On September 4, 2019, DOH published a Notice of Proposed Rulemaking that implements a New York Court of Appeal’s ruling striking down the so called “soft cap” limitations and affirming the “hard cap” limitations on executive compensation. In particular, a covered provider is prohibited from compensating a covered executive in an amount greater than $199,000 per year using solely State Funds, unless a waiver is obtained.  [https://regs.health.ny.gov/sites/default/files/proposed-regulations/Limits%20on%20Executive%20Compensation.pdf]

In October, 2018 Garfunkel Wild, P.C. issued a Client Alert of the decision of the New York Court of Appeals striking down the “soft cap” and affirming the “hard cap” limitations on executive compensation under NYS regulations that implemented Executive Order # 38 (“EO 38”). [See prior GW Alert – https://www.garfunkelwild.com/wp-content/2018/ALERTS/court-of-appeals-affirms-lower-courts-decision-striking-down-soft-cap-on-exec-comp.pdf]. Specifically, the Court upheld the regulations on covered providers, such as hospitals licensed under Article 28 of the Public Health Law, which imposed limits on administrative expenses and executive compensation to the extent funded by “State Funds” – the so-called “hard cap”.  This applied to funds in the State budget for State funded program services, e.g., Cystic Fibrosis Program, Early Intervention Program or “state-authorized payments”, which include funds that are distributed by or disbursed upon a New York State agency’s approval, e.g., Medicaid payments.  However, the Court invalidated the regulations which placed limitations  on the covered provider’s use of non-State Funds in funding executive compensation, e.g., private funds, payments from commercial payors, etc. – the so-called “soft cap”.


The soft cap prohibited executive compensation in excess of $199,000 from State Funds and non-State Funds unless (i) the compensation was within the 75th percentile of comparable providers and (ii) the compensation was approved by the provider’s governing board, including at least two independent directors.  The proposed regulations delete the soft cap prohibition and these comparability data and governing board approval requirements.

The hard cap continues to apply to “covered executives” (generally defined as a compensated director, trustee, managing partner or officer, or key employee), whose salary and benefits, in whole or in part, is considered administrative expenses and exceeds $199,000 during the reporting period. If there are more than 10 key employees who meet this definition, the covered provider need only report the highest compensated top 10 key employees

Covered providers that are subject to the hard cap are required to obtain a waiver in order to compensate their covered executives in an amount greater than $199,000. It is our understanding that few, if any covered providers, have used the waiver process.  Given the proposed change in the regulations, this waiver process may be more prevalent and an agency’s timely processing of waiver applications may be an issue.  Presumably, if a covered provider has sufficient non-State Funds to fund executive compensation, a waiver will not be necessary. However, the covered provider must have sufficient controls in place to document that non-State Funds are sufficient to fund executive compensation.

Of course, covered providers are still required to submit an EO 38 Disclosure Form for each covered reporting year.

Lastly, although the proposed regulations eliminate the use of and approval by the governing board of data to show that executive compensation was within the 75th percentile of comparable providers, we recommend the continued use of comparability data and governing board approval by charitable organizations in meeting their obligations under the Internal Revenue Code for executive compensation and by other covered providers to support a waiver application.

We look forward to comments that will be submitted by interested parties in response to the proposed regulations and to the Department’s responses to such comments.

Click Here to download the Legal Alert.

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If you have any questions about this alert, please contact the Garfunkel Wild attorney with whom you regularly work.


Partner/Directors Karen Rodgers and Scott Higgins facilitated the transfer of 28 skilled nursing facilities with a combined value in excess of $450 million located in 8 states with an associated financing of over $240 million.


Thirty-Four Garfunkel Wild attorneys were selected by their peers for inclusion in 2019 New York Metro Super Lawyers, and 2019 New York Metro Rising Stars.

Super Lawyers and Rising Stars recognize attorneys who exhibit excellence in the practice of law rated by a high-degree of peer recognition and professional achievement.

The following Garfunkel Wild attorneys were named 2019 New York Metro Super Lawyers:

  • Jeffry Adest – Health Care Law
  • Suzanne M. Avena – Environmental Law
  • Greg E. Bloom – Health Care Law
  • Andrew E. Blustein – Health Care Law
  • Roy W. Breitenbach – Business Litigation Law
  • Jeffrey S. Brown – Health Care Law
  • Barry B. Cepelewicz, M.D., Esq. – Health Care Law
  • Kevin G. Donoghue – General Litigation
  • Judith A. Eisen – Health Care Law
  • Peter M. Hoffman – Health Care Law
  • Michael J. Keane – Business Litigation Law
  • Stacey P. Klein – Health Care Law
  • Eve Green Koopersmith – Elder Law
  • Lauren M. Levine – General Litigation
  • Sean P. Leyden – Real Estate Law
  • Doris L. Martin – Estate Planning & Probate
  • John G. Martin – White Collar Crime
  • Lourdes Martinez – Health Care Law
  • Fredrick I. Miller – Health Care Law
  • Marianne Monroy – Employment & Labor Law
  • Salvatore Puccio – Employment Litigation
  • Leonard M. Rosenberg – General Litigation
  • Debra A. Silverman –  Health Care Law
  • Christina Van Vort –   Health Care Law
  • Justin M. Vogel – Business Litigation
  • Burton S. Weston –     Bankruptcy Law
  • Robert Andrew Wild – Health Care Law
  • Hayden S. Wool – Health Care Law
  • Andrew L. Zwerling – General Litigation

The following Garfunkel Wild attorneys were named 2019 New York Metro Rising Stars:

  • Carmen E. Jule – Health Care Law
  • Michael (Mickey) Keane, Jr. – Business Litigation Law
  • Jessica F. Sonpal – Health Care Law
  • Dayna B. Tann – General Litigation
  • Cynthia M. Thomas – Business & Corporate



On September 9, 2019, the Department of Health and Human Services, Office of Civil Rights (“OCR”) announced that Bayfront Health – St. Petersburg, a 480-bed Florida hospital (the “Hospital”), paid $85,000 to settle an investigation regarding the Hospital’s failure to provide one patient with timely access to her medical records.   In its press release, the OCR emphasized that this settlement is consistent with its Patient Access Initiative, which was announced earlier this year.  As part of this initiative, OCR is committed to vigorously enforcing the rights of patients to receive their medical records promptly and without being overcharged.

The investigation that prompted this settlement was initiated when a patient complained to the OCR on August 14, 2018 that the Hospital had not provided her complete copies of her baby’s fetal monitoring strips even though the patient had started making written requests for the information as early as October 18, 2017. After the OCR initiated in an investigation, the patient was finally provided a copy of the requested records on February 17, 2019.

To date, the majority of HIPAA settlements that have been reported have stemmed from unauthorized access to or disclosure of Protected Health Information. This most recent settlement is a reminder that Covered Entities, and, if applicable, their Business Associates need to comply with all facets of HIPAA, including requirements for patient access to information.   In particular, Covered Entities should be reviewing their patient access policies and confirming with their Health Information Management (“HIM”) Departments and Release of Information (“ROI”) vendors, if applicable, that HIPAA requirements for patient access, including limitations on charges, are being followed.

Click Here to download the Legal Alert.

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If you have any questions about this alert, please contact the Garfunkel Wild attorney with whom you regularly work.


Garfunkel Wild Wins Summary Judgment for Employer Seeking MLMIC Demutualization Funds

September 5, 2019, Great Neck, NY — Law firm Garfunkel Wild successfully represented Mid-Manhattan Physician Services on its claim to ownership of $473,000 of demutualization funds, based on premiums it paid to MLMIC for malpractice insurance for its former employer Melissa Dworkin, M.D. On September 4, 2019, Judge Debra James (Manhattan Supreme Court) granted summary judgment to Mid-Manhattan Physician Services based in part on language in MLMIC’s plan of conversion that refers to premiums paid.

Garfunkel’s litigation team was led by Len Rosenberg, Garfunkel Wild’s Co-Chair of the Litigation Department, and included Senior Attorney Courtney Rogers.

“This is a significant decision that supports employers’ right to receive MLMIC demutualization funds if they paid the insurance premiums to MLMIC,” said Len Rosenberg. “It adds another ground to the unjust enrichment theory on which most court decisions have been based to date.”

About Garfunkel Wild

Garfunkel Wild serves the diverse legal needs of the health care industry. For nearly 40 years, GW has represented hospitals, health systems, physicians, long term care facilities and many others in the areas of transactions, finance, litigation, information technology, managed care, credentialing, regulatory, employment law, professional licensing, compliance, real estate, bankruptcy, and trusts and estates.

GW has over 85 attorneys and maintains offices in New York, New Jersey and Connecticut. The firm’s healthcare practice and lawyers are ranked in Chambers USA. For more information, visit www.garfunkelwild.com.