Weiss Zarett & the PAP (Physician Advocacy Program)

Weiss Zarett will continue to offer the PAP (Physician Advocacy Program) for 2023 and we will be providing the same services. The 3 programs offered by the 2023 PAP are as follows:

Premium Program

  • $999 per year 
  • Legal representation in connection with a matter before the OPMC, OPD, OMIG, MAC, OIG, QIO, OSHA or OCR.  
  • Providers WITH administrative coverage from their insurance company will receive legal representation pursuant to the PAP without additional cost until the later of the following: (1) the limits of the administrative coverage under their insurance policy are reached; or (2) through the initial interview/appearance before the applicable governmental authority.
  • Providers WITHOUT administrative coverage from their insurance company receive legal representation without additional cost through the initial interview/appearance before the applicable governmental authority.
  • Legal representation pursuant to the PAP does not include subsequent services during any hearing process following the initial interview/appearance. 
  • FREE review of your medical records by a certified coder and a conference call to discuss.
  • FREE 30-minute consultation on ANY legal matter within the scope of practice of Weiss Zarett.    

Comprehensive Program

  • $699 per year 
  • Legal representation in connection with a matter before the OPMC, OPD, QIO, OIG, OSHA or OCR. 
  • Providers WITH coverage from their insurance company will receive legal representation pursuant to the PAP without additional cost until the later of the following: (1) the limits of the administrative coverage under their insurance policy are reached; or (2) through the initial interview/appearance before the applicable governmental authority.
  • Providers WITHOUT administrative coverage from their insurance company receive legal representation without additional cost through the initial interview/appearance before the applicable governmental authority.  Legal representation pursuant to the PAP does not include subsequent services during any hearing process following the initial interview/appearance.  
  • *Please note that the Comprehensive Program does NOT include a review of your medical records, a conference call between you and the coder and no 30-minute call. 

Basic Program

  • $399 per year 
  • Legal representation in connection with a matter before the OPMC or the OPD.
  • Providers WITH administrative coverage from their insurance company will receive legal representation pursuant to the PAP without additional cost until the later of the following: (1) the limits of the administrative coverage under their insurance policy are reached; or (2) through the initial interview/appearance before the applicable governmental authority.  
  • Providers WITHOUT administrative coverage from their insurance company receive legal representation without additional cost through the initial interview/appearance before the applicable governmental authority.  Legal representation pursuant to the PAP does not include subsequent services during any hearing process following the initial interview/appearance.  
  • *Please note that the Basic Program does NOT include a free review of your medical records by a certified coder and a conference call to discuss the findings related to your documentation and coding or representation in connection with matters before QIO, OIG, OSHA, OCR, MAC or OMIG, or the annual 30-minute consultation. 

If you are interested in enrolling in the 2023 PAP or have any questions, please contact Mathew Levy, Esq. at 516-926-3320 or MLevy@weisszarett.com.

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Key Considerations When Selling Your Health Care Practice to a Private Equity Firm

By Mauro Viskovic, Esq.
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Private equity investments in health care continue to trend rapidly upward. $151 billion of private equity capital surged into healthcare globally the past year, more than double the prior year, and more than seven times the volume of investment ten years ago.  In light of these developments, health care practices planning to sell to a private equity firm need to understand the important considerations in advance to ensure that the terms of the sale transaction are appropriate, legally compliant and in the best interest of the practice owners.

Below are 5 key issues practice owners should focus on when negotiating a private equity sale

1. Practice Value and Purchase Price:  

In order to maximize the purchase price from the sale of a healthcare practice, practice owners must learn and understand how private equity firms are valuing their business.  The price is usually determined using multiple of the practice’s earnings but the private equity’s incentive to invest in the practice is primarily based on the practice’s future revenue prospects, contracts, and potential intellectual property or proprietary processes.

Upon determining the amount of the purchase price, the next step is agreeing on how the purchase price will be paid.  Practice owners should seek to have all or a vast majority of the purchase price to be paid in cash.  Most deal, however, include equity in a buyer-affiliated company as part of the purchase price.  A transaction with an equity component will require a due diligence review of the entity that is issuing the equity.  Practice owners should also negotiate for full and immediate vesting of the equity with limited forfeiture provisions in only extreme circumstances.  

Some transactions will provide that a portion of the purchase price will be delayed after closing, for a period of 3-5 years.  If the buyer entity providing the promissory note for this debt component of the transaction is a mere shell entity with no assets, then practice owners should seek some form of security, such as a guarantee from the private equity firm or an affiliate of the private equity firm that has substantial assets and revenue prospects.  

2. Transaction Structure and Compliance with Health Care Laws:

More so than most other industries, health care is subject to a myriad of regulations which requires that the practice owner and private equity firm agree on a structure that is both mutually beneficial and compliant with all applicable laws.  In the State of New York, a primary regulatory consideration to be considered when determining how to structure a physician practice acquisition is the prohibition against the “corporate practice of medicine”. The overall purpose of this prohibition is to prevent non-physicians from interfering with a physician’s medical judgment. Accordingly, the rule prohibits non-physician owned business entities, from owning a medical practice.

To comply with laws against the corporate practice of medicine, private equity firms often use a management or administrative services organization, commonly referred to as an “MSO.” An MSO is paid a fee for providing non-professional services to a medical practice, but does not interfere or otherwise exert control over the professional aspects of the health care practice. Please see our firm’s past article on this subject, “Understanding Private Equity Transactions In Healthcare”, for a fuller explanation of the role of MSOs in health care transactions with private equity firms.    

3. Control of the Practice:

With respect to the control of the practice after closing, the private equity firm focuses on the business side of medicine and leaves the clinical decisions to the doctors. It is not unusual, however, for private equity firms to seek physician representation  among the directors and officers of the practice entity.  As such, practice owners should be prepared to negotiate strong protections with respect to all clinical decision-making authority.  This can include negotiating a requirement that existing management will stay in place and have representation with respect to the management of the MSO that will be assuming the administrative operations of the practice post sale.  Note, however, that even in situations where pre-sale management is retained, the private-equity firm may demand rights to allow it to take control of the practice if it is performing poorly. Several scenarios can trigger such action, including breaches of financial covenants in financing arrangements, failure to meet specified financial thresholds, material breaches of the MSO agreement, and more. Practice owners must carefully examine these clauses to ensure their interests are maintained

4. Post-Transaction Compensation:

In many private equity acquisitions of health care practices, there is a substantial compensation reduction for the physician-owners selling the practice. The private equity firm typically compares the median compensation for physicians in that region with what the physicians in the targeted practice are making.  As such, the practice owner and their accountant must analyze all deal metrics relative to their current compensation to make sure the deal works for them in the long term.

5. Non-Compete Agreements

As an MSO cannot perform professional health care services, the private equity investor is reliant on the continued services of the physician selling the practice following the closing of the sale. As such, private equity firms require some form of a non-competition provision setting forth the duration and geographic scope of the restriction, to prevent the seller from taking the money, quitting, and opening up a shop across the street soon after.  In negotiating such restrictions, the practice owner’s interest is to ensure that the restrictions are as limited in time and scope as possible and are no more than reasonably necessary to protect the private equity purchaser’s investment.  Note that, with respect to enforceability, courts are more amenable to longer restrictive time periods and broader geographic areas in connection with the sale of a business than it might otherwise allow in employment arrangements.

With so much to consider, navigating the complexities of a private equity transaction calls for the care and attention that a highly-skilled and experienced team of attorneys can provide.  If you are a healthcare provider considering whether to sell your practice to a private equity firm, please contact Mauro Viskovic at 516-751-6537 or mviskovic@weisszarett.com.

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Mandatory Healthcare Worker Bonus Program

By Mathew J. Levy, Esq.
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To attract talented people into the medical profession at a time of such significant strain and while also retaining those who have been working so tirelessly these past two years, NYS has implemented the Healthcare Worker Bonus Program (HWB). The HWB was implemented to recognize the efforts of our health care and mental hygiene workforce and reward them financially for their service. To do so, as part of the Fiscal Year 2023 New York State Executive Budget legislation, is providing $1.2 billion in funding for the payment of bonuses for certain frontline healthcare workers.

Most practices are not aware that this is a 
mandatory program. The first deadline has been extended to match the second Vesting Period submission window starting on October 1st, 2022.

Note: Qualified employers who fail to identify, claim, and/or pay bonuses for more than 10 percent of eligible workers may be subject to penalties of up to $1,000 per violation.

We anticipate there will be OMIG Audits for those that are not compliant within the next 6 years. If you should have any questions regarding the NYS Healthcare Worker Bonus Program please do not hesitate to ask.

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Time to Welcome Elizabeth A. Rizzo, Esq.!

By Elizabeth A. Rizzo, Esq.
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Elizabeth Rizzo is pleased to announce that she has joined Weiss Zarett Brofman Sonnenklar & Levy, P.C. with 3 years of client relations and healthcare law experience. Elizabeth earned her bachelor’s degree from Adelphi University and her law degree from Maurice A. Deane School of Law at Hofstra University. 

Elizabeth is proud to be part of the Weiss Zarett team, as Elizabeth carries with her Weiss Zarett’s attention to detail with a strong emphasis on clear and focused communication with clients.

Weiss Zarett is a prominent and well-respected Long Island-based Firm known for assisting members of the healthcare industry and general business clients.  In the healthcare field, Weiss Zarett represents physicians and physician groups, other healthcare providers and health-related businesses with a wide array of legal services including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, governmental and commercial payor audits, bankruptcy, and commercial real-estate transactions.  Weiss Zarett brings decades of experience to this complex and ever-changing area of practice. 

Equally experienced outside of the healthcare industry, Weiss Zarett advises and represents businesses and business owners in corporate and commercial matters, business disputes, employment practice, commercial, bankruptcy and commercial real estate and commercial landlord and tenant litigation, creditor’s rights, financing, documenting secured transactions and all phases of commercial real-estate transactions. 

Looking to the future, Elizabeth is excited to build and further develop valuable relationships at Weiss Zarett with her abilities and services now available to be called up at the Firm. Please feel free to call upon us for your legal needs.

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Welcome, Lisa Giunta-Popeil, Esq.!

By Lisa Giunta-Popeil
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Lisa Giunta-Popeil, Esq. is pleased to announce that she has joined Weiss Zarett Brofman Sonnenklar & Levy, P.C.  Lisa brings with her over ten years of general and commercial litigation experience in both federal and state courts in New York, including a clerkship for a U.S. District Court judge in the Eastern District of New York.  She has expertise in handling a wide range of matters, including contract disputes, shareholder disputes, commercial arbitrations, business tort actions, creditor’s rights litigation and securities fraud litigation.

Lisa shares Weiss Zarett’s commitment to providing a thoughtful and comprehensive approach to litigation.  This includes open and candid communication with clients, exploring all potential avenues for the resolution of disputes and considering all possible legal claims and defenses.  The Weiss Zarett litigation team will zealously advocate on behalf of their clients, whether in the courtroom or at the negotiation table.

Weiss Zarett is a prominent and well-respected Long Island-based firm known for assisting members of the healthcare industry and general business clients.  In the healthcare field, Weiss Zarett represents physicians and physician groups, other healthcare providers and health-related businesses with a wide array of legal services including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, governmental and commercial payor audits, bankruptcy, and commercial real-estate transactions.  Weiss Zarett brings decades of experience to this complex and ever-changing area of practice. 

Equally experienced outside of the healthcare industry, Weiss Zarett advises and represents businesses and business owners in corporate and commercial matters, business disputes, employment practice, commercial, bankruptcy and commercial real estate and commercial landlord and tenant litigation, creditor’s rights, financing, documenting secured transactions and all phases of commercial real-estate transactions.

Lisa is excited to be joining Weiss Zarett and looks forward to providing you with a broad array of litigation services.  Please call us to see how we can help you with your legal needs. 

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JOSHUA SUSSMAN ELEVATED TO PARTNER

By Joshua D. Sussman, Esq.
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Weiss Zarett Brofman Sonnenklar & Levy, P.C. is pleased to announce that Joshua Sussman has been promoted to Partner of the Firm. Since joining the firm as Senior Counsel in early 2020, Mr. Sussman has been essential to success and operations of the Firm’s Litigation Department. Mr. Sussman is lead attorney on many of the Firm’s commercial disputes, while also taking a critical role in managing and developing Weiss Zarett’s Litigation Department. Mr. Sussman handles complex commercial litigation pending before federal and state courts and in arbitration about an array of actions, including proceedings between shareholders, partners, or members of closely held companies, lockouts and valuation disputes, breaches of fiduciary duties, breaches of sale agreements, restrictive covenant litigation, and commercial real estate disputes. While Mr. Sussman is a talented and tenacious litigator, he has also proven exceptionally valuable to the Firm’s clients by helping to resolve their issues in a practical manner before they become costly litigations. 

On behalf of the Firm, David Zarett said, “Since the day he walked in the door, Josh has exceeded all expectations and it is my honor and privilege to call him a Partner.” “Josh’s passion for the law, his dedication to the clients and his ability to collegially work with the other attorneys in the Firm, makes his elevation to Partner very much deserved,” added Michael Brofman.

“Joining Weiss Zarett was the best decision of my career,” Josh added. “The Firm and the Partners have provided me with a unique opportunity to develop as an attorney and a leader and to work with exceptional clients and professionals on an array of challenging legal issues. I look forward to continuing my professional growth here and being an integral part of the future of the Firm.”

Please join us in congratulating Josh on such a significant milestone in his professional career.

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.
Email Michael

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.