As the new pandemic relief aid bill passes through Congress, movement begins behind the scenes on the “Build Back Better” plan. Additionally, today’s update looks at a court victory for restaurants, continuing fraudulent unemployment claims, and what happened with rapid tests.
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Biden Prepares for Sweeping Recovery Package After Covid-19 Relief Bill
As President Biden pushes for passage of his coronavirus relief plan, he has begun working on a wide-ranging economic recovery package that could face skepticism from lawmakers who are wary of another high-dollar legislative response to the pandemic.
White House officials say Mr. Biden’s priority is passing the $1.9 trillion coronavirus relief package being negotiated in Congress. But Mr. Biden, a 36-year veteran of the Senate, has begun laying the groundwork for the coming proposal in phone calls and White House meetings with his former colleagues. The president and his advisers have for weeks been quietly discussing the matter with members of Congress and senior Capitol Hill aides, according to people familiar with the matter, and Mr. Biden is optimistic that a compromise can be reached.
The exact contours of the new round of investments in the economy remain to be determined. Mr. Biden during his presidential campaign outlined his interest in new infrastructure investments and measures to combat climate change and boost manufacturing jobs, as well as improving access to childcare and seeking ways to increase racial equity.
The prospect of another pricey package is already raising concerns among some Republicans. Congressional aides also said that while there is bipartisan interest in funding infrastructure improvements, there will be tension between progressive lawmakers who want expansive proposals that address longstanding Democratic priorities and moderates and Republicans who support less expensive, more tailored measures.
Mr. Biden so far has declined to say how much he wants to spend on his broad economic plan, but outside analysts estimate that the proposals he made during his presidential campaign could cost trillions of dollars. Allies of Mr. Biden have had early discussions about using a budget maneuver known as reconciliation to pass the economic recovery package with only Democratic votes, people familiar with the matter said. Such an effort, which would face fierce opposition from Republicans, would echo the approach Democrats are taking with the $1.9 trillion relief measure.
White House officials said they hoped to pass the second measure, often referred to as the Build Back Better plan, with bipartisan support and remained open to ideas from Republicans. Democratic lawmakers have said they intend to send the bill to Mr. Biden’s desk by mid-March.
While infrastructure projects are popular with both parties, deciding how they are financed—whether through government spending, loans, or public-private partnerships—has proven to be a sticking point in previous negotiations. Another question is whether the White House will endorse one sweeping package or a series of smaller proposals. Lawmakers are reviewing bills that were approved in the previous Congress but weren’t signed into law.
Chicago Restaurants Earn Court Victory Over Covid Claims
Chicago-area restaurants, including well-known names like the Billy Goat Tavern and Big Onion Tavern Group, won a significant legal victory late Monday with a federal judge’s rejection of a Wisconsin insurer’s motion to dismiss lawsuits demanding the company pay out pandemic-related claims for lost business.
U.S. District Court Judge Edmond Chang ruled against Fond du Lac-based Society Insurance’s position that its insurance policies didn’t cover business-interruption claims tied to governmental restrictions imposed on restaurants. Society is a relatively small mutual insurer that specializes in property coverage for bars and restaurants.
Unlike many other insurers, Society’s policies didn’t include language explicitly excluding the impact of a pandemic like COVID-19. Business insurers across the country, whether their policies included pandemic exclusions or not, have fought numerous lawsuits filed for business-interruption payments, arguing that insurance isn’t intended to cover such large and broad risks. But in court, the policy language is generally what matters, and Society is especially at risk because its policies had no exclusions for a pandemic.
In addition to rejecting Society’s move to dismiss the parts of the lawsuits pertaining to business interruption, Judge Chang also retained the plaintiff’s claims that Society acted in bad faith by pre-emptively denying claims before they were even made in the early days of the pandemic.
“Specifically, according to the Plaintiffs, the March 16 and March 27, 2020, memoranda issued by Society, which denied coverage across the board, allegedly misrepresented the true scope of the insurance policies; Society failed to investigate individual claims, as required, and instead issued hasty denials not based on individual claims; and Society’s actions have caused an improper and lengthy delay in receiving payment,” Chang wrote in his opinion. “The need for more factual development prevents a pleading-stage dismissal of the claim,” he wrote. A finding of bad-faith denial would add substantially to potential damages. Society said it would continue to fight the lawsuits.
Society potentially could seek to appeal Chang’s ruling to the U.S. 7th Circuit Court of Appeals. But it would need Chang’s clearance to do so. The alternative is to move to discovery, and potentially to settlement discussions. Chang set an aggressive timetable for discovery, acknowledging the pressure on restaurant plaintiffs, who’ve argued in legal briefs that they may not survive without relief from their insurer. Plaintiffs’ attorneys, who include prominent Chicago class-action lawyers Adam Levitt of DiCello Levitt Gutzler and Shannon McNulty of Clifford Law Offices, must try to hammer out a schedule for discovery with Society’s attorneys by March 5 under the order.
The Society Insurance cases were consolidated before Chang late last year in the interest of efficiency and resolving them quickly. In addition to Billy Goat and Big Onion Tavern Group, the plaintiffs include the Purple Pig on Michigan Avenue.
The key decision a jury would have to make, if the lawsuits end up before a panel, is whether the pandemic and its effects constitute a “direct physical loss” for the restaurants and bars. Insurers like Society claim nothing happened to the physical spaces, so that’s not a direct physical loss. Restaurant and bar owners say they can’t use their space, or are limited in what they can do, making it a physical loss. “A reasonable jury could find for either side based on the arguments and factual record presented so far in the litigation,” Chang wrote.
Chicago restaurants could well be the national focus, at least in these early stages, of what will be a years-long legal dispute over the pandemic and its economic effects on the hospitality industry.
States Continue Paying Billions in Fraudulent Unemployment Claims
A tsunami of fraudulent unemployment claims sweeping the nation has cost states and the federal government tens of billions of dollars in payments, many to overseas crime syndicates and nefarious hackers who have gained access to Americans’ Social Security numbers and other identifying information.
The scope of the crisis is not yet known, though the early estimates are eye-popping: California officials have identified at least $11.4 billion in fraudulent claims, and they suspect another $20 billion may be fraudulent. In a report updated earlier this month, the Department of Labor’s Office of the Inspector General estimated that fraud has cost unemployment insurance programs across the country at least $63 billion this year.
Fraud is a routine part of unemployment insurance claims, experts said, in part because of the way the system is designed. Someone who becomes unemployed does not have time to wait through a lengthy review process, so states build in a bias toward action. A 1971 Supreme Court decision requires states to pay out benefits when a claim is made, rather than after an appeal.
“There’s a natural tension in the unemployment insurance system between adequately assessing eligibility and getting payments out in a timely fashion,” said Christopher O’Leary, a senior economist at the Upjohn Institute for Employment Research who studies unemployment insurance programs. “There is pressure for the states to not be slow. There is also pressure in a pandemic to get money to people in need.”
Fraudsters can use personal information acquired through data breaches to apply for benefits in someone else’s name, and in many states, there is little interaction beyond an online application before benefits are distributed.
ACA Window Reopens
HealthCare.gov’s market for subsidized health plans reopened Monday for a special three-month sign-up window as the Democratic-led Congress pushes a boost in financial help that could cut premiums by double digits. This enrollment period during the coronavirus pandemic could be an early test of President Joe Biden’s strategy to use the Affordable Care Act as a springboard toward health coverage for all. Advancing on a parallel track, the new COVID-19 relief bill from House Democrats would offer a generous, though temporary, increase in subsidies for people covered by the law known as “Obamacare.”
While policy experts are taking note, it’s unclear how uninsured Americans will respond. Former President Barack Obama’s health law has been on the books over a decade, but surveys consistently show that many people lacking job-based insurance do not realize they may qualify. The Congressional Budget Office estimates that about 33 million people are uninsured this year.
The Biden administration is going the extra mile to try to sign up people. HealthCare.gov will be accepting applications through May 15, a period about twice as long as annual open enrollment. The Centers for Medicare and Medicaid Services, which runs the program, has a $50 million advertising budget, five times what the Trump administration would spend on annual open enrollment.
Under Biden, there will be a special emphasis on reaching Black and Latino communities that have borne a heavy burden from COVID-19. Across the country, people in the 36 states served by the federal HealthCare.gov marketplace will be able to apply. Additionally, most states that run their own marketplaces are matching the federal effort, giving it the feel of a national campaign.
The appeal for uninsured people could become much clearer if Congress increases premium subsidies as part of its next virus relief package. “That would be a great incentive to get people in the door,” said Tara Straw, a health policy analyst with the Center on Budget and Policy Priorities, which advocates on behalf of low-income people. More generous help would be available not just to the newly enrolled, but to all who are covered through the legislation’s marketplaces.
By the budget center’s calculations, a family of four making $50,000 would pay $67 a month in premiums for a standard plan, instead of an average of $252 currently, while also qualifying for help with deductibles and copays. The boost in premium assistance would be available for this year and for 2022. Similarly, a single person making $30,000 a year would pay $85 a month for a standard plan instead of the current $195.
The proposal would allow more solid middle-class households to qualify for financial help. On the opposite end of the scale, those who’ve experienced unemployment would qualify for extra-generous subsidies.
Further Delay of Census Report
There’s another delay in issuing census numbers, which poses a huge problem in how Illinois officials redraw boundaries for federal and state seats. Census officials say data won’t be available until Sept. 30. Given it normally takes a few months to process that data, it seems impossible for the state to file a congressional redistricting plan by its Oct. 5 deadline. And meeting the May 31 deadline for state house seats is even more difficult.
Given Illinois is expected to lose at least one congressional seat, candidates for the remaining House positions will have little time to figure out which district they represent when it comes time to gather the signatures they need to get on the ballot. That deadline, by the way, is in December.
“Illinois is in a quandary. But it’s not alone. A lot of states are looking at what their avenues are,” Kimball Brace, a D.C.-based redistricting consultant. Some states are considering special legislative sessions later in the fall, asking state courts for guidance, or using preliminary population data to begin redrawing maps. The latter is a possibility in Illinois. There’s also the expectation that maps could face court challenges that draw out the process — possibly long enough to then pull in the official numbers when they arrive in September.
The congressional remap is trickier because the law requires that each district be represented equally “down to the penny,” Brace said. The courts have allowed a larger deviation of 5 percent above and 5 percent below for state legislative maps.
A spokesman for House Speaker Emanuel “Chris” Welch, who is among the Democratic leaders dictating the remap process, called the census delay “a unique situation.” The spokesman, Sean Anderson, added: “The speaker, members, and staff are still assessing all options, but his goal remains making sure all communities get their due representation in Congress.”
Asked if Illinois has a plan to use early data from the Census Bureau’s American Community Survey taken in advance of the census, Governor Pritzker told reporters: “We’re looking at that. We’re looking at how we might manage through that. We’ll deal with it like all the other challenges we’ve faced with Covid-19.”
Rapid Covid-19 Tests Help Control the Virus, but Many are Unused
The U.S. government distributed millions of fast-acting tests for diagnosing coronavirus
infections at the end of last year to help tamp down outbreaks in nursing homes and
prisons and allow schools to reopen. But some states haven’t used many of the tests, due to logistical hurdles and accuracy concerns, squandering a valuable tool for managing the pandemic. The first batches, shipped to states in September, are approaching their six-month expiration dates.
At least 32 million of the 142 million BinaxNOW rapid Covid-19 tests distributed by the
U.S. government to states starting last year weren’t used as of early February, according
to a Wall Street Journal review of their inventories. The unused tests cost the federal government $160 million, according to the review, which calculated the cost by multiplying the per-unit price paid by the federal government times the number of unused tests states reported in response to the Journal’s queries.
“The demand has just not been there,” said Myra Kunas, Minnesota’s interim public
health lab director. Minnesota’s health department has more than 1.4 million rapid Covid-19 tests warehoused, after distributing just over 108,000 to schools, clinics, and other facilities
that wanted them, Ms. Kunas said. She attributed the low pickup to a robust testing infrastructure already in place in the state and challenges for facilities in administering the rapid tests and manually reporting the results.
Limited use of these fast-acting Covid-19 tests, known as rapid antigen tests, is the latest
stumble in U.S. efforts to help contain the pandemic through more testing, after early
struggles in scaling up testing.
The effort to distribute rapid tests to states for broad screening “didn’t really go
anywhere,” said Michael Mina, a Harvard University epidemiologist who advised Trump
administration health officials. Many health authorities have heralded rapid antigen tests as crucial options to limiting outbreaks and tamping down transmission, especially when lab capacity was strained and case counts climbed.
The tests can quickly help determine whether someone is infectious. The tests detect
cases by searching for pieces of proteins from the virus. They deliver results in minutes. Among the first rapid antigen tests cleared by regulators was the BinaxNOW, which is made by Abbott Laboratories, costs $5 and doesn’t require any equipment.
In August, the U.S. Health and Human Services Department agreed to buy 150 million
BinaxNOW tests for $760 million, the largest federal government bulk purchase of Covid19 tests to date. The next month, it began sending 142 million of the tests to states, and the rest to longterm-care facilities, U.S. territories and historically Black colleges and universities.
Yet the tests are piling up in many states, the Journal found. The review was based on
test-inventory information that 32 states provided in response to the newspaper’s
questions about how many tests each state received, distributed and to what kinds of
facilities. The remaining states didn’t respond.
Michael Iademarco, who is now in charge of the testing and diagnostics working group at
HHS, said the Journal’s findings were consistent with a December survey conducted by
the agency that found about 20 states still had 50% or more of the tests they had been
given. HHS is concerned about the lack of use of rapid antigen tests, Dr. Iademarco said, and is
investing in different kinds of tests to give states more options for testing. One of the biggest early hurdles to widespread adoption of the rapid antigen tests, state health officials said, was figuring how best to use them.
The tests were authorized for use within five to seven days of symptoms emerging, and
health authorities were split on whether the tests should be used to identify cases among
people who hadn’t developed symptoms. The officials were especially worried about relying on the tests in places like nursing homes, the site of many outbreaks.
Studies now suggest rapid antigen tests like BinaxNOW miss more cases than laboratory-based tests that take more time to work, but are able to detect the virus among people who are most infectious. That can help speed up contact-tracing and containment efforts. “Public health is about trying to balance these imperfect solutions so that we can control the pandemic,” Dr. Iademarco said.
Some epidemiologists describe them as “contagiousness tests.” They are also most
effective when used repeatedly on the same population, according to health authorities.
“BinaxNOW shows performance of 95.6% sensitivity in people who are infectious and
most likely to be spreading the disease,” an Abbott spokeswoman said. Some state health officials said they were reluctant to use the tests for regular, continuous screening because they didn’t know whether they would get a continuing supply. Others were already using tests from other companies. Some facilities such as schools haven’t used the tests because of the amount of training staff needed, regulatory waivers that facilities must have to use the tests, and the time it
takes to manually report results.
Other states delayed using the tests as they built the technology needed to easily report
the results to public-health authorities and trained school nurses, nursing home staff and
others to administer them.
Because the tests are most useful in outbreak situations or when used repeatedly, some
state health officials also say they have tried to keep a reserve on hand and space out distribution over time. Clemens Hong, Los Angeles County’s co-lead of Covid-19 testing, said he aims to add more rapid testing soon because fast positive results are helpful for quicker contact tracing.
Yet he said he is concerned about the tests’ accuracy, which is why the county, during the
surge in cases around the winter holidays, gave priority to broadening access to the lab-based tests that take longer to work. The county runs the rapid tests and lab-based tests simultaneously to confirm the results.
Program Notices & Reminders
Upcoming Discussions with Illinois DCEO and SBA District Office
DCEO teams will host or sponsor more than 100 webinars held from now until the end of February. Webinars will cover technical assistance and questions related to the PPP application, as well as provide informational resources for businesses seeking assistance on EIDL, upcoming EIDL Advance, and SVO grant programs, and other resources tailored to small businesses. For a list of upcoming webinars on PPP and other programs, please visit DCEO’s page. Below are some upcoming webinars next week hosted by Team RED and their registration links.
Date: February 24, 2021
Time: 10:30 am
Presenter: Kim Watson, Southern Regional Manager for Regional Economic Development, DCEO and Darrah Perryman, US Small Business Administration
Date: Wednesday, February 24, 2021
Time: 2:00 pm
Presenter: Jonathan McGee, Deputy Director Regional Economic Development, DCEO and SBA District Director
SBA Page Links for Direction and Questions on PPP
1st draw info: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/first-draw-ppp-loans
First draw app: https://www.sba.gov/document/sba-form-2483-paycheck-protection-program-borrower-application-form?utm_medium=email&utm_source=govdelivery
2nd draw info: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/second-draw-ppp-loans
Second draw app: https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form?utm_medium=email&utm_source=govdelivery
Employee Retention Tax Credit (ERTC): Step by Step Instructions with a CPA
Wed., February 24, 2021 at 11 AM
Join this FREE webinar as Matt Evans, CPA, CMA, CFM, a frequent speaker who serves as a SCORE Mentor to small businesses, walks through the steps on how to take advantage of the ERTC.
Mr. Evans will cover:
- How to determine eligibility
- How to calculate the amount of credit
- How to access the credit, and
- Provide recommendations on how to best take advantage of the ERTC and the PPP loan programs.
With information rapidly changing, NFIB remains committed to providing up-to-date information and guidance on the different financial assistance options available to small businesses. After a short presentation, you’ll have the opportunity for Q&A. Participants will be able to ask questions in the chat box throughout the presentation, moderated by a member of NFIB’s COVID-19 team. Register Here
Finally, we would like to announce our next virtual conference. It will take place on March 11th at 11 AM with John Ferguson, Senior Vice President & Senior Portfolio Manager with Northern Trust.
Economic Trends & Reopening of the Economy
- History: Economic and Market Review through the Pandemic
- Current Events: Market and Economic Signs that we are at an inflection point
- Outlook for the Future: Is this a remake of the roaring 20’s?
Thursday, March 11, 2021 at 11:00 a.m. Register here: http://jolietchamber.chambermaster.com/events/details/2021-webinar-march-11-economic-trends-reopening-of-the-economy-6016
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry