Varnum starts Coronavirus task force to help guide through marketplace disruptions

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by Cynthia Price
Legal News

Although it was just this week that the state of Michigan had its first “presumptive” COVID-19 cases, the effects of the coronavirus are already being felt across the state.

In particular, uncertainty and negative trends felt by the business community have precipitated the formation of a COVID-19 Task Force by locally-based law firm Varnum.

“Overall the business community is in a state of concern; I wouldn’t necessarily say the business community is in a state of emergency,” said the leader of the new task force, Varnum Executive Partner Scott Hill, on Monday. “We’re working with clients daily on how to get ahead of the concerns.

“We assembled the task force to help our clients address these challenges in a comprehensive way in order to mitigate the potential negative impact the virus may have on their business and operations.”

The main cause for such concerns stems from the efforts of more heavily-impacted countries, particularly China, to stop the spread of the disease. This has included complete closure of Chinese facilities that produce items critical to the supply chain of US, and West Michigan, manufacturers.

COVID-19 is but one example of  diseases caused by a coronavirus, one of a group of RNA (ribonucleic acid)-based viruses. Others include the well-known SARS? (Severe Acute Respiratory Syndrome) and MERS (Middle East Respiratory Syndrome). In fact, the Centers for Disease Control classes COVID-19 (the CO and VI stand for “COronaVIrus” and the D for disease, with 19 referring to the year in which it was first identified) as SARS-CoV-2.

Global prevalence of the disease has been increasing very rapidly. Statistics as of March 9 include 109,577 confirmed cases and 3,809 deaths. Just a week before, March 2, the number of confirmed cases was 88,948. The number of countries reporting cases is growing as well.

Despite the lack of COVID-19 cases in Michigan so far, the state has set up an Emergency Operations Center to coordinate with state, local and federal agencies to help prevent the spread, and has constituted four task forces to assess potential impacts.  The task forces will focus on: state operations; health and human services; education; and the economy and workforce.

Governor Gretchen Whitmer also announced that the Michigan Medicaid Program will waive copays and cost-sharing for testing and health care treatment, and that  Blue Cross Blue Shield of Michigan, Blue Care Network of Michigan, Priority Health, CVS Health, McLaren, and Meridian will fully cover the cost of medically-necessary tests for members. The state Department of Health and Human Services has increased its testing capacity to 300 at a time when testing supplies are difficult to come by.

Locally, the Kent County Health Department has announced that it will be in close contact with providers Mercy Health, Metro Health-University of Michigan and Spectrum Health, and the state agencies to coordinate preparedness.

The three health systems have implemented healthy visitor restrictions, encouraging community members to stay home when they have any kind of sickness and wait until they are healthy to visit.

Last week, worldwide health officials designated five countries as causing the most concern: China, South Korea, Italy, Japan, and Iran. Of these, China continues to lead the numbers: of the 109,577 cases noted March 9, over 80,000 cases (and over 3,100 deaths) were in that country. China’s response has been to lock down factories, which has hurt its export revenues, and is certainly something Varnum’s inter-disciplinary task force will continue to monitor.

“Those five countries are right now the areas of the greatest concern from a supply chain standpoint, specifically China and Southeast Asia. With global trade, we’re all so connected and tied together,” Hill says. “We’re helping clients figure out how to find alternate sources of supply.”

Hill’s practice focuses on business representation including transactions, planning and counseling — specifically acquisitions, sales, mergers, succession planning, private equity, financing, joint ventures at a variety of levels, and, as is appropriate to his role on the task force, counsel on supply chain contracting.

Other members include: business law and healthcare attorney Scott D. Alfree; restructuring, insolvency and creditors’ rights attorney Brendan G. Best; immigration attorney Kimberly A. Clarke; labor and employment attorney and former executive partner David E. Khorey; and litigation attorney Michael J. Roth. All operate out of the Grand Rapids office except Best, whose office is in Detroit.

“We have internal calls so that we stay connected,” explains Hill.  “We discuss what everyone is hearing in their particular areas, and we’re keeping up on the latest updates. We discuss specific issues like, is there a way for this client to get out of the purchase agreement in the event that much of their supply, or the suppliers’ supply, is coming from China?

“I don’t think anyone here is trying to pretend that we can predict the future, and there is a sense of trying to calm our clients and reassure them,” he added. “On the litigation front, for example, we would envision that we’re probably not to the point of  people filing for injunctive relief requiring their suppliers to perform.”

There are definitely other concerns than contractual agreements and the supply chain. They include, in particular, labor and employment relations, what policies to govern self-quarantine, and how to handle business immigration issues that may arise. The task force may also draw on the members’ broad expertise to advise on timing for mergers and acquisitions.

Hill is confident that the brain trust gathered by creation of the task force is up to the challenges, whatever they may be.

“Some of our clients are able to utilize the tools they’ve already put in place; we’ve already helped them design a playbook. But with others, we most want to help them be proactive starting right now,” he says.

For more information, visit: www.varnumlaw.com/services-practices-coronavirus-task-force

The latest information about COVID-19 itself is available at two sites: Michigan.gov/Coronavirus and CDC.gov/Coronavirus.


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