Google Wins-Client Privilege Dispute, Court Finds Attorney Silent Communications Are Privileged

By Joshua D. Sussman, Esq.
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Email is now the preferred means of communication in the business world. Both within an organization, and between the organization and its third-party vendors, customers and others, virtually everyone emails. Sometimes, those communications are sent without much forethought. Not unexpectedly, a business’s email files have become a treasure trove for far-reaching and intrusive discovery in virtually any lawsuit or arbitration. It is not unusual for the proverbial “smoking gun” pivotal evidence to be found within one brief, spontaneous email communication from among terabytes of digital material. 

In response, some companies have adopted creative strategies to attempt to shield their routine emails from discovery production. One such example is highlighted by a recent antirust case that the U.S. Department of Justice commenced against Alphabet, Inc. and Google LLC, and raises the interesting legal issue of whether routine emails can be shielded from discovery simply by copying or “cc’ing” a lawyer.  

Generally speaking, the attorney-client privilege protects certain communications between a lawyer and their client that concern legal advice from being produced during discovery. However, can merely copying in-house general counsel on emails shield them from discovery production under the attorney-client privilege? 

A federal court Judge considered this issue in the context of a motion to sanction Google and to compel it to produce emails withheld on attorney-client privilege grounds under  its “Communicate with Care” program, which advised employees to add a lawyer as a recipient to emails. The DOJ argued that Google implemented the program so that it could assert the attorney-client privilege over those emails, thus shielding them from disclosure to an adverse party in a lawsuit even though the attorneys did not participate in the communications.  The Court  ordered Google to produce a random sample of emails for the Judge to review and inspect to determine whether Google properly asserted the privilege.

The U.S. Department of Justice argued it does not, and there is precedent to support their position. In Boca Investerings Partnership v. United States, 31 F.Supp.2d 9, 11 (D.D.C. 1998), the Court held that before the privilege applies it must determine whether the attorney was acting primarily in a professional legal capacity. If the attorney is being consulted on business decisions, those communications may not be privileged. Ultimately, “[a] court must examine the circumstances to determine whether the lawyer was acting as a lawyer rather than as business advisor or management decision-maker.” Id. 

After the Court’s inspection of the sample, the Court denied the DOJ’s motion to compel and for sanctions, but directed Google to re-review the remaining “silent-attorney emails” to determine whether are protected from disclosure. The transcript containing the Court’s decision is not yet available, but by denying the motion, the Court apparently found that sample contained emails where employees were seeking legal advice. If the Court had granted the DOJ’s motion and found that attorney-client privilege did not apply to the withheld emails, then the Court could have forced Google to produce some or all of the emails it sought to protect.

In the immortal words of coach Herm Edwards: “Don’t press send!” And if you are going to, think twice before you do, because once that email or text message is sent it may become the subject of litigation. 

Should you need the assistance of skilled and experienced counsel to assist you in litigation, do not hesitate to contact Joshua Sussman at jsussman@weisszarett.com.  

Beware the Risks of Taking Cryptocurrency as Collateral

By Mauro Viskovic, Esq.
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A lender who takes cryptocurrency as collateral for a loan must be careful to follow the specific requirements applicable to perfecting a security interest in crypto assets.  Otherwise, if the borrower ends up in bankruptcy, that lender would be deemed an unsecured creditor and possibly have no recourse for recouping any of its loan to the borrower.     

Article 9 of the Uniform Commercial Code provides instruction on how to perfect a security interest in loan collateral, however, the instructions are different depending on the type of asset provided as collateral.  The potential categories that crypto assets may fall under are: (1) money; (2) investment property; or (3) general intangibles.  

Cryptocurrency is not recognized as “money” under the UCC because it is currently not a form of currency authorized by a government.  The analysis of whether crypto assets would be deemed “investment property” is more complicated.  A crypto asset is not a “security” under the UCC if it is not an obligation of an issuer or an interest in the issuer.  However, it is possible that cryptocurrencies may nevertheless qualify as “investment property” under applicable provisions of the UCC if a securities intermediary and a customer agree that that the specific crypto assets are financial assets and those assets are held by the securities intermediary in a securities account.  If the crypto asset does not so qualify, then it would fall in to the catch-all “general intangibles” category.  

If the crypto asset is deemed an investment property, then the associated security interest is perfected by taking “control” of the asset.  Conversely, perfecting a security interest in general tangibles requires the mere filing of a UCC financing statement identifying the debtor and describing the collateral in the appropriate jurisdiction.  

For practical purposes, however, irrespective of the designation as investment property or general intangible, the lender should both take control of the crypto asset and file the UCC financing statement.  Control over the asset is critical because, once a crypto asset is sold on an exchange or elsewhere, a lender may not be able to track down the transferee (who may be anonymous and located overseas) to assert the lender’s rights to the assets under its lien.  Establishing control over a crypto asset can be accomplished by placing the crypto asset in a digital wallet controlled by the lender and held there until full repayment of the loan.  

As cryptocurrencies continue to increase in value and become more common, more borrowers will seek to pledge those assets as loan collateral.  Accordingly, lenders who accept such collateral will need to ensure that they take the necessary steps to be deemed a secured creditor with respect to such crypto assets.  Should you have any questions or require assistance with the loans secured by crypto assets, please contact Mauro Viskovic at 516-751-6537 or mviskovic@weisszarett.com.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a New York law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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DOCTORS WIN BIG IN THE COURT OF APPEALS – COURT SETTLES DISPUTE OVER MLMIC SALE PROCEEDS

By Michael J. Spithogiannis, Esq.
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The New York Court of Appeals, by a unanimous bench, decided a question that has been highly contested throughout New York State emanating from the sale and demutualization of Medical Liability Mutual Insurance Company (“MLMIC”), a mutual insurance company in the business of issuing medical malpractice policies to doctors and other medical professionals throughout the State.

The Court of Appeals decided the issue in favor of the policyholders – the medical professionals.  Among the cases decided was Columbia Memorial Hospital v. Hinds, where Weiss Zarett represented Dr. Marcel Hinds, and Seth A. Nadel, Esq. argued the case to the Court of Appeals on April 20, 2022.

When MLMIC was sold in 2018, the sale generated approximately $2.5 billion.  The question became: who was entitled to this money – the so-called cash consideration?  Employers – hospitals and medical practices – argued that they, not the policyholders, were entitled to the money, because they paid the premiums.  Their argument was simple:  they paid the premiums, they are entitled to the money.  Policyholders argued that under the governing provision of the Insurance Law, they were entitled to the money; employers merely paid the premiums because they had agreed to under their employment agreements.  Litigation ensued.  

The Court of Appeals determined that under New York’s Insurance Law the employee is the policyholder and an owner of the company, and that, absent contrary terms in an employment contract, insurance policy, or separate agreement, the employee – not the employer – is entitled to the sale proceeds.  

The Court of Appeals soundly rejected the employers’ primary argument that they are entitled to the proceeds simply because they paid the premiums.  The Court was clear:  insurance premiums were not paid by employers gratuitously, but because they were contractually obligated to do so under employment agreements.  Moreover, premiums were paid for the cost of coverage only, not for an ownership interest in MLMIC.  Under the Insurance Law, MLMIC was owned by the policyholders, and there was nothing unjust or inequitable about paying them the cash consideration.

Almost four years after MLMIC’s demutualization, and against a backdrop of conflicting decisions among New York courts, the Court of Appeals has conclusively settled the issue.

A copy of the decision from the Court of Appeals may be found here.

Weiss Zarett represents numerous physician-policyholders in MLMIC disputes, as well as a variety of other legal matters affecting physicians, medical practices, and health-related businesses. If you have any questions about the MLMIC demutualization, please reach out to David A. Zarett, Esq. at dzarett@weisszarett.com or 516-627-7000.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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New York Court Awards Attorney’s Fees To A Patient Sued By a Physician for Defamation Based on a Negative On-Line Review

By David A. Zarett, Esq.
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Given the ever-increasing prevalence of social media websites which “rate” physicians (such as Zocdoc and Yelp), it is not unusual for a disgruntled patient to post a negative review regarding a particular doctor. Understandably, any negative review creates consternation for physicians, who fear that the adverse publicity will interfere with their ability to retain and attract patients.  This Legal Alert considers the risks physicians might face if they elect to sue patients who publish a negative review given recent changes to the New York anti-SLAPP law.

Unfavorable patient reviews are, unfortunately, becoming a way of life for physicians. Many times, a physician will explore alternatives to neutralize a negative posting.  One alternative would be to review the social-media website’s internal policies, which typically contain a process for removing or at least challenging the adverse review under certain delineated circumstances. This alternative sometimes proves successful, but discussion here is beyond the scope of this Legal Alert.  A physician might also consider commencing a lawsuit against the web-based, social-media platform for “publishing” the allegedly false posting – which is typically unsuccessful given federal protections available under Section 230 of the United States Communications Decency Act. Discussion of that subject is also beyond the scope of this Legal Alert. 

In either case, the physician must take great care to assure patient confidentiality at all times.    

A third alternative, which is the subject of this Legal Alert, is for a physician to sue the disgruntled patient who posted the negative review, under a legal theory of defamation, libel, or something similar.  Such was the case in a recent lawsuit in the New York State Supreme Court, New York County, Great Wall Medical P.C., et al. v. Michelle Levine(Index No. 157517-2017). (Click here for a copy of the case).

The interesting lesson here is that the Court in Great Wall Medical not only dismissed the physician’s defamation claims, but awarded attorney’s fees to the defendant-patient based upon recent changes to New York’s anti-SLAPP law (Strategic Lawsuit Against Public Participation). Civil Rights Law Section 76-A.  Ruling in favor of the patient defendant, the court recognized that the anti-SLAPP law was designed to protect individuals from lawsuits when they engage in public petition or communicate in a forum open to the public. Finding that the defendant-patient’s statements – the negative social media postings – fell within the broad reach of the statute, which the Court applied retroactively, the Court dismissed the plaintiff-physician’s complaint. The Court found that the plaintiff-physician failed to demonstrate by clear and convincing evidence that the defendant-patient made the statements (i.e., the negative postings) knowing that they were false or with reckless disregard with respect to whether the statements were false. The Court also held that the actual malice standard must be determined subjectively, from the perspective of the patient making the statement. While each case in this area of law is fact-specific, the bottom line is that the Court applied a legal standard that was difficult for the physician to overcome.  

More significantly, the Court held that the defendant-patient was entitled, under recent amendments to the statute, to an award of costs and attorneys’ fees for defending the lawsuit (which would not be available to a defendant in an ordinary defamation action).

This case reflects that courts may give a great deal of latitude to patients making complaints on social media, and that whenever a physician considers taking action resulting from a negative patient review, great care should be given to assess whether such action could survive a legal challenge, given the strict legal standard applicable under the recent antiSLAPP suit amendments. Failing to do so may not only result in prompt dismissal of the physician’s case, but may also open the physician up to potential liability for the patient-defendant’s attorneys’ fees. 


Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a New York law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, employment counseling and controversies, litigations, arbitrations and administrative proceeding representation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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AVOID LITIGATION DISASTER – KNOW THE LAW

By Michael J. Spithogiannis, Esq. & Floyd Grossman, Esq.
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Federal and state governments regularly pass laws to protect consumers.  It is up to private businesses to adapt. This requires a thorough, well-counseled understanding of legislative objectives. Two recent foreclosure cases illustrate how common sense and extra postage might have averted litigation disaster for the lender.

The Home Equity Theft Prevention Act was New York’s response to the subprime lending crisis and the resulting cascade of foreclosures threatening to dispossess millions from their homes. The Legislature found that between default and foreclosure sale, homeowners in financial distress, especially the poor, elderly and financially unsophisticated, were vulnerable to unscrupulous equity poachers who fraudulently induced homeowners to sell off or sign away their homes for a fraction of their value.  The law now requires lenders, before starting foreclosure proceedings, to give 90-days’ written notice to defaulting borrowers, by registered or certified mail and by first-class mail, advising them that they risked losing their homes and of available government-approved housing counselors and financial services.  The statute also requires that the notice be sent in an envelope separate from any other mailing or notice, and must include specific language from the statute.

These requirements appear straight-forward, and one might not think they could provoke years of litigation, but they have.

On September 29, 2021, the Appellate Division, Second Department, decided Wells Fargo Bank, N.A. v. Yapkowitz, 199 A.D.3d 126 (2d Dep’t 2021), where a foreclosure, commenced in 2013, was dismissed because the lender’s required pre-foreclosure notice did not comply with the statute.  The borrowers, married individuals, defaulted on a $532,000.00 mortgage loan.  In defense, the borrowers argued that their lender failed to provide the proper pre-foreclosure notice.  The lender had sent one notice addressed to both borrowers, rather than notice to each borrower separately.  To be sure, the envelope did name both borrowers, and was sent to the correct address by first-class mail and by certified mail signed for by one of the borrowers

The lender maintained that the statute’s use of the word “borrower” in the singular meant that only one notice was necessary even if there was more than one “borrower.”  The lender also argued that the court should presume the borrower who signed for the mailing, informed the other of the notice.  

The Second Department agreed with the borrowers, with one Justice dissenting.  The Court held that the statute required strict compliance and focused on the Legislature’s intent to provide greater protections to homeowners facing impending foreclosure.  Moreover, the statute’s legislative purpose would be subverted if it was left to the one borrower who happens to sign for the envelope to notify the others.  Therefore, a separate mailing to each borrower was required.  

On December 15, 2021, the Second Department decided Bank of America, N.A. v. Kessler, 2021 N.Y.Slip.Op. 06797, ___ A.D.3d ___ (2d Dep’t 2021).  In 2014 the lender brought an action to foreclose a $590,302.00 mortgage.  The Court considered the provision of the statute which states that the notice “shall be sent . . . in a separate envelope from any other mailing or notice.”  Id. at *5.  The lender had seen fit to add information to the form notice adopted by the Legislature.  A majority of the Court concluded that the lender failed to strictly comply with the statute, and affirmed dismissal of the foreclosure.  

In both cases, the Court’s majority and dissenting Justices provided reasoned and thorough legal analyses.  But the more vexing question is why the lender in Yapkowitz decided it was proper to send the notice to both borrowers in one envelope rather than sending separate notices, or why the lender in Kessler decided to deviate from the Legislature’s prescribed language for the notice.  Certainly both lenders and their respective loan servicers – presumably sophisticated, experienced and well-counseled business entities – knew the 90-day notice was a statutory pre-condition to foreclosure, and that the statute’s purpose was to protect homeowners in economic crisis.  So too, foreclosure has historically been an equitable remedy, and courts have in general required strict compliance with statutory prerequisites before dispossessing homeowners.  

Knowing these factors should have made it clear to the lender in Yapkowitz that separatenotice to each borrower was necessary.  So too, had the statutory language been adopted, without deviation, the lender in Kessler would likely have been compliant.  If the lender did want to provide additional information to the borrower, it should have simply sent a separate mailing.  In both cases, the extra postage would have been well worth it.

These cases illustrate how ordinary business decisions made long before litigation ensues could result in years of unsuccessful litigation, and emphasize the importance of understanding the purpose of any statute, consequences of non-compliance, and need to implement well-counseledbusiness practices to avoid litigation disaster.


Michael J. Spithogiannis, Esq. and Floyd G. Grossman, Esq. each have over 35 years’ experience litigating commercial and real-property disputes in state and federal courts throughout New York.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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Weiss Zarett Wins Commercial Eviction

By Joshua D. Sussman, Esq., Michael D. Brofman, Esq.Michael J. Spithogiannis, Esq.

On January 26, 2022, the Supreme Court, County of Queens granted the Firm’s client a final judgment of possession and a warrant of eviction to evict a commercial holdover tenant that abused the eviction moratorium to overstay its welcome. The Firm’s victory, led by Joshua Sussman, is believed to be among the first for landlords since the commercial eviction moratorium ended on January 15, 2022.

Should you need the assistance of skilled and experienced counsel to assist you in litigation, do not hesitate to contact Joshua Sussman at jsussman@weisszarett.com, Michael Brofman at mbrofman@weisszarett.com, and Michael Spithogiannis at mspithogiannis@weisszarett.com.

Beware the Consequences of Worker Misclassification

By Mauro Viskovic, Esq.
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In violation of myriad applicable laws, many businesses will often hire workers as independent contractors, rather than employees.  The worker classification determination is often made without a thorough analysis of the applicable factors to be used for making the correct classification and without regard to the potential penalties and consequences for improperly classifying an employee as an independent contractor. 

As an initial matter, the fact that both the business and worker agree on an independent contractor relationship does not matter – even if the parties enter into a contract documenting such relationship.  There are various worker classification tests and factors under federal and state laws, of which a full explanation is beyond the scope of this article, but the primary focus areas are the degree of control that the business has over the worker and the degree to which the worker is economically dependent upon the business.  

A common reason that a business would wish to classify a worker as an independent contractor is to avoid the costs associated with hiring an employee.  A business is not required to withhold income tax, pay social security and Medicare taxes, pay unemployment compensation taxes or provide worker’s compensation insurance for independent contractors.  Independent contractors are not subject to minimum wage or overtime pay requirements.  Moreover, independent contractors are not eligible to participate in employer sponsored health plans and retirement plans.

Such cost savings, however, are miniscule and insignificant compared to the potential penalties and related consequences of misclassifying a worker as an independent contractor.  The Internal Revenue Service may pursue monetary penalties that include being subjected to as much as 41.5% of the worker’s wages going back 3 years.  If the IRS thinks you intentionally misclassified workers, they can seek a criminal conviction that may include jail time.  In addition to federal and state back taxes and penalties, the business will also owe state unemployment taxes and unpaid worker’s compensation premiums, and may owe unpaid overtime or minimum wages, medical expenses and unpaid vacation and sick pay.  

Government enforcement, however, is not the only risk. Large companies that use independent contractors to supplement their regular workforce or that operate on an independent contractor business model (such as Uber) are increasingly being targeted in class-action lawsuits brought on behalf of workers who are allegedly misclassified as independent contractors.  Certain corporate officers may be held personally liable for plaintiff awards in such lawsuits, as well as for the employment taxes and penalties described above.

In addition, recently terminated workers and workers injured on the job are likely to retain attorneys and sue for unpaid overtime or for payment of medical expenses on the ground that they should have been classified as employees, not independent contractors. Note that when an individual files a claim for Worker’s Compensation and the state board rejects the employer‘s defense that the worker was an independent contractor, if the employer does not have Worker’s Comp insurance, it will not only be hit with a penalty for failing to maintain insurance but will also be ultimately liable on the underlying Worker’s Compensation award to the individual.  

Federal and state authorities are actively and aggressively pursuing enforcement actions related to worker misclassification.  Accordingly, businesses should thoroughly review their independent contractor arrangements.  Should you have any questions or require assistance with the proper classifying – and the appropriate documenting of same – of your business’s workers, please contact Mauro Viskovic at 516-751-6537 or mviskovic@weisszarett.com.


Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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Weiss Zarett Defeats Motion To Dismiss Fraudulent-Conveyance Complaint

By Michael J. Spithogiannis, Esq.
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Fundamentally, a judgment is a decree determining a lawsuit. If the plaintiff is awarded damages, the judgment will direct the defendant to pay. If the defendant refuses, it’s up to the plaintiff to find assets to seize. But what if the defendant hid or transferred assets to avoid paying? 

New York’s Debtor and Creditor Law allows creditors to void certain asset transfers deemed fraudulent. Also, while a judgment against a corporate entity with no assets is usually worthless, a judgment creditor may, under circumstances where corporate formalities have not been followed, pierce the corporate veil and look to the assets of the company’s individual owners. So too, under the de facto-merger doctrine, if the debtor tries to avoid paying by closing up shop and opening under a new name, the creditor may, if certain factors are present, enforce the judgment against the successorentity. 

Years ago, a dispute arose almost immediately after the parties signed a 15-year, commercial lease for ground-floor premises in a six-story building owned by Weiss Zarett’s client in the Washington Heights section of Manhattan. 

The tenant, a corporation in the business of selling building material, hardware, and plumbing supplies, entered the then-vacant premises and caused severe structural damage. The landlord sued, and after years of hard-fought litigation and a seven-day bench trial, the landlord was awarded a judgment for its damages. 

In subsequent proceedings to enforce the judgment, evidence was uncovered indicating that the tenant systematically transferred assets to render itself judgment proof.  Weiss Zarett sued on the landlord’s behalf to set aside these transfers as fraudulent. The tenant’s principals were also sued, as was a newly formed entity believed to have been created to take over the tenant’s assets and business operations.  The defendants filed a pre-answer motion to dismiss the case. On December 21, 2021, the Supreme Court, New York County, denied the defendants’ motion, sustaining all causes of action.


Weiss Zarett’s tenacious representation may yet result in the judgment’s satisfaction, despite efforts to frustrate enforcement.

If you require legal representation in connection with a business or real-estate dispute, please feel free to contact Michael J. Spithogiannis, Esq. at mspithogiannis@weisszarett.com or call our office at 1-516-637-7000 and ask to speak with one of the attorneys in our Litigation Department.

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NYC MANDATES VACCINATION FOR PRIVATE EMPLOYEES

By Jessica Woodrow, Esq.
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On December 13, 2021, the Commissioner of the New York City Department of Health and Mental Hygiene issued an emergency Order mandating Covid-19 vaccination for private employees pursuant to Section 3.01(d) of the Health Code and Sections 556 and 558 of the New York City Charter. The emergency Order requires covered businesses to generally exclude their unvaccinated workers in New York City starting December 27, 2021. Whereas previous mandates applied primarily to city employees and individuals working with children and other vulnerable populations (including physicians and other health care workers), the new Order now applies to any “non-governmental entity that employs more than one worker in New York City or maintains a workplace in New York City.” The mandate also applies to solo practitioners who work in shared workspaces or interface with the public. The Order, which permits “reasonable accommodations for medical or religious reasons,” will remain in effect until rescinded, amended, or modified by the Board of Health.

Beginning December 27, 2021, workers must provide proof of vaccination against Covid-19 to their employer before entering the workplace. The covered employer must exclude from the workplace any worker who has not provided such proof, except for individuals working from home who do not interact with co-workers or the public, individuals entering the workplace “for a quick and limited purpose,” and non-city residents who are performing artists or college or professional athletes as defined under the “Key to NYC” program rules. Under the Order, a “worker” is defined as a “full- or part-time staff member, employer, employee, intern, volunteer or contractor of a covered entity, as well as a self-employed individual or a sole practitioner.” The order does not apply to employers or individuals who are already subject to another Order of the Department, the Board of Health, the Mayor, or any State or federal entity that is currently in effect and requires the entity to maintain or provide proof of full vaccination, or to individuals who have been granted a reasonable accommodation pursuant to another Order.

Covered employers are required to verify all workers’ proof of vaccination and/or record of reasonable accommodation, maintaining a record of each worker’s name, whether the worker is fully vaccinated, and the basis for any reasonable accommodation with supporting documentation. For contractors and other non-employee workers, the covered entity may instead request that the worker’s employer confirm the proof of vaccination, but must maintain a record of the request and confirmation. Upon request by any City agency, the covered employer must produce these records for inspection. Records created or maintained pursuant to the Order must be treated as confidential by the covered employer. No later than December 27, 2021, covered employers must affirm compliance using a form to be provided by the Department and must post the affirmation conspicuously.

The stated purpose of the new vaccine mandate is to take action to reduce the transmission of Covid-19 as necessary “for the health and safety of the City and its residents… to protect the public health against an existing threat.” The decision to issue the Order was based in part on a study by Yale University, which “demonstrated that the City’s vaccination campaign was estimated to have prevented approximately 250,000 Covid-19 cases, 44,000 hospitalizations, and 8,300 deaths from Covid-19 infection since the start of vaccination through July 1, 2021.” The Department found that “between January 1, 2021, and June 15, 2021, over 98% of hospitalizations and deaths from Covid-19 infection involved those who were not fully vaccinated.”


Jessica Woodrow is an Associate Attorney in the litigation and administrative proceedings practice group, handling matters involving all aspects of civil litigation with a primary practice focus on healthcare law. She can be reached at jwoodrow@weisszarett.com or 516-627-7000.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a New York law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, employment counseling and controversies, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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HEALTHCARE FRAUD: SELF-DISCLOSURE PROTOCOL UPDATE

By Mathew J. Levy, Esq.
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What is healthcare fraud? There are the obvious cases of greed, such as physicians billing for fictitious patients, services never performed, and the rendering of unnecessary medical procedures.  However, there is more to healthcare fraud than the obvious. This includes widely practiced rule-bending to assist patients, such as exaggerating either the severity of a patient’s condition, changing a patient’s billing diagnosis, or reporting signs or symptoms that a patient did not have to help the patient secure coverage for needed care.  Recent events make clear that these infractions can result in serious legal issues. The truth is that even well-meaning practitioners who bend the rules are placing their careers, and indeed their very freedom, at risk. 

On November 8, 2021, for the first time since 2013, the United States Department of Health & Human Services Office of the Inspector General (OIG) made substantive revisions to its Self-Disclosure Protocol (SDP).

The SDP – now officially known as the “Health Care Fraud Self-Disclosure Protocol,” pursuant to the recent updates – is intended to allow providers to voluntarily disclose evidence of fraud or improper billing practices to avoid the costs and business disruptions associated with government investigations and possible litigation. In other words, if a provider discovers that it has been previously reimbursed for claims which it knows or should have known to be legally improper (such as claims involving upcoding, overbilling, violations if the Anti-Kickback Statute, and others), it can choose to voluntarily disclose the impropriety in the interest of a more expedient and favorable resolution rather than wait for the government to discover, investigate and possibly sanction the provider.

list of recent enforcement actions on OIG’s website illustrates just some of the types of claims which are commonly the subject of disclosures. In several cases, providers paid penalties  based on having disclosed that they employed individuals they knew or should have known were excluded from the Medicare or Medicaid programs. Other settlements came about as a result of disclosing instances of upcoding, billing for services provided by unlicensed individuals, or submitting claims for incident-to services not covered by Medicare. In one instance, a durable medical equipment company was required to pay $7.1 million for dispensing equipment from unenrolled locations while representing the services were being performed at a different enrolled location.

Other than alleviating the anxiety inherent in knowing that a possible government enforcement action could strike at any time, the self-disclosure process has several notable benefits for providers which avail themselves of it. One key benefit is that penalty calculations in SDP cases tend to be lower than in other government enforcement actions. Although there is no firm standard, the government’s general practice is to require damages in a minimum amount of 1.5 times the actual damage rate (i.e. the amount of the improper claims), whereas the False Claims Act and Civil Monetary Penalties Law can authorize up to triple damages in other cases. Providers who self-disclose also enjoy a presumption by OIG that they will not be required to enter into a Corporate Integrity Agreement, and a suspension of the provider’s requirement to report and return overpayments under CMS regulations until a settlement of the disclosed matter is reached.

For 2021, there are several notable updates to the SDP. First, as mentioned, is the name, which has been amended to “Health Care Fraud Self-Disclosure Protocol” (previously the “Provider Self Disclosure Protocol”), presumably to clarify that the protocol applies to any “person,” rather than merely providers. OIG also published updated statistics, showing that between 1998 and 2020, OIG resolved over 2,200 disclosures, resulting in over $870 million in recoveries to the federal healthcare programs.

To focus its enforcement efforts and more efficiently allocate OIG’s resources, the 2021 updates also provide for higher minimum settlement amounts required to resolve matters which come about as a result of SDP disclosures. Previously, resolutions under the SPD required minimum settlements of $50,000 for disclosed violations of the Anti-Kickback Statute, and $10,000 for all other violations. Under the 2021 updates, the minimum settlements for both have been doubled, to $100,000 and $20,000, respectively.

The 2021 updates also brought several logistical changes to the SDP process. Whereas previously the self-disclosing party could submit an SDP either by mail or through OIG’s online portal, all disclosures must now be sent through the portal. There is also a new requirement that the self-disclosing party must identify the estimated damages to each federal healthcare program as well as the sum of all estimated damages. The updates further clarify additional requirements for use of the SDP for entities subject to existing Corporate Integrity Agreements, and require the disclosing party to state that it is subject to a CIA, and send a copy to the party’s assigned OIG monitor.

Finally, the 2021 updates also contain minor changes to the provision regarding OIG’s coordination with the United States Department of Justice (DOJ) in civil and criminal matters. Unfortunately, although the SDP can be a useful mechanism for more favorably resolving civil matters involving false claims, and while OIG may advocate for leniency from DOJ based on a party’s self-disclosure, use of the SDP does not preclude a related civil investigation by DOJ unless DOJ chooses to participate in any resulting settlement. This has not changed with the 2021 update. However, the language of the SDP with respect to criminal matters has been amended to reflect that OIG no longer “encourages” parties to disclose potential criminal conduct, but that OIG will no longer advocate for a benefit in any prospective criminal matter based on the disclosing party’s use of the SDP. In other words, OIG seems committed to leaving criminal matters to the DOJ, and a provider cannot rely on its use of the SDP to mitigate the consequences of any potential criminal conduct.

A full copy of the updated SDP may be found on OIG’s website here.

The healthcare attorneys at Weiss Zarett routinely assists physicians in connection with OIG self-disclosure protocols, audits and investigations by governmental agencies and third-party payors, as well as investigations by state and federal law enforcement agencies such as DOJ and New York Medicaid Fraud Control Unit. If you have any questions or require assistance with such a matter, please feel free to reach out to Mathew J. Levy, Esq., at 516-929-3320 or email: mlevy@weisszarett.com.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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WEISS ZARETT WINS REVERSAL ON APPEAL AND DISMISSAL OF TORTIOUS-INTERFERENCE CLAIMS

By Michael D. Brofman, Esq. & Michael J. Spithogiannis, Esq.
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Imagine winning litigation after being a defendant in a contract dispute and then having the plaintiff start another suit arising out of the same contract but on a different theory.  That is essentially the issue that Weiss Zarett faced recently in its appeal to the Appellate Division Second Department.  The matter in question arose from two cases in the Supreme Court Nassau County.  In the first case, the plaintiff sought to foreclose on a mortgage arising out of a joint- venture agreement.  Weiss Zarett represented the new owner of the commercial real property in question, which it purchased after the foreclosure litigation had commenced.  Weiss Zarett successfully intervened for the new owner in  the pending foreclosure action and asserted a counterclaim to quiet title.  Ultimately, on appeal, the underlying foreclosure action was dismissed, and a judgment was entered in favor of the new owner cancelling and discharging  the mortgage of record.  Immediately thereafter, plaintiff again sued the same joint-venture parties under the same joint- venture agreement and added the new owner as a defendant, asserting  that it tortiously interfered with the joint venture agreement. The new case was assigned to a different Supreme Court Justice.  Weiss Zarett moved to dismiss the case as to the new owner, on the grounds (among others) that the plaintiff could not split its causes of action and was barred from asserting claims it could have asserted in the first action. The Supreme Court  denied the motion to dismiss. On appeal, the Appellate Division, Second Department, reversed and dismissed the case as to Weiss Zarett’s client, effectively reminding parties that they can’t have two bites at the apple!

Should you need the assistance of skilled and experienced counsel to assist you in litigation arising from commercial real estate transactions, do not hesitate to contact Michael D. Brofman, Esq. at mbrofman@weisszarett.com and Michael J. Spithogiannis at mspithogiannis@weisszarett.com.

Courts Enforce Contracts As Written – Except Sometimes

By Michael J. Spithogiannis, Esq. & Floyd Grossman, Esq.
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A lawsuit is the last thing you would expect when signing a real-estate contract.  And if litigation does ensue, you would expect a court to follow established rules of contract interpretation and hold the parties to what they signed.  Here we examine a recent court decision which seems to disregard a basic rule of contract law: a court determining the intent of contracting parties should not look to any evidence outside the contract unless the writing is unclear.

Last year, the Appellate Division, Third Department, decided Prendergast v. Swiencick,[1] based on what the Court perceived was a common practice in residential real-estate sales rather than enforcing the contract as written.  

By statute in New York, all that is necessary to create a binding enforceable real-estate contract is a signed writing clearly describing the property, and specifying the sales price.  There are, however, many other issues covered by real-estate contracts: closing date; how the purchase price will be paid; mortgage-loan contingency; title issues; defaults.  Indeed, many pertinent issues are addressed to reflect clearly the intent of the parties without having to rely on anything outside the contract to determine what they meant.

If the parties’ full intent is ascertainable from the contract, considering evidence outside the writing – parol evidence – is not permitted to explain what the parties meant. Parol evidence can be in the form of oral or written communications evidencing how business was done in the past, or a common practice under similar circumstances.  But here’s the key: only if a court decides, in the first place, that the writing is unclear, may parol evidence be considered.  Although this is a bedrock principle of contract interpretation, we find examples where the rule has been disregarded or overlooked.  

In Prendergast, the seller sued her buyer under a written contract for failing to close on the agreed-upon closing date.  The buyer argued she was not required to close, because mortgages against the property had not been satisfied.  The buyer argued that under their contract the seller was required to deliver title on the closing date free from all mortgages. 

The seller argued that, even though the mortgages were unsatisfied, the buyer’s interests could have been protected.  To this point, the seller made arrangements to satisfy the mortgages by using the buyer’s purchase money, after which the lenders would issue satisfactions for recording.  Indeed, part of the service a title-insurance company can provide is to attend the closing, verify the amounts owed to lenders, pick up checks to satisfy the mortgages, deliver payment to lenders, and obtain mortgage satisfactions.  A title insurer could then insure the buyer’s title as of the closing date, even if the mortgages were satisfied after closing.  These procedures are indeed common practice in real-estate closings.  Accordingly, the sale could have been completed even though the seller did not comply with the contract. 

But the contract had no requirement that the buyer purchase title insurance or avail herself of a title company’s closing services.  

Was the buyer compelled to follow this common practice even though the contract itself did not require her to do so?  Who breached the contract?  Was it the seller who failed to satisfy existing mortgages? Was it the buyer who refused to tender the purchase price, buy title insurance, or consent to post-closing satisfaction of the mortgages?

In Prendergast, four out of the five Justices ruled in favor of the seller, concluding that the buyer could not refuse to close.  The Court reasoned that the parties used a standard-form, real-estate contract, which “reflect[ed] the  parties’ intent to embrace the common practice over the years in the real-estate closing realm” with respect to existing mortgages.[2]  In other words, the buyer was found to have agreed to something that was  not actually stated in the contract.  Not only did the buyer forfeit her down payment, but she was held liable for the difference between the contract price and the lower price the seller received from a subsequent buyer.

What is troubling is that the Court’s majority did not first find any ambiguity in the contract, which would have justified considering parol evidence.  

One Justice dissented, pointing out that the majority did not find the contract ambiguous, needing clarification. Moreover, he did not agree that the “standard form real estate contract necessarily incorporate[d] the common practice in the real estate industry such that those practices are given more weight than the language of the contract itself.”[3]  He opined that the contract’s express terms should control even if common practice might have facilitated the transfer of title.  He concluded that the seller was in breach.  

Whether the majority’s decision to rely on parol evidence without first deciding that the contract was ambiguous is simply an anomaly or heralds a departure from long-established, contract-interpretation principles remains to be seen.  So far, no courts have cited Prendergast as authority for the point discussed.

If there be a moral to our story, it is that real-estate contracts – indeed, all contracts – should be carefully considered, negotiated and drafted so as to avoid – as far as practicable – unintended consequences.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.

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[1] 183 A.D.3d 945 (3d Dep’t 2020).

[2] 183 A.D.3d, at 947 (emphasis added).

[3] 183 A.D.3d, at 954.