AKS”) if the requisite intent were present. This is due to both the possibility that the proposed per-patient-encounter fee would be used to induce or reward referrals to Requestor and the associated risk of improperly steering patients to Requestor.