Michigan Court of Appeals Clarifies Athlete Concussion Liability Standards

On November 19, 2020, the Michigan Court of Appeals issued a decision in Randall v. Michigan High Sch. Athletic Association which clarifies the legal risks and obligations coaches and other covered adults face when they suspect a youth athlete has suffered a concussion.

The old playboook: standards were unclear

In 2013, Michigan enacted its concussion protection statute, codified at MCL 333.9156. It established requirements for coaches and other adult participants in organized youth sports events, providing in relevant part:

A coach or other adult employed by, volunteering for, or otherwise acting on behalf of an organizing entity during an athletic event sponsored by or operated under the auspices of the organizing entity shall immediately remove from physical participation in an athletic activity a youth athlete who is suspected of sustaining a concussion during the athletic activity. A youth athlete who has been removed from physical participation in an athletic activity under this subsection shall not return to physical activity until he or she has been evaluated by an appropriate health professional and receives written clearance from that health professional authorizing the youth athlete’s return to physical participation in the athletic activity.

MCL 333.9156

While the law established requirements to follow, it did not explicitly set out any penalties. Since the law’s enactment, most authorities agreed that an injured person could sue non-medical professionals under a common-law negligence theory. Common-law negligence occurs when a person has a legal duty to exercise reasonable care, the person breaches that duty, and the breach “proximately” causes an injury giving rise to damages. Laws such as the concussion awareness law can and do impose legal duties of care on covered adults. Stated plainly, reasonable care is the level of care a reasonably prudent person would take. It is an objective standard, so the decision is up to a judge or jury.

Even with existing common-law negligence theories, the lack of clarity from the statute and the lack of case law to clarify it created uncertainty among many coaches, referees, school administrators, and other adults involved in organized youth sports. For example, it was uncertain whether violating the terms of the statute would automatically put someone on the hook for damages.

How the Randall decision changes the game

In the Randall case, the plaintiff sued the MHSAA and numerous other entities connected to his youth hockey team after he endured two collisions in a game—the second of which came after he allegedly showed signs of a concussion and his coach had put him back in. The plaintiff’s theories of liability were that:

  1. The concussion protection statute created a private cause of action against non-medical professionals, meaning that the plaintiff would not need to prove the covered adult was negligent—and,
  2. In the alternative, a violation of the statute constituted negligence per se—meaning that a covered adult’s violation of the statute would automatically be negligent—and finally,
  3. Failing those two arguments, defendants were liable under a theory of ordinary negligence.

In its November 19 opinion, the Michigan Court of Appeals established that a violation of the statute neither gives rise to a statutory cause of action nor constitutes negligence per se.

“Our Legislature enacted the concussion-protection statute to protect youth athletes from the harmful effects of concussions. In doing so, the Legislature did not create, explicitly or by implication, a private statutory cause of action for violation of the statute. Rather, the statute creates negligence-based duties on the part of coaches and other covered adults, and a violation of the statute can be evidence of actionable negligence.” Randall v. Michigan High Sch. Athletic Ass’n, No. 346135, 2020 WL 6811661, at *12 (Mich. Ct. App. Nov. 19, 2020)

This does not mean that coaches, referees, and other covered adults are free from liability concerns. If the plaintiff can prove that a covered adult violated the statute by failing to pull an athlete suspected of sustaining a concussion, the covered adult will face a rebuttable presumption of negligence. In other words, covered adults who violate the statute are presumed “guilty” of negligence unless they can prove themselves “innocent.” (Note: negligence under this statute is not a crime, but negligence can become criminal if the negligence and resulting injury are serious enough).

Covered adults who face this presumption can avoid liability by proving (by a preponderance of the evidence) that their negligence did not cause an injury giving rise to damages.

It is also important to note that an athlete’s willingness to get back in the game does NOT protect covered adults from liability. The rule is that if covered adults suspect a concussion, they need to pull the athlete from participation until a qualified medical professional determines that they can safely get back in the game.

Play it safe

The best course of action is to follow the statutory requirements and exercise your judgment as a covered adult—whether you are a coach, referee, adult volunteer, or even a school administrator—conservatively. If you suspect a youth athlete might have suffered a head injury, it is likely in everyone’s best interests to play it safe. Remember that common-law negligence uses an objective standard—ultimately, if you run into a negligence suit, a judge or jury who lacks your background and experience in youth sports would decide whether your actions were reasonable. Furthermore—as we all know—in litigation and in life, hindsight is always 20/20.

Still, playing it safe is not always enough. Things can go wrong. If that is the case and you find yourself facing a lawsuit, the attorneys at Fraser Trebilcock are here to help.


Matthew J. Meyerhuber is an associate at Fraser Trebilcock focusing on general litigation, environmental law, and real estate. Matthew can be reached at mmeyerhuber@fraserlawfirm.com or 517.377.0885. 

Governor Signs Four Bills Reinstating Remote Notarization, Witnessing, and Visitation During COVID-19 Pandemic

Update:

The remote visitation by guardians and the remote signing, witnessing, and notarization of estate planning, and other, documents has been extended through June 30, 2021. On December 29, 2020, Governor Whitmer extended these remote practices by signing Enrolled Senate Bills 1186, 1187, 1188, and 1189. The Bills were designated as Public Acts 335, 336, 337, and 338 of 2020.


On November 5, 2020, Governor Whitmer signed into law four bills that passed the Michigan House and Senate overwhelmingly that continue the practices of remote notarization, remote witnessing and remote visitation that were first permitted under Executive Orders issued since April 8, 2020. To reduce exposure to COVID-19, the Executive Orders encouraged the use of remote, 2-way real-time, audiovisual technology for signing, notarizing and witnessing of legal documents and for remote visitation by guardians and guardians ad litem.

These remote practices were halted and the validity of all legal documents executed under the Executives Orders after April 30th were called into question by an Order of the Michigan Supreme Court on October 2, 2020. The Order concluded that the Governor lacked authority to declare a state of emergency or a state of disaster under Michigan’s Emergency Management Act (EMA) after April 30, 2020 and ruled that the Emergency Powers of the Governor Act (EPGA) violated the Michigan Constitution. The Supreme Court effectively terminated the continued validity of Governor Whitmer’s Executive Orders issued under the EMA and the EPGA since the Legislature refused to continue her Executive Orders after April 30, 2020.

House Bills 629462956296, and 6297 (PA 246’20, PA 247’20, PA 248’20, and PA 249’20) were given immediate effect and amend the following Michigan laws: the probate code (Estates and Protected Individuals Code), the Uniform Electronic Transactions Act, the Uniform Real Property Electronic Recording Act, and Michigan Law on Notarial Acts. The bills are effective retroactively from April 30, 2020 through December 31, 2020. The bills:

  • reinstate use of 2-way real-time, audiovisual technology for remotely executing, notarizing and witnessing legal documents, including wills, durable powers of attorney, patient advocate designations, funeral representative designations, appointments by parents of guardians for minors, and deeds, provided strict procedures are followed as outlined in the bills;
  • define 2-way real-time audiovisual technology;
  • permit a guardian or guardian ad litem to fulfill her duty to visit with an individual in person by using remote visitation instead of in-person visits;
  • permit each State department to send and accept electronic records and electronic signatures to and from other persons;
  • encourage governmental agencies and officials of the state to use or permit the use of electronic records and electronic signatures to transact business, process applications, and recognize the validity of legal instruments, and when a notarized signature is required by a law of this state, to use a notary public who performs notarial acts electronically under the new law;
  • apply the law’s use of remote signatures to the Uniform Commercial Code during this time frame (with some exceptions);
  • direct registers of deeds to accept for recording electronic documents, or if a county’s register of deeds does not have equipment to accept an electronic document, to accept for recording a tangible copy of an electronic document properly notarized under Michigan’s notary law, as amended to allow remote notarization;
  • direct financial institutions to accept documents or electronic documents recorded by a register of deeds under the amended laws permitting remotely signed and notarized documents; and
  • extend the validity of notary public commissions that expire between March 1, 2020 and December 31, 2020 until December 31, 2020.

What is 2-way real-time, audiovisual technology?

Remote execution, notarization, witnessing, and visitation must be performed using 2-way real-time, audiovisual technology which is defined as procedures that allow for direct, contemporaneous interaction and communication by sight and sound between the signatory and the witnesses, or the notary and an individual seeking a notary’s services and any witnesses to the notarial act.

Requirements for executing and witnessing documents with this technology must be met, including:

  • the interaction must be recorded and preserved for at least 3 years;
  • the signatory must affirmatively represent their presence in Michigan or, if physically outside the state, that certain factors apply showing relevance of the document to the state of Michigan;
  • the signatory must affirmatively state what document is being signed;
  • each title page and signature page must be shown to the witnesses;
  • specific page numbering must be followed (page x of y);
  • the act of signing the document must be captured sufficiently up close so the witnesses can observe the signing;
  • the signatory or her designee must transmit the document within 72 hours after it’s signed and the witnesses must sign and return the signed copy, within 72 hours after receipt, back to the signatory by fax, mail or electronic means; and
  • the document must be in writing and readable as text.

Notarization of documents include additional requirements for 2-way real-time, audiovisual technology, including:

  • the interaction must be recorded and preserved for at least 10 years;
  • if the person seeking notarial services, or any required witness, is not known by the notary, satisfactory evidence of their identity must be presented during the video conference;
  • signatures must be capable of being affixed in a manner rendering any change or modification of the remote online notarial act to be tamper evident;
  • the signed document must be transmitted to the notary on the same day it was signed; and
  • once received with all necessary signatures, the notary must notarize the record and transmit it back to the individual seeking the notarial services.

Effective date of notarial act; use of counterparts is convenient.

The effective date of the notarial act is the date which the notary witnessed the signing of the document through the 2-way real-time, audiovisual technology. Documents may be signed in counterparts, using separate pages for each signature, unless the document prohibits the use of counterparts. Using counterparts is useful in that it allows remote signatures and notarization while also allowing original signature pages to be gathered and combined at a later date, resulting in a final document that includes all original signatures.

The validity of documents signed and notarized under the Executive Orders are preserved.

The new witnessing law includes a savings clause that protects the rights and interests of persons who relied in good faith and without actual notice that a document, signed on or after April 30, 2020 and before January 1, 2021, was not executed in accordance with the signing and witnessing requirements of the new law.

The new notary law includes a savings clause providing that notarizations performed, on or after April 30, 2020 and before January 1, 2021, using the outlined procedures in the law, as amended, are valid. The right and interests of a person who relied in good faith and without actual notice that the record was executed on or after April 30, 2020 and before January 1, 2021 but was not executed or notarized in accordance with this section are not impaired, challenged, or terminated on that basis alone.

If a recent document was executed, witnessed, or notarized pursuant to Executive Orders
2020-412020-742020-1312020-1582020-1732020-187, the savings clauses in the new bills protect the validity of such documents since the new witnessing and notarization law incorporates the same procedures required by the Executive Orders.

Compliance is presumed but a document’s validity can be challenged.

Compliance with the new law is presumed. A document can be challenged and the presumption of compliance with the new law may be overcome by the presentation of clear and convincing evidence that the signatory or a witness, or a notary or the individual seeking the notary public’s service, intentionally failed to comply with the requirements of the new law.

All good things come to an end: Will that be so here or will the Legislature extend?

The current bills validate remote, use of 2-way real-time, audiovisual technology, for the execution, witnessing, and notarization of legal documents signed on or after April 30, 2020 and before January 1, 2021. This means that unless the law changes, December 31, 2020 is the last day that these new procedures can be used.

The Executive Orders and new law related to remote signatures, witnessing and notarization are based upon the need for the continued signing of important legal documents during the COVID-19 pandemic in a way that reduces exposure to the virus. Given the reality and uncertainty of this health crisis, many people are trying to execute and update important legal documents, particularly estate planning documents. As the year comes to an end, the legislature may determine that the pandemic is continuing and that the public has a continued need for the protection that remote execution, witnessing and notarization of legal documents provide. In that case, the new law will most likely be extended. As with many laws, additional changes may be made as we learn new ways to streamline and improve the process.


Teahan, Marlaine2.jpgMarlaine C. Teahan is a subcommittee member of a joint initiative of the Elder Law and Disability Rights and the Probate and Estate Planning Sections of the State Bar of Michigan that worked on a legislative solution to replace the Executive Orders on remote execution, witnessing and notarization of documents. The subcommittee (led by Howard Collens and Nathan Piwowarski), the represented Sections and their lobbyists, and other stakeholders were instrumental in the passage of the new bills. Representative Lightner, the bills’ sponsor, and the leadership in the Legislature recognized the importance of these issues and worked quickly with all stakeholders to respond to the developing crisis and pass these laws out of the Legislature for signature by the Governor. Marlaine can be reached at mteahan@fraserlawfirm.com or 517.377.0869. 

Fall in Michigan: Safely Handling Deer/Automobile Accidents

You did the right thing… you did not swerve but have hit a deer… now what?

During the next couple of months there will be thousands of deer/car accidents in both rural and suburban Michigan. In fact, statistics suggest that there will be over 50,000 deer/car accidents during the 2020 calendar year. The Michigan State Police report that 80% of these accidents will occur between dawn and dusk, but they are not limited to rural areas. Indeed, for example in the Lansing area alone, Meridian Township had 129 car/deer accidents, and Delta Township had 128 deer/car accidents in 2018. Simply stated, if you drive enough, there is an excellent chance that at some point in time you will be involved in a car/deer accident.

When that happens what should you do?

First, and foremost, if it is still drivable, get your vehicle as far off the traveled portion of the highway as possible. Activate your hazard warning flashers but stay in your vehicle! Getting out of your vehicle places you in a zone of danger that you need to avoid at all costs. The adrenaline will be flowing right after the accident but control it and think safety. Use your cell phone and call 911 which, hopefully, will dispatch a police car to the scene. Regardless, you should receive a police report number even if a police car is not dispatched to the accident. This is important so that you can provide your insurance company with evidence that the accident was a car/deer accident as opposed to a collision claim. Car/deer accidents (or other car/animal accidents) are covered under what is referred to as the comprehensive insurance coverage of your auto policy. Typically, your comprehensive coverage will have a substantially lower deductible than your collision coverage. You will need to check with your insurance agent to determine your “out-of-pocket” costs of repair.

Finally, remember that if you wish to keep the deer you may do so. You will need to advise the responding police officer that you would like a highway deer kill permit. The police officer will then give you a tag to transport the deer. If you take the deer that you have hit without a permit you could be in trouble with law enforcement or the Department of Natural Resources. Keep in mind too that even if you are not a fan of venison there are organizations that would be happy to accept the donation of your deer.

Most importantly, stay safe after your unavoidable car/deer accident.


Fraser Trebilcock Shareholder Gary C. Rogers has firsthand experience with car/deer accidents, having been involved in four himself; Gary is recognized as one of the top civil defense attorneys in the area of automobile related cases, and he has co-written Michigan No-Fault Law-The Insurers’ Perspective, a handbook for handling claims under Michigan’s No-Fault Automobile legislation. Gary can be reached at grogers@fraserlawfirm.com or (517) 377-0828.

Unemployment Compensation Benefits Extended to 26 Weeks

On October 20, 2020, Michigan Senate Bill 886 was signed into law by Governor Gretchen Whitmer. The bill extends the expansion of unemployment benefits for Michigan workers from 20 weeks to 26 weeks. Extended Benefits are now available for claims established on or before December 31, 2020, on which date the extended benefits provision expires.

The Michigan legislature passed the bipartisan legislation, which is now Public Act No. 229, following the Michigan Supreme Court’s ruling on October 2, 2020, that the governor lacked the authority, after April 30, 2020, to issue or renew COVID-19-related executive orders under the Emergency Powers of Governor Act of 1945. The new law, with certain exceptions noted below, largely reflects the now invalidated Executive Order 2020-76, which provided for temporary expansions in unemployment eligibility.

Public Act No. 229 provides that:

  • The maximum unemployment benefit period is extended from 20 weeks to 26 weeks;
  • Certain eligibility requirements for an individual to receive benefits would not apply if COVID-19 prevents the individual from meeting the requirements;
  • Benefits are to be charged to the employer’s “non-chargeable” account when a worker is laid off due to COVID-19, meaning that the employer’s experience rating is not affected by the cost of extended benefits;
  • Workers may receive benefits during time off work due to a COVID-19-related cause.

Public Act No. 229, in contrast to Executive Order 2020-76, does not waive the requirement that an unemployed worker must be “seeking work” to be eligible for benefits.  Thus, except in certain circumstances, claimants will need to prove they are actively searching for a job to receive benefits. The requirement that a claimant seek work to receive benefits can be waived if either (i) the employer notifies the Unemployment Insurance Agency (“UIA”) that the layoff is temporary and that work is expected to be available in a declared number of days, not to exceed 45 days, following the last day the laid-off individual worked, or (ii) the UIA finds that suitable work is unavailable both in the locality where the individual resides and in those localities in which the individual has earned wages during or after the base period.

Another way in which Public Act No. 229 deviates from Executive Order 2020-76 is that it requires the UIA to review the claimant’s job history for the 18-month period preceding the claim filing date.  Any disqualification identified during that period would prevent the extension of benefits.  Executive Order 2020-76 had waived that requirement, requiring the UIA only to only consider a claimant’s most recent job. In a statement issued in conjunction with signing the bill into law, the governor’s office called the 18-month look-back period “a waste of resources because employers are not being directly charged for benefits paid at this time.”

If you have any questions about how this new law affects your business, please contact your Fraser Trebilcock attorney

This alert serves as a general summary, and does not constitute legal guidance. All statements made in this article should be verified by counsel retained specifically for that purpose. Please contact us with any specific questions.


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.

Client Alert: Health FSA Maximum Remains the Same for 2021

The IRS has just released its 2021 annual inflation adjustments, in which it announced that the Code section 125 dollar limitation on voluntary employee salary reductions to health flexible spending arrangements (health FSAs) is staying at $2,750.

The IRS annual inflation adjustments for more than 60 tax provisions, including health FSAs, can be found in Rev. Proc. 2020-45. This guidance reiterates that cafeteria plans can be written to allow carryovers of unused health FSA amounts up to a maximum of $550.

Although open enrollment season is about to be in full swing for most, employers should ensure that their salary reduction agreements, plan documents, and related enrollment materials are updated to reflect any changes in benefits for the upcoming plan year.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Michigan Supreme Court Officially Incorporates Centers for Disease Control’s Order Halting Evictions

On September 4, 2020, we reported on the Centers for Disease Control and Prevention’s order halting evictions nationwide through December 31, 2020 for tenants who cannot pay rent based on COVID-19 related circumstances. An article interpreting that order and discussing how it might apply to common eviction, landlord, mortgage and land contract situations appears here. It remains accurate and timely, but does not address yesterday’s Michigan Supreme Court Order 2020-17.

Yesterday, October 22, 2020, the Michigan Supreme Court adopted the CDC order and effectively made it the law of the State of Michigan. It did so over the objection of Chief Justice Pro Tem David Viviano, who expressed a preference for ruling on the validity of the CDC order in a case brought by litigants, as opposed to adopting it administratively as the Supreme Court did. Justice Viviano also argued in dissent that the CDC order “has been challenged on a host of grounds and, I believe, rests on a shaky legal foundation.” Order 2020-17 can be found here.

A court form for landlord/plaintiffs and tenant/defendants to file (attesting that the case is not subject to the CDC order or attesting that it is) can be found here.

Please refer back to this article in the coming days for comprehensive updates and analysis. If you are a landlord confronting these issues, please contact your Fraser Trebilcock attorney.


Jared Roberts is a shareholder at Fraser Trebilcock who works in real estate litigation and transactions, among other areas of the law. Jared also “walks the walk” as a landlord and owner of residential rental properties and apartments in Downtown Lansing. He may be reached at jroberts@fraserlawfirm.com and (517) 482-0887.

SBA Clarifies Rules Regarding PPP Loans and Changes of Ownership

In a recently issued procedural notice, the Small Business Association (“SBA”) addressed a lingering question of borrowers and lenders related to the Paycheck Protection Program (“PPP”) process: What procedures are required for changes of ownership of an entity that has received PPP funds?

The notice, issued on October 2, describes when change of ownership is considered to have occurred and what impact such change has on a PPP borrower’s responsibilities under the program.

Definition of a Change of Ownership

For the purposes of the PPP, a “change of ownership” takes place when one of the following occurs:

  • At least 20% of the common stock or other ownership interest of a PPP borrower (including a publicly traded entity) is sold or otherwise transferred, whether in one or more transactions, including to an affiliate or an existing owner of the entity;
  • The PPP borrower sells or otherwise transfers at least 50% of its assets (measured by fair market value), whether in one or more transactions; or
  • A PPP borrower is merged with or into another entity.

A PPP borrower must aggregate all sales and other transfers occurring since the date of approval of the PPP loan in determining whether the relevant threshold has been met.

Is a Borrower Required to Obtain SBA Consent?

If a PPP borrower fails to satisfy one of the criteria below, SBA consent is required for a change in ownership to ensure the repayment of any unforgiven PPP loan amounts.

  1. The PPP loan has been paid in full or forgiven by the SBA.
  2. In the case of a stock sale or merger:
    (a) The sale or transfer involves less than 50% of the borrower’s   stock/ownership interest; or
    (b) The PPP borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it, together with any required supporting documentation, to the PPP Lender, and an interest-bearing escrow account controlled by the PPP Lender is established with funds equal to the outstanding balance of the PPP loan. After the forgiveness process (including any appeal of SBA’s decision) is completed, the escrow funds must be disbursed first to repay any remaining PPP loan balance plus interest.
  3. In the case of an asset sale of 50% or more of the borrower’s assets, if the PPP borrower completes a forgiveness application reflecting its use of all of the PPP loan proceeds and submits it, together with any required supporting documentation, to the PPP Lender, and an interest-bearing escrow account controlled by the PPP Lender is established with funds equal to the outstanding balance of the PPP loan.

If SBA consent is required, the PPP lender is required to submit certain documents to the SBA, including documents relating to the transaction and information about the buyer and its ownership. The SBA will review and provide a decision within 60 days of receipt of a complete request.

Borrower’s Responsibilities in the Event of a Change in Ownership

The PPP borrower remains responsible for all obligations under its PPP loan in the event of change of ownership, including performance obligations under the PPP loan, certifications it made in connection with its loan application, retention of records and providing records in connection with a request from the PPP lender or the SBA, as well as other applicable PPP requirements.

In addition, before undergoing a change of ownership, a PPP borrower must notify its PPP lender in writing and provide the lender with copies of relevant documentation related to the transaction prior to closing.

Regardless of whether SBA approval is required and/or obtained, if change in ownership involves a sale of equity interest or a merger, the new owner is responsible for all obligations under the PPP loan. If the new owners use PPP funds for unauthorized purposes, the SBA will have recourse against them. If the new owner also had a PPP loan, the PPP loan funds must be segregated and properly allocated among the two borrowers.

Unanswered Questions

While the notice clarifies a great deal about change in ownership issues related to PPP loans, there remain unanswered questions. Among those questions are:

  • What are the consequences of failing to obtain SBA consent for a change in ownership transaction?
  • What rules apply for changes in ownership that occurred prior to the issuance of the notice?
  • What should PPP borrowers do if their PPP lenders have not yet opened application portals for seeking loan forgiveness?

We will continue to monitor and keep you abreast of new developments related to PPP forgiveness. In the meantime, if you have questions or require assistance, please contact your Fraser Trebilcock attorney.


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Fraser Trebilcock Business Tax Attorney Edward J. CastellaniEdward J. Castellani is an attorney and CPA who represents clients involved with alcohol beverages as a manufacturer, wholesaler, or retailer. He may be contacted at ecast@fraserlawfirm.com or 517-377-0845.

[Client Alert]: 2021 Adjustments for ACA’s OOP Limits, Penalty Amounts, and Affordability

HHS Announces OOP Limitations for 2021

With the passage of the Affordable Care Act (ACA), group health plans became required to apply an out-of-pocket limitation to certain in-network benefits… meaning that once an individual or family out-of-pocket (OOP) limit was met, the plan could not charge additional OOP costs for essential health benefits. These OOP limits include both the plan’s deductible as well as cost-sharing amounts for essential health benefits (EHB) in-network as set forth under the ACA.

Although self-insured plans and large-group insured plans are not required to cover all EHBs (while small-group insured plans are), to the extent they do, in-network OOP expenses for EHBs cannot exceed the maximum OOP limit. Additionally, group health plans may not impose annual or lifetime dollar limitations on EHBs whether offered in-network or out-of-network.

The Department of Health and Human Services (HHS) has released the 2021 plan year inflation-adjusted OOP limits applicable to non-grandfathered plans.

  • Self-only coverage:      $8,550 (was $8,150 for 2020)
  • Family coverage:         $17,100 (was $16,300 for 2020)

See PPACA; HHS Notice of Benefit and Payment Parameters for 2021.

Employers with non-grandfathered group health plans must update their maximum annual OOP limits.

These rules do not apply to ACA grandfathered plans. [Please note that these cost-sharing limits are different than the maximum out-of-pocket limits for purposes of being HSA-qualifying high deductible health plans.]

HHS Announces ACA Employer Mandate (Pay or Play) Penalty Amounts for 2021

Under the ACA, applicable large employers must offer certain group health plan coverage to their full-time employees; otherwise they will risk significant penalties.

Applicable large employers are those who employ 50 or more full-time or full-time equivalent employees in the preceding calendar year. Employees of related employers (within a controlled group or affiliated service group) are counted in this determination.

  • Part A requires employers to offer minimum essential coverage to 95% of their full-time employees.  See Section 4980H(a).
  • Part B requires the offered coverage be affordable and meet the minimum value standards.  See Section 4980H(b).

Specifically, the Part A Penalty is imposed on an employer who fails to offer minimum essential coverage (MEC) to at least 95% of the employer’s full-time employees (FTEs) and dependents as defined under the ACA, and if one of its FTEs receives subsidized coverage through the Marketplace or public health insurance exchange. The penalty amount is multiplied by the number of FTEs, minus 30. Special rules exist for applicable large employer members which are part of a controlled group.

The Part B Penalty amount is imposed on an employer who fails to offer coverage that meets the minimum value (MV) requirements or fails to be affordable, again as defined under the ACA, with respect to each one of its FTEs who receives subsidized coverage through the Marketplace or public health insurance exchange.

The Internal Revenue Service (IRS) has released the 2021 inflation-adjusted penalty amounts under the Affordable Care Act’s Employer Shared Responsibility Mandate (Pay or Play):

  • Part A Penalty:     $2,700 (was $2,570 for 2020)
  • Part B Penalty:     $4,060 (was $3,860 for 2020)

See Q&A 55 on Employer Shared Responsibility Provisions under the ACA.

Specifically, HHS finalized the premium adjustment percentage as 1.3542376277 for the 2021 benefit year, which is then multiplied by the original 2015 penalty amounts (Part A was $2,000 and Part B was $3,000) and rounded down to the nearest multiple of ten.

By way of example, an employer with 200 FTEs who fails to offer MEC to 95% of those employees (and if at least one of those FTEs receives subsidized coverage through the Marketplace or an exchange), the penalty assessed for the year will be $459,000 (200-30 = 170 x $2,700). The larger the employer, the larger the penalty.  If the same employer offers coverage to 95% of its FTEs but that coverage is not affordable or doesn’t provide minimum value, the penalty assessed will be based on the number of employees who receive subsidized coverage through the Marketplace or an exchange. If 20 FTEs receive subsidized coverage for each month of the year, the 2021 penalty would be $81,200 ($4,060 x 20).

Affordability Rates for 2021

As discussed above with respect to ACA penalties, an applicable large employer who does not offer affordable employer-sponsored group health plan coverage could face steep penalties.

For 2021, the ACA affordability requirement applies to the lowest-cost self-only coverage option that offers minimum value and must not exceed 9.83 percent of an employee’s household income. Please see Rev. Proc. 2020-36. This is a increase from 2020 (which was 9.78%).

As it is difficult to determine an employee’s household income, three safe-harbors are available for employers to use to determine affordability:

  1. Form W-2, based on an employee’s W-2 wages as reported in Box 1;
  2. Rate of Pay, based on the employee’s hourly wage rate, multiplied by 130 hours per month; and
  3. Federal Poverty Line, based on the individual federal poverty level as of six months prior to the beginning of the plan year, divided by 12…

Employers must be sure to carefully consider the safe harbors available and calculation of the lowest-cost employee coverage that should be charged.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Michigan Supreme Court finds Statutory Basis of Executive Orders Unconstitutional: Next Steps Uncertain

UPDATE (10/13): On Monday, October 12, 2020, the Michigan Supreme Court issued an Order in Michigan House of Representative and Senate v Governor, reversing the lower Court of Appeal decision in that case which upheld the Governor’s source of emergency authority. The Supreme Court took this action on Monday in light of. and consistent with, its recent decision on the same questions on October 2nd involving certified questions for the US District Court. The Supreme Court’s October 12 Order has been given immediate effect, putting to rest any question regarding the timing of its ruling and or binding effect. You can read that Order here.


Late on Friday, October 2, 2020, the Michigan Supreme Court ruled that the Governor’s use of the Emergency Powers of the Governor Act and the Emergency Management Act as two sources of authority to issue a host of executive orders regulating capacity limits in public-facing businesses, public mask use, school re-openings, the size of public and private gatherings, among others was unconstitutional. In the wake of the Court’s ruling, uncertainty abounds regarding the legal effect and enforceability of the Governor’s numerous executive orders issued to date. Although the Attorney General announced Sunday that she will not enforce the Governor’s COVID-19 executive orders, this does not mean all COVID-19 related rules and regulations are invalid or not without practical merit. Further, both state and local health agencies have quickly moved to fill the regulatory void left as a result of the Court’s ruling.

This controversy started towards the end of April, when the state legislature moved forward with a bill aimed at preventing the Governor from renewing her original state of emergency declaration. The Governor, relying on the 1945 emergency powers law, issued an executive order to keep a stay-at-home order in place through June 1 without consent of the Legislature. This law has been the legal basis for continued rolling orders that have kept some public-facing businesses such as bowling alleys and movie theaters shuttered until Oct. 9. There have been a number of lower state court cases challenging the Governor’s action, all of which have sided in her favor.

One particular lawsuit was brought in federal district court by three medical groups in West Michigan. The three medical groups sued the Governor, challenging her spring executive order that prohibited doctors and medical facilities from performing “elective” procedures in an effort to preserve personal protection equipment when it was in short supply during the early days of the pandemic.

The Michigan Supreme Court is the ultimate authority on interpreting state law, and the federal district court judge noted that state law questions regarding the limit of the Governor’s authority were crucial to the case before it. The law permits federal courts to ask for guidance – called a certified question — on state law questions from a state’s highest court. State supreme courts are not required to accept certified questions from a federal court but they usually do.

Here the Federal court certified two questions to the Michigan Supreme Court:

  1. Whether, under the Emergency Powers of the Governor Act, MCL § 10.31, et seq. [(the “1945 law”)], or the Emergency Management Act, MCL § 30.401, et seq. [(the “1976 law”)], [the] Governor has the authority after April 30, 2020 to issue or renew any executive orders related to the COVID-19 pandemic; and
  2. Whether the [1945 law] and/or the [1976 law] violates the Separation of Powers and/or the Non-Delegation Clauses of the Michigan Constitution.

In answering these questions, the Michigan Supreme Court stated:

“[w]e conclude that the Governor lacked the authority to declare a ‘state of emergency’ or a ‘state of disaster’ under the EMA after April 30, 2020, on the basis of the COVID-19 pandemic. Furthermore, we conclude that the EPGA is in violation of the Constitution of our state because it purports to delegate to the executive branch the legislative powers of state government— including its plenary police powers— and to allow the exercise of such powers indefinitely.”

Friday’s ruling throws into doubt the Governor’s many executive orders addressing a variety of issues in response to the COVID-19 pandemic in Michigan. For example, orders that expand unemployment eligibility during a pandemic, that allow local governments to hold their meetings virtually to avoid in-person meetings that could allow the virus to spread, that place moratoriums on foreclosures and evictions, and those that permit remote witnessing and notarization of legal documents, are all somewhat in question.

Additional uncertainly surrounds the effective date of the Court’s order and if it is even entitled to binding effect, as it was issued in response to a certified question from the Federal District Court and therefore merely “advisory” in nature. For the most part, these questions have answered (1) the order was effective on October 2nd, and (2) there is a clear likelihood that the Court’s decision will be followed in any subsequent state or federal court decisions.

State regulators are nevertheless holding fast. The Michigan Occupational Safety and Health Administration (MIOSHA) has issued thousands of dollars in citations to Michigan businesses for failing to implement COVID-19 precautions under the agency’s “general duty clause,” which requires employers to provide workspaces free of hazards causing death or “serious harm.” Since the Supreme Court decision Friday, many have questioned the validity of the citations, arguing that violations of the general duty clause were based on non-compliance with the Governor’s executive orders on mask usage, social distancing, or employee training. State regulators have said that they will not rescind any fines and penalties for workplace COVID-19 non-compliance, even in light of a Michigan Supreme Court decision upending the Governor’s executive orders back to April 30.

Further, the Director of the Michigan Department of Health and Human Services, citing authority under the Michigan Public Health Code, quickly issued an emergency order reinstating requirements that masks should be worn at most indoor and outdoor gatherings and events, limiting attendance at indoor and outdoor gatherings, limiting organized sports and other limitations on certain food service establishments, including bars. The order specifies that violations are a misdemeanor punishable by imprisonment for not more than 6 months, or a fine of not more than $200, or both.

Local health departments are issuing similar orders. The Oakland County Health Department on Saturday ordered residents of Michigan’s second-most populous county to wear masks or facial coverings when leaving their homes. More orders will follow to outline capacity limits for bars and restaurants and instill public health screenings, the department said. Ingham County followed suit Sunday by issuing emergency orders similar to Oakland’s, with rules requiring face masks, limiting restaurant capacity to 50%, mandating employee health screenings and putting restrictions on indoor and outdoor gatherings. Other local action is anticipated in Kent, Ottawa, St. Clair, and Wayne.

It will take a while for the Legislature and Governor to sort out these issues legislatively as there are only 3 session days left before the November 3 election and only 14 session days after the election. In the meantime, the Administration will pursue reissuing some of these orders through administrative rules and regulatory action.


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Fraser Trebilcock attorney Paul V. McCord has more than 20 years of tax litigation experience, including serving as a clerk on the U.S. Tax Court and as a judge of the Michigan Tax Tribunal. Paul has represented clients before the IRS, Michigan Department of Treasury, other state revenue departments and local units of government. He can be contacted at 517.377.0861 or pmccord@fraserlawfirm.com.

IRS Announces 2021 Increases for HSAs

The IRS has released its 2021 annual inflation adjustments for Health Savings Accounts (HSAs) as determined under Section 223 of the Internal Revenue Code. Specifically, IRS Revenue Procedure 2020-32 provides the adjusted limits for contributions to a Health Savings Account (“HSA”), as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2021.

The 2021 limits are as follows:

  • Annual Contribution Limit
    • Single Coverage: $3,600
    • Family Coverage: $7,200
  • HDHP-Minimum Deductible
    • Single Coverage: $1,400
    • Family Coverage: $2,800
  • HDHP-Maximum Annual Out-of-Pocket Expenses (including deductibles, co-payments and other amounts, but not including premiums)
    • Single Coverage: $7,000
    • Family Coverage: $14,000
  • The catch-up contribution for eligible individuals age 55 or older by year end remains at $1,000.

Plans and related documentation, including employee communications, should be updated to reflect these new limits for 2021.

As always, please keep in mind that participation in a health FSA (or any other non-HDHP) will result in HSA ineligibility, unless the health FSA is limited to: (1) limited-scope dental or vision excepted benefits; and/or (2) post-deductible expenses.

This alert serves as a general summary of lengthy and comprehensive new provisions of the Internal Revenue Code. It does not constitute legal guidance. Please contact us with any specific questions. 


We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.


Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.


Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.