COVID-19 Update: Interplay of Various Programs Under the CARES Act

COVID-19 has affected businesses across many sectors, including healthcare. This alert focuses on the impact of utilizing various relief programs available and the interplay of such utilization with eligibility for other programs.

Loan Options:

Several loan options are available to small to mid-size businesses. The Small Business Administration’s (“SBA”) Paycheck Protection Program (the “PPP”) provides forgivable loans of up to $10 million to small businesses. The SBA’s Economic Injury Disaster Loan Assistance program (“EIDL”) provides non-forgivable loans of up to $2 million to small businesses with potential advance of up to $10,000 that do not have to be repaid. The Federal Reserve’s Main Street Lending Program (“Main Street”) is available to small and mid-sized businesses and provides non-forgivable loans ranging from $1 million to $25 million. The Federal Reserve is also required to implement, but has yet to provide any guidance on, a Midsize Business Loan Program (“Midsize”) for midsize businesses that is similar to but separate from Main Street.

A business may apply for both a PPP loan and a loan under EIDL, but the proceeds from the loans cannot be used for the same purposes. A loan granted under EIDL is also eligible to be refinanced into a business’s PPP loan, and therefore may be eligible for forgiveness. In addition, businesses that receive PPP and EIDL loans are still eligible to apply for Main Street loans. Guidance is pending regarding the terms of Midsize loans and whether a business may receive funds under Midsize in addition to other programs.

Federal Tax Relief:

Employers may defer the deposit and payment of the employer’s share of Social Security taxes, with partial payment due in December 2021 and full payment due in December 2022. Receipt of a PPP loan does not impact the deferral; however, once the lender issues a decision to forgive the PPP loan, the employer is no longer eligible for additional deferrals. The amounts already deferred would remain payable on the dates listed above.

Employers may also qualify for Employee Retention Credits equal to 50 percent of qualifying wages up to $10,000 per employee if certain criteria are met. An employer that receives a PPP loan is not eligible for Employee Retention Credits and must repay any credits received before the PPP loan was granted.

Based on current guidance, no restrictions apply to an employer’s ability to take advantage of Social Security tax deferrals or Employee Retention Credits based on receipt of a Main Street or Midsize loan.

Additional Relief Available for Healthcare Providers:

The Centers for Medicare & Medicaid Services (“CMS”) has expanded its Accelerated and Advanced Payment Program that allows certain providers to receive advanced payments equal to three to six months’ worth of Medicare reimbursement. The expanded program acts as a short-term, interest free loan that works independently from other relief options.

$30 billion out of $100 billion in Provider Relief Funds has automatically been distributed to providers based on their share of total 2019 Medicare Fee-for-Service reimbursements. Receipt of other forms of relief does not prohibit the provider from keeping the Provider Relief Funds, but the recipient must certify that it will not use the funds to reimburse expenses or losses that have been reimbursed from other sources, such as PPP loans. No guidance has been issued to date regarding the remaining $70 billion in Provider Relief Funds to be released.

Additional Information:

The availability of relief and guidance on related programs is quickly evolving and is subject to change. Underwood Law Firm is monitoring this developing topic. If you have questions related to the relief options or any other health care matters, please contact Gavin Gadberry ( or Traci Phipps (

Department of Education (DOE) Releases Application for Education Stabilization Fund

The Department of Education (DOE) released its much anticipated application for the Elementary and Secondary School Education Relief Fund (ESSER Fund) as prescribed by the CARES Act today. State Education Agencies may now apply for this funding. The press release can be found here.  There is no requirement for districts to apply to the federal government for this money.

Texas will receive approximately $1.285 billion in total with approximately $1.157 billion of that amount to local districts directly and in proportion to what they received under Title I, Part A. TEA may reserve up to ten percent of the total funds. At this time, the Agency has not given an indication on how this money may be spent. We are hopeful that more information will be forthcoming. Districts should remain in close contact with the Agency as it distributes these funds and ensure all applicable guidelines are followed.

For questions, please contact Colby Nichols at or David Backus at

Roger Cox Publishes New Edition of “Cox’s Texas Creditors’ Rights Laws Annotated”

We are thrilled to announce Underwood Law Firm’s Roger Cox has published a new edition of his book titled “Cox’s Texas Creditors’ Rights Laws Annotated.”

Cox’s Texas Creditors’ Rights Laws Annotated combines the compactness and portability of an unannotated code and the interpretive materials of a fully annotated code into a single publication. It contains selected primary law materials relevant to Texas Creditors’ Rights, including portions of the:

-Texas Business and Commerce Code

-Texas Business Organizations Code

-Texas Civil Practice and Remedies Code

-Texas Estates Code

-Texas Finance Code

-Texas Property Code

-Texas Constitution

The pamphlet also contains relevant Federal statutes, including portions of the Bankruptcy Code, FIRREA, Fair Debt Collection Practices Act, and more. Cox includes commentary and leading cases, references to leading CLE and law review publications, and research references to other legal resource.

The new edition can be purchased in both hard copy and e-version here.

*Roger Cox is the author of Cox’s Texas Creditors Rights Laws Annotated (Thomson Reuters 2018-20), and a former contributor to the SMU Law Review.  He is Board Certified in Business Bankruptcy Law, Commercial Real Estate Law, and Farm & Ranch Real Estate Law by the Texas Board of Legal Specialization.  Underwood has offices in Amarillo, Austin, Fort Worth, Lubbock, and Pampa. 

COVID-19 and The CARES Act- Temporary Amendments to Bankruptcy Code

By Roger Cox *

            The so-called CARES Act, passed in response to the COVID-19 pandemic, includes temporary amendments to the Bankruptcy Code – highlighting, in one case, the potential impact of a relatively new statute designed to provide streamlined relief to small businesses.

            Small Business Reorganization.  The Small Business Reorganization Act of 2019 (“the SBRA”) became effective February 19, 2020.  Codified as a new subchapter V. of Chapter 11 of the Bankruptcy Code, this was originally available to debtors whose obligations were primarily business related, having a debt load of $2,725,625.00 or less. 

            SBRA Debt Limit Increased.  Under the CARES Act, the SBRA eligibility limit has been increased (for a period of one year) to $7,500,000.00.

            SBRA “Streamlines” Small Business Cases. Accordingly, small business debtors who fit this newly expanded eligibility limit may seek Chapter 11 relief without being subject to the extraordinary cost and uncertainty of a Chapter 11.  SBRA debtors, for example, escape the burdensome United States Trustee fees, creditors’ committees are generally not appointed; however, a standing trustee will be appointed in every SBRA case. Only the debtor may file a plan, a disclosure statement may not be required, and a SBRA plan may be confirmed even if all impaired classes vote to reject the plan.  New time limits apply. 

            Effect on Creditors. Generally, creditors who hold fully secured claims may not see much of a difference; however, unsecured creditors (or those whose claims are proportionately secured) will lose what little leverage they may have had in a conventional Chapter 11 given the effective lack of voting and the effective absence of the absolute priority rule at plan confirmation.  In short, all creditors may lose some leverage, but arguably, the cost of SBRA cases may be much less.

            Consumer Cases.  The CARES Act also amends Chapter 7 and 13 in the context of consumer bankruptcies.  Generally, CARES Act and similar stimulus payments will generally not be included in the definition of “income” for eligibility purposes for a consumer Chapter 7, nor will such payments be included in the calculation of “disposable income” for Chapter 13 plan confirmation purposes.  Chapter 13 debtors with existing confirmed plans who have suffered a “material financial hardship” due to the pandemic may be allowed to seek plan modifications – notably, this may include extension of a payment for up to seven years after the first plan payment was due.


            These provisions are generally set to sunset one year after the effective date of the CARES Act.  That said, with additional legislation expected, any deadlines or monetary thresholds remain fluid.  In the meantime, however, creditors of small businesses may see more SBRA filings than originally anticipated now that the limitation has nearly been tripled.

*Roger Cox is the author of Cox’s Texas Creditors Rights Laws Annotated (Thomson Reuters 2018-20), and a former contributor to the SMU Law Review.  He is Board Certified in Business Bankruptcy Law, Commercial Real Estate Law, and Farm & Ranch Real Estate Law by the Texas Board of Legal Specialization.  Underwood has offices in Amarillo, Austin, Fort Worth, Lubbock, and Pampa. This article is for general and academic information only and is not intended as legal advice or as a specific position asserted on behalf of any existing or future client of the firm.

COVID-19 Healthcare Update: Hospital Capacity

On April 17, 2020, Governor Greg Abbott issued an Executive Order related to hospital capacity. The Governor had, by previous Executive Order, ordered that all surgeries and procedures that were not medically necessary be postponed throughout Texas through April 21, 2020. Today’s new Executive Order continues that prohibition generally through May 8, with the exception that beginning April 22, the following procedures can be performed:

-any procedures that, if performed in accordance with the commonly accepted standard of clinical practice, would not deplete the hospital capacity or the personal protective equipment needed to cope with the COVID-19 disaster; or

-any surgery or procedure performed in a licensed health care facility that has certified in writing to the Texas Health and Human Services Commission that:

(1) it will reserve at least 25% of its hospital capacity for treatment of COVID‑19 patients; and

(2) it will not request any personal protective equipment from any public source, whether federal, state, or local, for the duration of the COVID‑19 disaster.

In another Executive Order issued today, the Governor Abbott extended the prohibition on visiting nursing homes, state supported living centers, assisted living facilities, and long-term care facilities except to provide critical assistance.

The Governor has also formed a task force of medical and economic experts to advise on the reopening of Texas, targeting early May. A plan for opening businesses is tentatively set to be announced on April 27.

Schools to Remain Closed for Rest of School Year: COVID-19

On April 17, 2020, Governor Greg Abbott announced several Executive Orders aimed at restarting the Texas Economy. The first Executive Order establishes a strike force consisting of three separate sets of professionals.

(1.) The first is government and includes: Lieutenant Governor Patrick, Speaker of the House Dennis Bonnen, Attorney General Ken Paxton and Comptroller Hegar. (2.) The second workgroup includes medical experts, and (3). the third consists of business leaders.

In one of the Orders, the Governor announced that schools will remain closed for the remainder of the school year, because it “would be unsafe to allow students to gather.”. The Commissioner of Education will provide further guidance as to further steps (some can be found here), including how to proceed with graduation ceremonies.

Quarantine Order Success Story

The novel Coronavirus Pandemic has impacted Texas cities, large and small, in innumerable ways. In response to the pandemic, many cities, as well as counties, have issued Orders of Local Disaster and adopted resolutions extending those declarations.  But what should a city do when a resident does not follow such an order? How can cities protect their citizens from those few that violate the spirit and letter of these declarations?

Recently in one city, there was an individual who had been in close contact with a family member who had tested positive for COVID-19. This individual was not staying at home and self-quarantining. Instead, this individual continued to be out in public without being cleared by a medical professional.

Pursuant to the powers provided by State and Local directives, the Mayor issued a Quarantine Order and had it served on the non-compliant person ordering the individual to remain quarantined within his residence for the duration of his suspected illness or until he had submitted to a test for COVID-19 that is returned negative.  This Quarantine Order was served on the individual by a city police officer. Happily, the individual ultimately tested negative for COVID-19 and was allowed to end his quarantine. Such a Quarantine Order is one option in a City’s toolbox to enforce its orders during these unprecedented times.

COVID-19 and Notary Public Rules

Governor Greg Abbott has suspended certain laws concerning appearance before a notary public to execute:

1. a self-proved will,

2. a durable power of attorney,

3. a medical power of attorney,

4. a directive to physician, or

5. an oath of an executor, administrator, or guardian.

This order temporarily allows a person to appear before a notary public by videoconference when executing these listed documents.

Governor Abbott noted that “The State of Texas is taking any action necessary to enforce social distancing and reduce the need for in-person contact throughout the COVID-19 response. These temporary suspensions provide flexibility in the notarization process for certain documents and ensure Texans are able to stay home as much as possible to protect themselves and others from this virus.” 

The following conditions will apply whenever this suspension is invoked:

1. A notary public shall verify the identity of a person signing a document at the time the signature is taken by using two-way video and audio conference technology.

2. A notary public may verify identity by personal knowledge of the signing person, or by analysis based on the signing person’s remote presentation of a government-issued identification credential, including a passport or driver’s license, that contains the signature and a photograph of the person.

3. The signing person shall transmit by fax or electronic means a legible copy of the signed document to the notary public, who may notarize the transmitted copy and then transmit the notarized copy back to the signing person by fax or electronic means, at which point the notarization is valid.

This suspension of the rules will remain in effect until terminated by the Office of the Governor or until the March 13, 2020 disaster declaration is lifted or expires. Documents executed while this suspension is in effect, and in accordance with its terms, will remain valid after the termination of this suspension.

Guidance from the Texas Health and Human Services Commission Waiving Certain Certified Nurse Aide Requirements for Nursing Facilities: COVID-19

On April 10, 2020, the Texas Health and Human Services Commission (HHSC) issued Provider Letter 20-26Waiver of Certified Nurse Aide Requirements Granted.

Governor Abbott suspended certain provisions prohibiting a nursing facility from hiring, for longer than four months, an individual to complete nurse aid tasks who is not a certified nurse aide (CNA) for longer than four months. The suspension provides flexibility in staffing during the COVID-19 pandemic. According to PL 20-26, the following rules are suspended:

– 40 Texas Administrative Code (TAC) §19.1001(a)(4)(A)(ii)

– 40 TAC §19.1001(a)(4)(B), (C), (E), (F), and (H)

Additionally, 40 TAC §19.1001(a)(4)(D) is partially suspended, only to the extent necessary to allow the employment as a nurse aide of an individual who is not listed in the Nurse Aide Registry due solely to the individual’s having no history of employment as a nurse aide.

Two important requirements were NOT suspended.

First, the waiver does not suspend requirements for supervision or competency. Nursing facilities are still required to ensure that individuals “completing nurse aide task are able to demonstrate competency in skills and techniques to care for residents’ needs….”  Specific training on tasks to be performed, competency demonstration on the skill, and documentation of such demonstration is required. The American Health Care Association (AHCA) has developed a training program for its members that would assist nursing facilities in meeting the competency requirements temporary nurse aides through an online course entitled Temporary Nurse Aid Training and a skills competency checklist.

Second, if an applicant will be completing nurse aide tasks, nursing facilities must still “receive verification that the individual is not designated” in the Nurse Aide Registry or Employee Misconduct Registry with a finding of abuse, neglect, or mistreatment of a resident, or misappropriation of a resident’s property.  Traditional criminal history checks must also be conducted. These checks may be conducted through the HHSC Employability Status Check Search system.

If you have questions related to PL 20-26 or other long-term care matters, please contact Gavin Gadberry (, Chuck Mallard (, Stephanie James (, or Traci Phipps (

Additional COVID-19 Guidance From Department of Labor (DOL)

On April 10, 2020, the DOL issued additional COVID-19 guidance on case reporting and unemployment compensation.  Please see below a summary of the DOL’s new guidance. 

Guidance for Recording Cases of COVID-19

The U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) has issued interim guidance for enforcing OSHA’s recordkeeping requirements (29 CFR Part 1904) as it relates to recording cases of COVID-19.

Under OSHA’s recordkeeping requirements, COVID-19 is a recordable illness, and employers are responsible for recording cases of COVID-19, if the case:

– Is confirmed as a COVID-19 illness;

– Is work-related, as defined by 29 CFR 1904.5; and

– Involves one or more of the general recording criteriain 29 CFR 1904.7, such as medical treatment beyond first aid or days away from work.

In areas where there is ongoing community transmission, employers other than those in the healthcare industry, emergency response organizations (e.g., emergency medical, firefighting and law enforcement services), and correctional institutions may have difficulty making determinations about whether workers who contracted COVID-19 did so due to exposures at work. Accordingly, until further notice, OSHA will not enforce its recordkeeping requirements to require these employers to make work-relatedness determinations for COVID-19 cases, except where:

(1) There is objective evidence that a COVID-19 case may be work-related; and

(2) The evidence was reasonably available to the employer.

Employers of workers in the healthcare industry, emergency response organizations and correctional institutions must continue to make work-relatedness determinations pursuant to 29 CFR Part 1904. 

Guidance Regarding Pandemic Emergency Unemployment Compensation Program

The U.S. Department of Labor’s Employment and Training Administration (ETA) released an Unemployment Insurance Program Letter (UIPL) 17-20, which provides further guidance to states as they implement the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including the Pandemic Emergency Unemployment Compensation (PEUC) program.

Under the Pandemic Emergency Unemployment Compensation program, states can provide up to 13 weeks of federally funded benefits to qualified individuals who:

– Have exhausted all rights to regular compensation under state law or Federal law with respect to a benefit year that ended on or after July 1, 2019;

– Have no rights to regular compensation with respect to a week under any other state UC law or Federal UC law, or to compensation under any other Federal law;

– Are not receiving compensation with respect to a week under the UC law of Canada; and

– Are able to work, available to work, and actively seeking work, although states must offer flexibility on “actively seeking work” where there are COVID-19 impacts and constraints.

– The cost of PEUC benefits is 100% federally funded. States may not charge employers for any PEUC benefits paid. Implementation costs and ongoing administrative costs are also 100% federally funded.

– In addition to the PEUC program, ETA has also provided guidance to the states regarding two additional CARES Act unemployment programs.

Under Federal Pandemic Unemployment Compensation (FPUC),states will administer an additional $600 weekly payment to certain eligible individuals who are receiving other benefits. The guidance makes clear that:

o   If an individual is eligible to receive at least $1 (one dollar) of qualifying state unemployment benefits, the individual will receive the full $600 weekly payment under this program. 

o   Child support obligations may be deducted from the FPUC payments.

o   The FPUC payments are taxable income.

The Pandemic Unemployment Assistance (PUA)program assists individuals who do not qualify for regular unemployment compensation and are unable to continue working as a result of the coronavirus, including self-employed workers, independent contractors, and gig workers. PUA provides up to 39 weeks of benefits to qualifying individuals who are able to work and available for work but are unemployed, partially unemployed, or unable or unavailable to work due to one of the following COVID-19 related reasons:

o   The individual has been diagnosed with COVID-19 or is experiencing symptoms of COVID-19 and is seeking a medical diagnosis;

o   A member of the individual’s household has been diagnosed with COVID-19;

o   The individual is providing care for a family member or a member of the individual’s household who has been diagnosed with COVID-19;

o   A child or other person in the household for which the individual has primary caregiving responsibility is unable to attend school or another facility that is closed as a direct result of the COVID-19 public health emergency and such school or facility care is required for the individual to work;

o   The individual is unable to reach the place of employment because of a quarantine imposed as a direct result of the COVID-19 public health emergency;

o   The individual is unable to reach the place of employment because the individual has been advised by a health care provider to self-quarantine due to concerns related to COVID-19;

o   The individual was scheduled to commence employment and does not have a job or is unable to reach the job as a direct result of the COVID-19 public health emergency;

o   The individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID-19;

o   The individual has to quit his or her job as a direct result of COVID-19; or

o   The individual’s place of employment is closed as a direct result of the COVID-19 public health emergency.

As always, please contact us at Underwood Law Firm with any questions or concerns.