COVID-19: Contract Law Versus Executive Orders: Which Wins, in the Wake of a Worldwide Pandemic?

How much power does an executive order signed by your state’s governor actually wield? Governors, all of whom are elected, serve as the CEOs of the 50 states, five commonwealths, and territories of the U.S.

As CEO of their particular state, governors are responsible for ensuring that each state is adequately prepared for emergencies and disasters of all types and sizes. Most emergencies and disasters are handled at the local level, and few require a presidential disaster declaration or attract worldwide media attention. Yet here we are. A global pandemic affecting every single person on the planet.

This is not a tornado. It’s not Sept. 11 or giant killer hornets, which are also apparently a new thing. This virus has uprooted the world in a way that no one has ever witnessed.

Not everyone is following governors’ executive orders. For example, multiple adult day care centers contacted me recently from New York. Governor Cuomo has issued multiple executive orders regarding telehealth, basically relaxing the rules and forcing higher reimbursement rates and allowing for more telehealth, when in the past, it would not have been allowed. However, private insurance companies are refusing to obey the governor’s executive orders. The private companies argue that the providers signed a binding contract that does not include telehealth. The private payors argue that contract law trumps a governor’s executive order, even though the governor has ordered it because of the pandemic. Governor Cuomo has suspended New York State Public Health Law §2999-cc, as well as numerous others.

These adult day centers have followed the governor’s executive orders and are providing telehealth to maintain elderly socialization. The mental health aspect is their main concern right now.

There is no consistency in how the private companies are complying or not complying. Some private payors have issued amendments to the providers’ contracts, allowing telehealth, but at a serious financial decrease. Where the visit would have been reimbursed at $100-200, the new contract amendments allow for reimbursement rates of $25.

Others stick to the contracts and refuse to reimburse telehealth for these adult day care centers at all.

According to one of the companies that spoke with me, the adult day care centers in New York are losing approximately $56,000 per month. Now, I know that most healthcare providers are losing money in this pandemic. My friend who is an ER nurse says she has never seen the ER so empty. But in the case of the adult day care centers, we can point to a legal reason that providers should be reimbursed during this pandemic. The private payors are blatantly not following the governor’s executive order.

The providers want to sue to get the reimbursements that they are owed.

This is just one example of how discombobulated COVID-19 has made everyone.

Then add in the next variable of New Yorkers re-entering society and the “stay at home” orders being lifted. I do not think that the problem with private payors not following a governor’s executive order will just vanish when the state reopens. These providers have lost their higher reimbursable rates and cannot get that money unless they sue.

If I were a betting woman, I would bet that there are hundreds of intricate ways that insurance companies have not followed their particular states’ executive orders. Think about this: even if the companies were truly trying to abide by all executive orders, those companies in multiple states may get opposing orders from different states. So then a nationwide private payor is expected to follow 50 different executive orders. I can see why it would be difficult to comply with everything.

We have to ask ourselves – does an executive order, in a time of crisis, trump normal laws, including basic contract law? If the answer is yes, then how do we make private payer insurance companies comply?

Programming Note:

 

Knicole Emanuel is a permanent panelist on Monitor Monday. Listen to her live reporting every Monday at 10-10:30 a.m. EST.

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Knicole C. Emanuel Esq.

For more than 20 years, Knicole has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. She has successfully obtained federal injunctions in numerous states, which allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. Across the country, Knicole frequently lectures on health care law, the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers. Knicole is partner at Nelson Mullins and a member of the RACmonitor editorial board and a popular panelist on Monitor Monday.

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