THIS ISSUE'S HEADLINES

RI Creates New Tax Credit for Small Business Investment Companies

First Fine Issued for Failing to Provide Timely Patient Records

Cybersecurity Resource Library Expands With New Podcast Episodes

Industry Spotlight: Construction Industry
Technology – A Key Factor Driving Success in the Construction Industry


RI CREATES NEW TAX CREDIT FOR SMALL BUSINESS INVESTMENT COMPANIES

The Rhode Island General Assembly recently created a new program designed to promote private funding for Rhode Island small businesses. The program creates a tax credit for Small Business Investment Companies (“SBIC”) that invest in eligible Rhode Island businesses.

An SBIC is an investment fund recognized by federal law (15 U.S.C. § 681) and licensed by the U.S. Small Business Administration. The SBIC program incentivizes private investment in eligible small businesses by offering certain benefits, including favorable terms on federal loans (so the SBIC may invest the loan funds) and exempting the SBIC from both the Volcker Rule and SEC registration.

Rhode Island is now offering its own incentives for SBICs that invest in Rhode Island small businesses. The program will be administered by the Rhode Island Commerce Corporation. Beginning on the third anniversary from the initial capital investment, the tax credit takes effect and lowers the SBIC’s state tax liability by 21.5% multiplied by the amount invested.

To take advantage of this tax credit, the SBIC must invest in an “eligible business,” which is defined as (1) having fewer than two hundred fifty employees; (2) having no more than fifteen million dollars in net income from the preceding tax year; and (3) having its principal business operations located within Rhode Island. In addition, the funding is only available for certain industries that the General Assembly believes will contribute to economic growth, such as clean energy, life sciences, defense, shipbuilding, and composites. The list of industries is relatively broad (it includes food, design, hospitality and “advanced business services”) and SBICs may even petition the Commerce Corporation to allow the investment if the company is not within an enumerated industry so long as the Corporation determines that the investment will be beneficial to economic growth.

An SBIC seeking to certify a capital investment in an eligible Rhode Island business must apply to the Commerce Corporation. The Corporation begins accepting applications in Fall of 2019. For more information about this program or other business matters, contact Attorney Joshua J. Butera at 401-824-5100 or email jbutera@pldolaw.com.

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Earlier this year, the HHS Office of Civil Rights (“OCR”), which enforces HIPAA, announced its new “Right of Access Initiative.” Under this initiative, OCR publicized that it would begin fining providers who failed to provide patients with copies of their medical records in the time-frame mandated by HIPAA. Pursuant to 45 CFR § 164.524, HIPAA-covered entities such as health care providers are required to provide patients with their records within 30 days of the request, and may only charge patients a reasonable fee.

In early September, OCR issued its first fine under the Right of Access Initiative. Under this first-ever settlement agreement, Bayfront Health St. Petersburg has agreed to a corrective action plan and an $85,000 civil monetary penalty for taking nine months to respond to a mother’s request for her then-unborn child’s fetal heart monitor records.

While the $85,000 penalty should certainly garner the attention of any HIPAA-covered entity, the bigger impact on Bayfront Health will likely be the corrective action plan, which requires the provider to develop, maintain, and revise, where necessary, its written access policies and procedures to comply with the HIPAA privacy rule.

Not only does the provider have to augment its policies for ensuring timely response to records requests, it has to develop protocols for training all employees and applicable business associates involved in receiving or fulfilling access requests. The revised policies have to ensure that appropriate sanctions will be applied to non-compliant workforce members. The provider is required to assign one or more individuals to ensuring that access-related business associate agreements are properly executed, and to create a review and termination process for business associates involved in access requests. All workforce members and applicable business associates are required to sign a written or electronic verification of compliance with the new policies, and the provider must update the policies every year.

With this first civil monetary penalty, OCR has affirmed that it is serious about enforcing it new Right of Access Initiative. Covered entities of all types will be well advised to recognize OCR’s commitment to patients’ right of access to their protected health information, and should develop policies and procedures to ensure that HIPAA’s 30-day/minimal-fee requirements are met. If you have questions or would like further information, please contact Attorney Joel K. Goloskie at 401-824-5100 or email jgoloskie@pldolaw.com.

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To help business owners prepare for and protect against the risk and costly consequences of a cyber attack, PLDO and Citrin Cooperman teamed up to offer an online resource library and original series of informational podcasts, entitled Cyber Crooks and Crime. Two of the latest podcasts are now available on the website: “Taming and Reforming the Wild West of Information in the Digital Age” (Episode V) and “Meet ‘Your’ Hacker – Why Offensive Measures Are Your Best Defense Against Threats.” (Episode VI)

The podcast interviews feature PLDO Partner Brian J. Lamoureux, a leading voice and frequent commentator on social media and digital law and cybersecurity legal issues, and Kevin Ricci, CISA, CRISC, MCSE, QSA, a leader in the cybersecurity practice at Citrin Cooperman.Joining the conversation for Episode VI is guest commentator Matt Wagenknecht, a director with Citrin Cooperman and the corporation’s “ethical hacker,” who explains the covert nature of hackers, what might trigger an internal breach, the importance of vigilant oversight of IT networks, and provides preventative security measures businesses should take to protect their organization from the harmful consequences of a data breach by a hacker.

To listen to the entire series of six podcasts and access other important cybersecurity articles, research information and learning materials, visit Cyber Crooks and Crime. If you have questions about your organization’s cybersecurity strategies or legal issues, call Attorney Lamoureux at 401-824-5100 or email bjl@pldolaw.com.

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In addition to delivering legal advice, PLDO lawyers are routinely asked by clients to provide insight relating to business/legal decisions. In this regard, our attorneys’ top priority is to understand the myriad of legal issues as well as the business challenges clients face to ensure they receive the best advice and options to help them make informed decisions. As part of the firm’s “industry spotlight” series on the construction industry, PLDO Managing Principal Gary R. Pannone adds his latest advisory, Technology – A Key Factor Driving Success in the Construction Industry. The advisory focuses on the advantages of the use of technology relating to a construction company’s profitability, productivity and overall performance – all of which are essential to sustainability. To access the advisory, please click here. To read other advisories in the series, please click on Owning a Construction Company and Challenges in the Construction Industry. For more information about the construction industry and related business and legal issues, please contact PLDO Managing Principal Gary R. Pannone at 401-855-2601 or email gpannone@pldolaw.com.

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