EPA PFAS Rule Imposes New Requirements on Public Water Systems

New EPA Rule Sets Standards for PFAS in Drinking Water

The United States Environmental Protection Agency (EPA) recently finalized a new rule setting legally enforceable standards for PFAS (per- and polyfluroalkyl substances and related chemicals) present in drinking water. The rule, promulgated under the Safe Drinking Water Act, sets Maximum Contaminant Levels (MCLs) for six separate PFAS (including PFOA, PFOS, PFHxS, PFNA and HFPO-DA) and hexafluoropropylene oxide (HFPO). Two of the most common PFAS, PFOA and PFOS, now have an enforceable level of four parts per trillion (ppt), which is only marginally higher than the applicable detection limits for each chemical. Three other PFAS, PFHxS, PFNA, and HFPO-DA chemicals – commonly referred to as GenX – now have MCLs of 10 ppt. Additionally, the MCL for any mixtures containing two or more substances including PFHxS, PFNA, HFPO-DA, and PFBS will be determined using a novel approach that EPA dubs a “hazard index,” which is a measurement of risk dependent on how many PFAS are present in the mixture and how concentrated they are relative to levels that impact human health.

Although states will need to adopt their own MCLs at or below the federal standard to retain regulatory authority under the Safe Drinking Water Act, the rule imposes several new requirements on all public water systems. The rule applies to any public water system that serves at least 15 service connections used by year-round residents, any system that regularly serves over 25 year-round residents, and any system that regularly serves at least 25 of the same persons for more than six months of the year. Regulated public water providers must complete initial monitoring for these six PFAS chemicals by 2027, with ongoing compliance monitoring thereafter and reporting requirements thereafter. Depending on the results of the monitoring, public water systems will have until 2029 to reduce any PFAS exceeding the new MCLs. At that time, water systems with PFAS in violation of the MCLs will need to provide public notice of their exceedances.

Compliance with this rule is anticipated to be costly – tens of millions of dollars and upward for larger systems. Conventional water filtration technologies are not designed to effectively capture relatively miniscule PFAS molecules. As a result, new technologies necessary to meet the standard (including granulated activated carbon and high-pressure membrane filtration technologies) are likely to result in high compliance costs.

Although it will likely be difficult for many public water suppliers to fund monitoring and improvements necessary to comply with the new PFAS standards, there are options to consider. Earlier this year, EPA announced over $3.2 billion in funding through the Drinking Water State Revolving Loan Fund to assist in funding for drinking water projects, including upgrades to water treatment plants (and PFAs treatment systems). This most recent announcement is in addition to previous funding of over $12 billion for water infrastructure improvements under the Bipartisan Infrastructure Law. Public water suppliers may also have valid claims against parties that have contaminated public water supplies that may allow for recovery of some or all of the costs of addressing that contamination.

Contact Matt Eugster or your Varnum environmental attorney today to learn more about the requirements of these new PFAS MCLs and how they may impact your business or organization.

Preparing for Michigan Liquor License Renewal 2024-2025

Navigating Liquor License Renewals in Michigan

Requirements, Deadlines and Best Practices

All liquor licenses issued by the State of Michigan Liquor Control Commission (MLCC), including all on premises, off premises, manufacturer, wholesaler and importer licenses, must be renewed by April 30, 2024. All liquor licenses issued by the MLCC are effective for periods of one year each and expire April 30 of each licensing year. Exceptions exist only for certain sales representative and vendor permits, which are valid for terms of three years.

For those with licenses currently in escrow, different rules for renewal apply, but these licenses must also be renewed, despite the non-active nature of the license. Finally, no exceptions to the renewal rules exist for recently issued licenses: liquor licenses issued in the 2023 – 2024 licensing year must be renewed on or prior to April 30th as well.

In order for restaurants, hotels, retail stores and other liquor licensed operators to retain their licensed status with the ability to furnish and/or sell alcoholic beverages, whether at retail or wholesale, each Michigan licensee must renew their existing licenses on or prior to the extended deadline. The failure of an active licensee to timely renew a license is a violation of the Michigan Liquor Control Code and will subject the license to termination.

Renewal Process Modifications

The MLCC provides a credit card option for liquor license renewal payments. The online renewal portal accepts payments using Visa, Mastercard, American Express and Discover. Payment by electronic funds transfers (EFT) from bank accounts continues to be an available option. If there are multiple transactions, applicants will need to allow five (5) minutes between transactions of the same amount with the same account information. Otherwise, the system thinks it is a duplicate payment.

Licensees can now print their own renewal license online. If licensees have no changes to their renewal license application, they may print their own license for the April 30th, renewal date. If a renewal application has been mailed to the MLCC prior to April 1, 2024, it may also be printed online. Licensees can only print active licenses for the current renewal year. Escrow renewals do not contain licensing documents that require printing. Instructions for printing renewal licenses can be found here.  

Typically, the administrative staff of the MLCC will mail renewal packages in the middle of March. The members of Varnum’s Hospitality and Beverage Control Law Practice Group are currently responding to several license inquiries and are handling the renewal of the licenses for a number of our clients when so requested. If you would like to obtain our assistance in this regard or have any other questions, please contact us. We would be happy to review and submit the appropriate documentation to the State of Michigan to assure that your license is properly renewed and delivered to you on a timely basis to avoid any suspensions of your license.

Department of Justice Ramps Up Investigations of Private Clubs that Received PPP Loans

DOJ's Focus on PPP Loans Now Includes Private Clubs

As Varnum’s government investigations team has previously discussed, the COVID-era Paycheck Protection Program (PPP) resulted in millions of businesses receiving emergency loans. The PPP’s hurried implementation, coupled with confusion among recipients over eligibility requirements, created an environment ripe for both fraud and the issuance of loans to ineligible recipients. Over the past few years, the Department of Justice (DOJ) has focused on fraud by among other things, opening civil investigations under the False Claims Act and bringing criminal charges against PPP loan recipients who misused loan proceeds on luxury items. But recently, the DOJ has shifted its focus to a new category of PPP recipients: social clubs that may have been technically ineligible for the loans they received.

The opportunity for improper loans to social clubs comes about because of a technical wrinkle in how Congress wrote the American Rescue Plan Act of 2021. In this Act, Congress made social clubs (i.e. golf clubs, tennis clubs, yacht clubs) organized under 26 U.S.C. § 501(c)(7) eligible for PPP loans. However, Congress incorporated an agency regulation that prohibited loans to “private clubs and businesses which limited the numbers of memberships for reasons other than capacity.” Accordingly, social clubs that limit their membership for a reason other than capacity may be ineligible for PPP loans.

In recent months, the DOJ has issued Civil Investigation Demands (CIDs) to clubs that it believes might not have been eligible for PPP loans. Commonly, CIDs are issued following a whistleblower tip or the filing of a Qui Tam lawsuit, which is a lawsuit filed by an individual “on behalf of the United States” alleging that the United States was defrauded. The focus of the United States’ current investigation is on country clubs in Florida. These CIDs are demands for documents and interrogatory answers and often relate to employment records, income statements, the membership admission process, prospective members’ applications, the club’s governance, and membership information. CIDs are expansive and the government can use the club’s answer in future civil or criminal proceedings.  

Given the DOJ’s new focus, clubs should review their PPP paperwork now and consult with an attorney to determine whether their loan was properly issued. If the clubs find technical violations, proactively approaching the government through counsel may be beneficial. If a club receives a CID, it should immediately contact an attorney to begin preparing the appropriate response.

If you have received a CID or would like more information about PPP loan eligibility and enforcement issues, contact a member of Varnum’s government investigation team.

Arbitration vs. Mediation in Family Law Cases

Bailey Contributes to Institute of Continuing Legal Education

Originally published by the Institute of Continuing Legal Education Partnership; republished with permission.

In the realm of family law, arbitration and mediation offer alternative pathways to resolving disputes outside the courtroom. However, key distinctions exist between these two processes. This advisory will delve deeper into the legal nuances of each option.

View a printer friendly version of the comparison chart.

Controlling law

ArbitrationMCL 600.5071
Parties to an action for divorce, annulment, separate maintenance, child support, custody, or parenting time, or to a post-judgment proceeding related to such an action, may stipulate to binding arbitration by a signed agreement that specifically provides for an award with respect to one or more of the following issues:
  • real and personal property child custody child support, subject to the restrictions and requirements in other law and court rule as provided in this act parenting time spousal support costs, expenses, and attorney fees enforce ability of prenuptial and postnuptial agreements allocation of the parties’ responsibility for debt as between the parties other contested domestic relations matters
MediationMCR 2.410
All civil cases are subject to alternative dispute resolution (ADR) processes unless otherwise provided by statute or court rule. MCR 2.410(C) states that, at any time, after consultation with the parties, the court may order that a case be submitted to an appropriate ADR process.
MCR 2.411
This rule applies to cases that the court refers to mediation as provided in MCR 2.410.

What is it?

ArbitrationArbitration is a process in which a dispute is submitted, by agreement of the parties, to one or more arbitrators, who make a binding decision on the dispute.
MediationMediation is a process in which a neutral third party facilitates communication between parties, assists in identifying issues, and helps explore solutions to promote a mutually acceptable settlement. A mediator has no authoritative decision-making power. MCR 2.411(A)(2).

Who can participate?

ArbitrationArbitration may be heard by a single arbitrator or by a panel of three arbitrators. The court must appoint an arbitrator agreed to by the parties if the arbitrator is qualified under MCL 600.5070 (2) and consents to the appointment.
The court may not appoint an arbitrator under MCL 600.5070 et seq. unless the individual meets all the following qualifications:
  • is an attorney in good standing with the State Bar of Michigan
  • has practiced as an attorney for not less than five years before the appointment and has demonstrated expertise in the area of domestic relations law
  • has received training in the dynamics of domestic violence and in handling domestic relations matters that have a history of domestic violence. MCL 600.5073(2).
MediationThe parties may stipulate to the selection of a mediator. A mediator selected by agreement of the parties need not meet the qualifications in MCR 2.411(F). MCR 2.411(B)(1).
If the order referring the case to mediator does not specify a mediator, the order must set the date by which the parties are to have conferred on the selection of a mediator. MCR 2.411 (B)(2). If the parties do not advise the ADR clerk of the mediator agreed on by that date, the court must appoint one as provided in MCR 2.411(B)(3).

What is the procedure?

ArbitrationAs soon as practicable after the appointment of the arbitrator, the parties and attorneys must meet with the arbitrator to consider all of the following:
  • scope of the issues submitteddate, time, and place of the hearing witnessesschedule for exchange of expert reports or summary of expert testimonyexhibits, documents, or other information each party considers applicable and material to the case and a schedule for production or exchange of that information.
MCL 600.5076.
The arbitrator must issue the written award on each issue within 60 days after either the end of the hearing or, if requested by the arbitrator, after receipt of proposed findings of fact and conclusions of law.
An arbitrator under this chapter retains jurisdiction to correct errors or omissions in an award until the court confirms the award. Within 14 days after the award is issued, a party to the arbitration may file a motion to correct errors or omissions. The other party may respond within 14 days after the motion is filed. The arbitrator must issue a decision on the motion within 14 days after receipt of a response or, if a response is not filed, within 14 days after the response period expires. MCL 600.5078.
MediationAlthough not required by authority, practitioners typically submit a brief that outlines their perspective on the issues at bar in advance of the mediation. This serves as a tool that allows the mediator to organize an effective approach to resolving the issues.
The mediator must meet with counsel and the parties, explain the mediation process, and then proceed with the process. The mediator must discuss with the parties and counsel, if any, the facts and issues involved. The mediation will continue until a settlement is reached, the mediator determines that a settlement is not likely to be reached, the end of the first mediation session, or a time agreed to by the parties. Additional sessions may be held as long as it appears that the process may result in settlement of a case. MCR 2.411(C)(2).
The mediator must advise the court of the completion of mediation within seven days after completion, stating only the date of completion, who participated, whether settlement was reached, and whether further ADR proceedings are contemplated. MCR 2.411(C)(3).

Is the procedure confidential?

ArbitrationExcept as provided by MCL 600.5077, court rule, or other arbitration agreement, a record may not be made of an arbitration hearing. An arbitrator may make a record to be used only by the arbitrator to aid in reaching the decision.
A record must be made of the portion of a hearing that concerns child support, custody, or parenting time in the same manner required by the Michigan Court Rules for the record of a witness’s testimony in a deposition. MCL 600.5077
MediationConfidentiality in the mediation process is governed by MCR 2.412.
Mediation communications are confidential. They are not subject to discovery, are not admissible in a proceeding, and may not be disclosed to anyone other than mediation participants except as provided in MCR 2.412(D). MCR 2.412(C).

Is the award enforceable?

ArbitrationThe circuit court must enforce an arbitrator’s award or other order issued under the Revised Judicature Act in the same manner as an order issued by the circuit court. A party may make a motion to the circuit court to enforce an arbitrator’s award or order. MCL 600.5079(1).
An appeal from an arbitration award that the circuit court confirms, vacated, modifies, or corrects must be taken in the same manner as from an order or judgment in other civil actions. MCL 600.5082.
MediationMediation agreements are binding and enforceable once executed by the parties involved.
If the case is settled through mediation, within 21 days the attorneys must prepare and submit to the court the appropriate documents to conclude the case. MCR 2.411(C)(4).

Bridge Collapses and Contractual Uncertainty: Navigating Force Majeure

Bridge Collapses and Contractual Uncertainty: Navigating Force Majeure

In the aftermath of a catastrophic event, such as the Francis Scott Key Bridge collapse, the immediate focus rightfully rests upon the human toll and the urgent need for rescue, recovery, and support. However, amidst these pressing humanitarian concerns, it is important to recognize the concurrent commercial implications that arise from such tragedies. The disruption to shipping and logistics triggered by this disaster requires careful attention, as businesses grapple with the practical challenges and legal complexities of navigating force majeure clauses.

Understanding Force Majeure Provisions

Force majeure clauses are designed to allocate responsibility for events beyond a party’s control, excusing performance when such events delay or prevent it. Whether a shortage of parts due to shipping delays resulting from a port closure warrant invoking a force majeure clause depends on contractual language and specific circumstances. In the absence of such a clause, jurisdictional laws or common law principles may offer similar remedies.

Force majeure clauses vary widely in content and scope. Some enumerate specific qualifying events, while others adopt a broader approach encompassing any uncontrollable event. Given this variability, it is crucial for suppliers to seek legal guidance to assess the language of specific force majeure provisions.

Legal Considerations in Michigan

In Michigan, the defense of impossibility is narrowly recognized, particularly under the Michigan Commercial Code (MCC), which acknowledges the defense of impracticability concerning the sale of goods. Impracticability may excuse delayed or non-delivery of goods due to compliance with regulations or unforeseeable events. However, suppliers may not always rely on this defense, especially if the contract imposes greater obligations on them.

Notice Requirements

Invoking force majeure typically requires providing notice to the unaffected party, with varying requirements across contracts. Some contracts mandate notice within a specified timeframe from the event’s occurrence, while others stipulate prompt notification without specific timelines. Notices may need to detail the expected consequences and duration of the force majeure event, and failure to adhere to notice requirements can jeopardize a party’s claim.

Given the unpredictable impact of events like the Francis Scott Key Bridge collapse in Baltimore on supply chains, some suppliers may choose to issue proactive force majeure notices, acknowledging evolving disruptions and their implications for contract performance.

Mitigation Obligations

Even when an event falls under a contract’s force majeure provision, the affected party must take reasonable steps to mitigate foreseeable consequences. Failure to do so may undermine a force majeure claim, particularly if alternative means of fulfilling obligations were available.

Conclusion

It seems unlikely that a court would reject a force majeure argument for a surprisingly shocking event such as a container ship running into the Francis Scott Key Bridge. However, one should be aware that the inclusion of a force majeure clause in a Supply Agreement does not automatically mean if a catastrophic event occurs that your performance is excused.

The details of the event and the language of the force majeure clause can greatly impact your performance as well as the required performance your vendor/customer. If a supplier finds itself in a position where it is difficult to meet contractual obligations due to lack of a required product, it may be time to review supply contracts to understand its rights under a force majeure clause or other legal protections.

Tips to Avoid Common Retirement Plan Errors

Master Your Retirement Plan: Avoid Common Errors

Being on the wrong side of ERISA and Internal Revenue Code requirements creates one headache after another. To prevent common errors, you need to make sure your plan document satisfies these requirements, but you also need to make sure you are following the terms of your plan document. Here are some common errors and helpful tips for avoiding them.

1. Plan Documents: A simple error with a big impact.

Make sure your plan has the required documentation. This seems simple and it can be, but it is also one of the most common errors. Your plan documents must comply with ERISA and Internal Revenue Code requirements. For example, you must sign and date the plan document, sign and date any amendments, adopt amendments in the way your plan requires, and disclose your Summary Plan Description (SPD) to participants and beneficiaries as required by law.

2. Eligibility: Wait, was Jim eligible to participate last year?

Errors about who is eligible to participate, and when they begin participation, are also common. Your plan document defines eligibility, so refer to it often and avoid late enrollment of eligible participants. Plan documents often also exclude certain employees, either because they are covered by another plan or because they simply are not eligible. For instance, seasonal and temporary employees are often excluded from retirement plans, and union employees sometimes have separate plans to reflect the terms of their collective bargaining agreement. You need to correctly and consistently apply these exclusions.

3. Timing is Everything: Making contributions.

Plan documents usually set forth the deadlines by which contributions must be made. These deadlines may vary depending on the type of contribution (for instance, employee elective deferrals must be deposited as soon as reasonably possible, whereas employer contributions may have a later deadline). Contributions deposited after the deadline are deemed to be late. Making late contributions, or otherwise failing to make consistently timely contributions, may require corrections that include government filings, self-correction and additional contributions for lost earnings. To avoid errors, determine with your payroll provider how early you can reasonably make contributions and set procedures to help ensure deposits are consistently made by that date.

4. Loans: Write down the rules and follow them.

401(k) plans may allow participants to take loans but aren’t required to offer loans. If they do, the loan procedures must be in writing. The plan administrator (or the loan administrator, if separate) should always follow the written procedures, especially with regard to repayment terms, the maximum number of loans, and the terms and process for taking loans. Failure to follow the loan procedures or other failures involving loan payments may often require correction.

5. Fiduciary Duties: Document, document, document.

The importance of documentation cannot be overstated. Fiduciaries for retirement plans are entrusted with certain responsibilities for plan participants and beneficiaries, and with great fiduciary duties come great potential liabilities! Fulfilling these responsibilities is only part of the obligation. How fiduciaries meet these responsibilities matters, as does documenting compliance with the fiduciary duties. Documentation provides a clear picture of how decisions are made and why—it provides rationale at the time of the decision and can help prevent later speculation by those not part of the process. It also helps avoid the risk that a fiduciary will comply with fiduciary duties in the moment but will be unable to prove it when a claim is made.

These are only some common errors we see in retirement plans. Often, preventing these errors is simple, and preventative measures are easier to take than corrective steps. If you have any questions about compliance, how to correct these errors and others, or other employee benefits matters, please contact your Varnum Employee Benefits team.

Federal Court Strikes Down the Corporate Transparency Act as Unconstitutional

Federal Court Strikes Down the Corporate Transparency Act as Unconstitutional
Visit Our CTA Resource Center

On March 1, 2024, the federal judge presiding over the lone case testing the validity of the Corporate Transparency Act (CTA) struck down the CTA as unconstitutional. As we have explained, through the CTA, Congress imposed mandatory reporting obligations on certain companies operating in the United States, in an effort to enhance corporate transparency and combat financial crime. Specifically, the CTA, which took effect on January 1, 2024, requires a wide range of companies to provide personal information about their beneficial owners and company applicants to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). More than 32.5 million existing entities are expected to be subject to the CTA, and approximately 5 million new entities are expected to join that number each year. By mid-February, approximately a half million reports had been filed under the CTA according to FinCEN.

The CTA’s enforceability is now in doubt. In National Small Business United d/b/a National Small Business Association v. Yellen, the Honorable Liles C. Burke of the United States District Court for the Northern District of Alabama held that the CTA exceeded Congress’s authority to regulate interstate commerce, and that the CTA was not necessary to the proper exercise of Congress’ power to regulate foreign affairs or its taxing power. The Court issued a declaratory judgment—stating that the CTA is unconstitutional—and enjoined the federal government from enforcing the CTA’s reporting requirements against the plaintiffs in that litigation. A nationwide injunction, which would have raised its own enforceability concerns, was not included in the Court’s ruling.

The Court focused on three aspects of the CTA. First, the Court highlighted that the CTA imposes requirements on corporate formation, which is traditionally left to state governments as matters of internal state law. Second, the Court observed that the CTA applies to corporate entities even if the entity conducts purely intrastate commercial activities or no commercial activities at all. Third, the Court concluded that the CTA’s disclosure requirements could not be justified as a data-collection tool for tax officials as that would raise the specter of “unfettered legislative power.”

What the Decision Means for Entities Subject to the CTA

The Court’s decision creates uncertainty on entities’ ongoing obligations under the CTA.  Although the Court purported to limit its injunction to the parties in the litigation before it, the lead plaintiff in the suit is the National Small Business Association (NSBA). In its opinion, the Court held that the NSBA had associational standing to sue on behalf of its members. Based on precedent, this means the Court’s injunction likely benefits all of the NSBA’s over 65,000 members. If so, the government is prevented from enforcing the CTA’s reporting requirements against any entity that is a member of the NSBA.

Regardless of membership in the NSBA, however, the Court’s declaratory judgment that the CTA is unconstitutional also raises serious doubts about the government’s ability to enforce the CTA’s reporting requirements. This could amount to a de facto moratorium on CTA enforcement, depending on the government’s view of the decision.

What Happens Next

The government will likely appeal this decision, but the Court’s injunction and declaration will remain in effect unless a stay is granted. To receive a stay, the government will first likely need to file a motion in the district court, which will consider (1) how likely it is that the government will succeed on appeal; (2) whether the government will be irreparably harmed without a stay; (3) whether a stay will injure other parties interested in the litigation; and (4) whether a stay would benefit the public interest. If the district court denies a stay, the government will be able to seek a stay from the Atlanta-based United States Court of Appeals for the Eleventh Circuit.

The government has 60 days to appeal, though it will likely file its appeal sooner given the grant of an injunction and decision’s far-reaching consequences. The grant or denial of stay should be resolved in the coming weeks, but the timing of any final decision from the Court of Appeals is uncertain. In 2023, the median time for the Eleventh Circuit to resolve a case was over 9 months. However, the key deadline by which tens of millions of companies otherwise must file their initial report under the CTA is January 1, 2025.

Varnum’s Corporate Transparency Act Task Force will monitor all developments in National Small Business United.  Contact any member of Varnum’s CTA Taskforce, or your Varnum attorney to learn more.

Navigating Health Care Data Management: Proposed Changes to HIPAA’s Privacy Rule

Proposed Changes to HIPAA's Privacy Rule

The Health Insurance Portability and Accountability Act (HIPAA) contains Standards for the Privacy of Individually Identifiable Health Information (Privacy Rule). The Privacy Rule applies to covered entities (i.e., (i) a health plan; (ii) a health care clearinghouse; and (iii) a health care provider who transmits any health information in electronic form in connection with a transaction for which DHHS has adopted standards). More specifically, the Privacy Rule broadly establishes national standards to protect individuals’ protected health information (PHI), by requiring certain safeguards, setting limits and conditions on the uses and disclosures of PHI, as well as giving individuals rights over their PHI.

PHI is defined as individually identifiable health information (IIHI) that is:

    • (i) transmitted by electronic media;
    • (ii) maintained by electronic media; or
    • (iii) transmitted or maintained in any other form or medium.

    In January 2021, the Department of Health and Human Services (DHHS) issued a Notice of Proposed Rulemaking (NPRM) which proposes to modify the Privacy Rule. According to DHHS, the NPRM sought to modify HIPAA’s Privacy Rule to support individuals’ engagement in their health care, remove barriers to coordinated care, and decrease regulatory burdens on the health care industry. The NPRM estimated that the total savings from the proposed reform would be roughly $3.2 billion over five years.

    NPRM Spotlight: Proposed Changes to the Right of Individuals to Access Their PHI

    Of the nine different sections contained in the NPRM, the most extensive proposed changes involve changes to an individual’s right to access their PHI. These proposed changes include:

      1. Adding definitions for electronic health record (EHR) and personal health application

      The NPRM defines an EHR as “an electronic record of health-related information on an individual that is created, gathered, managed, and consulted by authorized health care clinicians and staff.” Further, the NPRM proposes to define personal health application as “an electronic application used by an individual to access health information about that individual in electronic form, which can be drawn from multiple sources, provided that such information is managed, shared, and controlled by or primarily for the individual, and not by or primarily for a covered entity or another party such as the application developer.” As stated in the NPRM, these proposed definitions would clarify the proposed modifications to the right of access.

        2. Strengthening the access right to inspect and obtain copies of PHI

        DHHS proposes to enable individuals to use personal resources, such as taking notes, videos, and photographs, to view and capture PHI in a designated record set. These proposed changes are seen as a way to eliminate “persistent barriers” that individuals face when trying to inspect and/or obtain copies of their PHI.

          3. Modifying the implementation requirements for requests for access and timely action in response to requests for access

          • Requests for access: The NPRM prohibits a covered entity from imposing unreasonable measures on an individual exercising the right of access that create a barrier to or unreasonably delay the individual from obtaining access.
          • Timeliness: The NPRM requires that access be provided “as soon as practicable,” but in no case later than 15 calendar days after receipt of the request, with the possibility of one 15 calendar-day extension. 

          4. Addressing the form of access

          When a covered entity offers a summary in lieu of access, the covered entity must inform the individual that they retain the right to obtain a copy of the requested PHI if they do not agree to receive the summary.

          5. Addressing the individual access right to direct copies of PHI to third parties

          The NPRM creates a separate set of provisions for the right to direct copies of PHI to a third party.

          6. Adjusting permitted fees for access to PHI and ePHI

          DHHS plans to change the access fee provisions of the Privacy Rules to establish a fee structure with elements based on the type of access request.

          7. Notice of access and authorization fees

          DHHS proposes to add additional regulations requiring covered entities to provide advance notice of approximate fees for copies of PHI requested under the access right and with an individual’s valid authorization.

          Impact of HIPAA Privacy Rule Update: Covered Entities

          A final rule implementing these proposed changes to the Privacy Rule has not yet been announced. However, the final rule is expected to be posted in 2024. Although the proposed HIPAA Privacy Rule updates aim to relieve the administrative burden imposed on covered entities, in the short term, it undoubtedly will cause significant work for covered entities seeking to comply with these updates. To comply, covered entities will likely incur costs, update various policies and procedures, and also update workforce member training.

          Interested parties are encouraged to contact Varnum’s Health Care Team for assistance navigating and complying with the evolving HIPAA Privacy Rules.