By: Shur Erdenekhuu and Trevor Stapleton

On Tuesday, December 3, 2024, Judge Amos L. Mazzant III of the US District Court for the Eastern District of Texas issued a nationwide injunction, blocking enforcement of the Corporate Transparency Act less than a month from the January 1, 2025 enforcement date. The order, while providing immediate relief, still raises questions and uncertainty for business owners across the country.

The Corporate Transparency Act was passed in 2021 under authority of the Constitution’s Commerce Clause and requires “beneficial owners” to file personal information with FinCEN, a subagency of the Department of Treasury. In response, impacted business owners and legal experts raised constitutional validity concerns relating to the Act’s far-reaching compliance requirements. Until last Tuesday, these constitutional concerns went judicially unaddressed at a nationwide level. The Department of Justice, on behalf of the Department of Treasury, has already filed a Notice of Appeal.

What Now?

As the Act’s constitutionality continues to be ligated, compliance requirements remain in limbo. In response to the recent order, FinCEN released an alert indicating that beneficial owner filings are now voluntary, and individuals who choose not to file while the injunction remains in effect are not subject to liability. FinCEN has yet to comment on whether the deadline will be extended past January 1, 2025, in the event enforcement is affirmed.

To find out how this ruling may impact you and your business, contact an attorney today.

By Suzanne M. Nicholson

As an appellate practitioner, I am keenly aware that sometimes, a procedural matter can doom what would otherwise be a meritorious issue for appeal. Trial attorneys are well-advised to check and double-check procedural rules and case law governing the issues in their cases. Here’s a few recent developments to be aware of.

The record on appeal: electronic recordings now available in Santa Clara County.

            It should not be news to anyone that it is the appellant’s burden to produce an adequate record for appeal. That includes not just the written submissions to the trial court, but also reporter’s transcripts of all proceedings that could have a substantive impact on your case. If you do not have a court reporter present for your hearing, you will be struck trying your best to get an agreed statement or a settled statement should the case go up on appeal. Believe me, that can be a serious challenge. Any omissions or deficiencies are going to result in presumptions made against the appellant.

            It came to my attention this week that Santa Clara Superior Court has issued a General Order authorizing the use of electronic recording equipment in certain types of proceedings where a court reporter is unavailable. This is welcome news, and hopefully a harbinger of things to come in other courts as well. The General Order recognizes the lack of a sufficient number of court-employed court reporters, and the inability of indigent parties to retain and pay for their own court reporters. Because the absence of an adequate record can effectively deny these parties access to an appeal, Santa Clara now permits its judicial officers “to authorize the electronic recording… of hearings at which fundamental rights are at stake.” Electronic recordings are already permitted for misdemeanor, infraction, and limited civil cases. The General Order now permits electronic recordings in felony proceedings, family law proceedings, certain probate conservator or guardianship proceedings, and civil contempt proceedings. You can view the complete General Order and its supporting documentation here.

CCP 473(d) motions to set aside a “void” default judgment via extrinsic evidence no longer subject to two-year rule.

            On November 18, the California Supreme Court issued a decision in California Capital Ins. Co. v. Hoehn (2024) 2024 Cal.LEXIS 6438* [2024 WL 4812045]. The defendant had moved under CCP 473(d) to set aside a default judgment entered against him nine years prior, based on extrinsic evidence of improper service of process. The trial court held the motion was time-barred, and the appellate court affirmed, based on a long-standing line of appellate decisions “borrowing” a two-year outer time limit for such motions from CCP 473.5, which governs motions for relief from default where service of a summons had not resulted in actual notice to the defendant. Under this line of cases, a defendant seeking to have a judgment declared void based on extrinsic evidence after two years could not seek relief via motion in the original action, but was required to bring an independent equitable action.

            The judicially-imposed two-year limitation period on motions to set aside a default judgment based on extrinsic evidence is no longer. The Court in Hoehn could find no compelling reason, either in policy or principles of statutory interpretation, to impose such a limitation. Noting that the right to proper service is essential to a defendant’s due process rights, the Court held that “[p]rocedural hurdles that are unnecessary to the fair adjudication of default judgments should not stand in the way of a defendant’s due process rights.”

Waiver and judicial disqualification.

            Finally, in October, the California Supreme Court decided North American Title Co. v. Superior Court (2024) 17 Cal.5th 155.

            North American Title addresses the interplay between CCP 170.3(c)(1), which requires a party seeking to disqualify a judge via a verified statement of disqualification to do so “at the earliest practicable opportunity after discovery of the facts constituting the ground for disqualification” and the nonwaiver provision of CCP 170.3(b)(2) which provides that “there shall be no waiver” of disqualification where a judge has determined themselves to be disqualified based on their personal bias or prejudice concerning a party. The appellate court held that CCP 170.3(b)(2) precluded a finding of waiver where a party’s efforts to disqualify a judge based on the judge’s personal bias or prejudice are untimely.

            The Supreme Court reversed, holding that the timeliness requirement for disqualifications sought by a party under CCP 170.3(c)(1) applies regardless of the basis for disqualification. The non-waiver provision of CCP 170.3(b)(2) only applies to cases of judicial self-disqualification based on personal bias or prejudice, and is inapplicable where disqualification is sought by a party to the proceedings.

Wilke Fleury is pleased to announce its inclusion in the 2025 edition of ‘Best Law Firms’ ranked by Best Lawyers! Firms included in the 2025 “Best Law Firms” list are recognized for professional excellence with persistently impressive ratings from clients and peers. Achieving a tiered ranking signals a unique combination of quality law practice and breadth of legal expertise.

Now Hiring – Litigation Associate

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Read more about Steven J. Williamson

Teaming up with Ali Ferrando at Brothers Smith, LLP, the Walnut Creek, CA Primerus firm, Kathryne spoke on the panel together with two corporate counsel: Spiwe Jefferson, General Counsel at Asset Marketing Services, LLC and Abagail Adams, General Counsel for the National Association of Homebuilders. 

The four-person panel spoke on “How to Balance Being a Department of ‘Yes’ With Risk Mitigation” in the conference’s largest ballroom, with 400 corporate counsel in attendance. The event is very high exposure and had roughly 4000 attendees.

Read more about: Jizell K. Lopez

By Michael G. Polis and Rawan N. Khalili

The No Surprises Act (the “Act”)[1], signed into law on December 27, 2020 by the U.S. Congress, took effect on January 1, 2022. The Act was passed with the goal of addressing “surprise medical bills” for patients who unknowingly obtain medical services from providers outside of their network. The Act provides significant protections for patients, however, providers ought to be aware of the impacts of the Act on their practice. This article will summarize Section 112 of the Act, which establishes the “Good Faith Estimate”[2] requirements for providers.

What is a Good Faith Estimate?

The Good Faith Estimate (“GFE”) requires providers to make “Good Faith” estimates of services available to self-insured patients. Practitioners are required to provide reliable and accurate cost estimates for self-insured individuals, which must include all “co-providers,” (i.e. anesthesiologist-anesthetist, facility fee, and other fees related to the medical procedure).

Providers have some flexibility with the estimate, and while it’s not necessarily completely binding, a patient can dispute the bill if it’s at least $400 over the GFE.

The Good Faith Estimate includes the following:

A GFE is a timely written notice that is signed by the patient.  According to guidance from the U.S. Department of Health and Human Services (“HHS”):

• A good faith estimate must be provided within 3 business days upon request.
• Information regarding scheduled items and services must be furnished within:
  • 1 business day of scheduling an item or service to be provided in at least 3 business days;
  • 3 business days of scheduling an item or service to be provided in at least 10 business days

If the patient is a minor, the GFE should be signed by a legal guardian or whoever is obligated to pay for the service. The GFE should also include an itemized list of items or services that are reasonably expected to be furnished or provided to the patient related to the procedure.

A revised GFE must be provided if the facility or practitioner becomes aware of changes to the scope of the services provided. If the scope has changed, the prior GFE shall be revoked and a new GFE be provided before the procedure is undertaken.

Unexpected items or services provided during a Procedure.

[1] Enacted as part of the Consolidated Appropriations Act 2021 (CAA-21)) (Pub. L. 116-260, 134 Stat. 1182 (2020)): [1] 42 U.S.C. § 300gg-136

The “unexpected” item or service must be truly unforeseen, sudden, or unanticipated.  The rule of thumb is to provide “worst case” scenarios in the GFE.  If “worst case” scenarios are not included in the GFE, the service that was not included in the GFE may be disputed. The likelihood of success is low in a dispute between a patient and seasoned practitioner related to whether the GFE included anticipated reasonable fees and costs in a fee dispute.  That being said, it’s best to have the GFE include all “expected” costs related to the services provided. While the Act suggests providing the estimate at least three business days before the scheduling of services, it is best practice to have the practitioner’s office staff discuss and review the GFE (or a revised GFE) with the patient several days before the scheduled procedure.

Notice of the No Surprises Act

Along with the Health Insurance Portability and Accountability Act (“HIPAA”) policies, practitioners should post “No Surprises Act” and “Good Faith Estimate” notices on their website and in office. Provider offices should also be prepared to provide oral notices of a patient’s ability to receive a GFE. Should a patient require the notice in accessible formats and in different languages, provider offices should be prepared to make those available.

Additionally, providers should post the separate required notice about surprise billing for out-of-network services. HHS has drafted model language to use for both these notices.

For questions or more information about your right to a Good Faith Estimate, visit www.cms.gov/nosurprises or call 1-800-985-3059.

Mustafa R. Karim was featured in this Primerus article. To read more, follow the link below: https://www.primerus.com/article/persistence-pays-young-california-lawyer

Read more about: Daniel L. Egan

Wilke Fleury is extremely proud to have five attorneys recognized in The Best Lawyers in America and three attorneys recognized in the Best Lawyers: Ones to Watch in America! Best Lawyers has been regarded by lawyers and the public for more than 40 years as the most credible measure of legal integrity and distinction in the United States. Congratulations to this talented group!

Read more about: Suzanne M. Nicholson

By: Mena M. Arsalai, Kimberly V. Martinez, and Alexandra J. Porter

In a significant development marking a pivotal moment in California’s healthcare landscape, the Office of Health Care Affordability (“OHCA”) has broadened its regulatory oversight of healthcare transactions.  The California Office of Administrative Law recently approved OHCA’s regulations under which “health care entities” are required to notify OHCA of “material change transactions” at least 90 days before closing for transactions finalized on or after April 1, 2024 (the “CMIR Regulations”).

Once a material change notice (“MCN”) is filed, OHCA has 60 days to decide whether to (i) conduct a cost and market impact review (“CMIR”) of the proposed transaction or (ii) waive such review.  OHCA is required to conduct a CMIR if the proposed transaction poses a risk of significant impact on market competition, the state’s ability to meet cost targets, or costs for purchasers and consumers.

The first MCN filing was deemed completed on April 12, 2024.  While this filing offered a first look at how OHCA will manage its CMIR process, the contemplated transaction in the filing did not relate to the sale of a business.  Rather, as described in the notice, the submitter entered  into the  transaction solely as an accommodation to the landlord and its new operator/tenant.  “Submitter is not ‘selling’ its business, but is agreeing to transfer the business operations to the new operation when the new operator obtains its license to operate the Facility.”  Based on the facts of this notice, OHCA ultimately decided to waive the CMIR.

OHCA recently entertained its second MCN filing[1].  Unlike the first filing, this transaction contemplated the sale of a business, Invitae Corporation, a biotechnology company that provides genetic testing services.  Invitae Corporation filed for Chapter 11 bankruptcy, and the bankruptcy court approved the sale of Invitae Corporation’s assets to Laboratory Corporation of America Holdings, a national provider of clinical laboratory services. The  second MCN filing was deemed completed on June 5, 2024.

This latest MCN filing  described the transaction as “an asset sale, through which LabCorp Genetics, Inc., a newly formed entity, will acquire certain assets of Invitae Corporation in accordance with the negotiated Asset Purchase Agreement and certain requirements under the bankruptcy code.”  The goal of the transaction was described as “for Invitae to sell its assets to pay its creditors and settle its executory debts, while maintaining patient access to Invitae’s services.”

OHCA concluded its review by waiving the CMIR.  A few of the details in this notice that may have helped OHCA reach this conclusion include the following:

• Invitae Corporation stated in the notice that the licensed laboratories in California were not involved in the contemplated transaction. 
• The location of all services would not be changing post-transaction.
• The services provided would not be changing post-transaction.
• The patient population served would not be changing post-transaction.
• Laboratory Corporation of America Holdings committed to retaining at least 95% of Invitae Corporation’s employees under compensation and benefit conditions at least as favorable as those prior to the closing.
• Invitae Corporation contended that the contemplated transaction would promote competition and that without it, Invitae Corporation faces the prospect of complete cessation and liquidation, reducing options for patients and healthcare professionals and leading to job losses.

Each MCN filing is significant because it provides guidance on how OHCA will interpret and enforce the relatively new CMIR Regulations.  California healthcare entities will benefit from closely reviewing each MCN filing and as more filings are made, we will gain a better understanding of the process.

[1] https://hcai.ca.gov/affordability/ohca/assess-market-consolidation/material-change-transaction-notices-mcn-and-cost-and-market-impact-review-cmir/

Wilke Fleury is extremely proud that several of its incredible attorneys have been selected as 2024 Northern California Super Lawyers or Rising Stars!  Super Lawyers rates attorneys in each state using a patented selection process and publishes a yearly magazine issue that produces award-winning features on selected attorneys. Congratulations to this talented group: 

2024 Super Lawyers:

2024 Rising Stars:

• Islam M. Ahmad

• Mena M. Arsalai

• Kathryne E. Baldwin

• Aaron R. Claxton

• Jason G. Eldred

• Jizell K. Lopez

• Jose L. Parra

Check out the full profile on Trevor by following this link: https://online.fliphtml5.com/yzguw/lraj/#p=10