Pennsylvania Adopts COVID-19 and Health Care Cost Containment Legislation

Pennsylvania addressed health care costs and emergency authorizations during the current corona virus pandemic by enacting Act No. 15 of 2020 (the “Act”). The Act (a) reauthorizes the Pennsylvania Health Care Cost Containment Council (“PHC4”); and (b) (1) authorizes taxing districts to defer real property tax payment deadlines, (2) extends the time for donors to make contributions to schools for education tax credits, (3) allows renegotiation of contracts under the Pennsylvania Public School Code of 1949 (“School Code”), (4) authorizes notarization of signatures for remotely located individuals, and (5) authorizes political subdivisions to conduct hearings, meetings, proceedings or other business through authorized telecommunications devices. The reauthorization of PHC4 stands alone but the emergency authorizations (b)(1)-(5) are tied to Governor Wolf’s COVID-19 Disaster Emergency Proclamation issued on March 6, 2020 (the “Disaster Proclamation”). The Act is important because it provides specific relief related to issues arising under the Disaster Proclamation and ongoing health care information.

The PHC4 is an independent state agency formed to contain rapidly expanding health care costs in Pennsylvania. PHC4’s website sets forth its strategy to implement that mission as follows: “to stimulate competition in the health care market by (A) giving comparative information about the most efficient and effective health care providers to individual consumers and group purchasers of health care services; and (B) giving information to health care providers that they can use to identify opportunities to contain costs and improve the quality of care they deliver.” Pennsylvania established PHC4 in 1986 and extended it by Act 3 of 2009 and, when it expired, extended it by Executive Order Act 2014-4. The Act began as SB 841, sponsored by Sen. Scott Martin (R-13). His introductory memo provides as follows: “the Legislation will codify PHC4 under Title 35 and will not include a sunset date. It will also make a number of modernizations to the Council including adding a member of the Senate and House of Representatives and allowing members to attend meetings electronically, removing the need for travel reimbursement.” The Act amends Title 35 to create a new Chapter 33 codifying the PHC4. Notwithstanding Sen. Martin’s stated intention to include no sunset date, the new Chapter 33 expires 10 years after its effective date according to 35 Pa. CSA §3317.

The remainder of the Act responds to issues that arise in relation to the “COVID -19 Disaster Emergency,” defined as “the duration of the [Governor’s Disaster Proclamation] and any renewal of the state of the Disaster Emergency.” First, it authorizes taxing districts to defer real property tax payment deadlines. Specifically, a taxing district “may do any of the following for the collection of a tax imposed on the assessed value of real property that would otherwise be due by December 31, 2020: (1) collect the tax at the taxing district’s prescribed discount rate, if any, no later than August 31, 2020 and waive any fee or penalty otherwise associated with the late payment of the tax if paid in full by December 31, 2020.” 35 Pa. CSA §5713 (A). To exercise this authority, the governing body of the taxing district must deliver a duly adopted resolution by May 20, 2020 (within 30 days of the effective date of the Act) to the tax collector of the taxing district. The following are taxing districts under the Act: cities, counties, boroughs, towns, townships and incorporated towns.

Second, the Act extends the time for donors to make contributions to schools for education tax credits. Under section 2004-B of the School Code, to receive a state tax credit for donations to a qualified education entity, a business firm must apply to the Department of Education (“Department”) and make the donation within 60 days of the Department’s approval. Under the Act, that deadline is “extended until the end of the business firm’s applicable tax year.” 35 Pa. CSA §5721(B)(1). The business firm must give proof of payment to the Department within 30 days of the contribution. Further, any business firm impacted by the COVID -19 Disaster Emergency and that fulfills a second-year contribution of a two-year commitment is entitled to 90% of the second-year contribution. The Department may not reduce that percentage even if the second-year donation is less than the first-year donation. Section 5721(A) provides that this relief is only during tax years affected by the COVID -19 Disaster Emergency.

Third, the Act allows renegotiation of contracts under the School Code. This is important because schools are closed during the COVID-19 Disaster Emergency but they need to assure the cost of and the continuing ability to perform by contracted service providers. Specifically, “each school entity may renegotiate a contract for contract service providers to ensure contracted personnel and fixed costs, including administrative and equipment, are maintained during the period of school closure.” 35 Pa. CSA §5721.1(A). Those service providers must give to the respective school entities weekly documentation “that its complement levels remain at or above the level on March 13, 2020, in order to continue being paid.” 35 Pa. CSA §5721.1(A).

Fourth, Subchapter D of the Act authorizes notarization of signatures for remotely located individuals. The Pennsylvania Department of State (“State Department”) regulates notaries public who acknowledge in the Commonwealth the execution of documents by individuals. Under 57 Pa. CSA §306, those individuals must execute the documents in the presence of the notary public. That executing person must present identifying documents under 57 Pa. CSA §307 for the notary public to have personal knowledge and thereafter acknowledge, in statutorily-prescribed terms, the execution of the documents. Subchapter D builds upon the Electronic Notarization Program which permits qualified notaries to acknowledge electronic records by affixing a digital signature or certificate generated by algorithms involving encryption technology. More on that program begun in 2006 may be found at

The Governor issued executive orders on March 25, 2020 and April 2, 2020, authorizing remote notarization. Subchapter D provides that notaries may acknowledge the signatures of individuals not in the notary’s physical presence. The State Department “shall immediately authorize a notary public to conduct notarial acts in the manner authorized by this section, if the notary gives notice to the [State] Department….and uses an identification and proofing technology designated [in the State Department’s March 25, 2020 notice] or that is designated in a list of additional acceptable technologies subsequently adopted by the [State] Department.” 35 Pa. CSA §5731(A)1. “Identity Proofing” is a “process or service by which a third person provides a notary public with a means to verify the identity of a remotely located individual by a review of personal information from public or private data sources.” 35 Pa. CSA §5731(K). The individual must appear “before a notary public by means of communication technology.” 35 Pa. CSA §5731(B). “Communication technology” is “an electronic device or process that: (1) allows
a notary public located in this Commonwealth and a remotely located individual to communicate with each other simultaneously by sight and sound; and (2) makes reasonable accommodations for an individual with a vision hearing or speech impairment in accordance with law.” 35 Pa. CSA §5731(K).

Subchapter D requires compliance with these technologies and a third technology, audio- visual recordings. Accordingly, the notary or the notary’s employer must financially invest in communication technology, identity proofing and audio-visual recordings. “The notary public, or a person acting on behalf of the notary public, creates an audio-visual record of the performance of the notarial act, including all interactions between the notary public and the remotely located individual.” 35 Pa. CSA§5731(C)(3). The notary public or the person acting for the notary public “shall retain the recording or at least 10 years after the recording is created.” 35 Pa. CSA§5731(F)(2). Third party vendors provide these services, including Doc-Verify, Safe-Docs and Pavaso.

The authorization to notarize the execution by remotely located individuals expires “60 days after termination or expiration of the COVID-19 Disaster Emergency….” 35 Pa. CSA §5731(A)(3). Given the unknown duration of the COVID-19 Disaster Emergency, it is reasonable to ask how notaries or their employers can recover that technology investment and profit from it. The notaries most incented to acquire the technologies to work remotely with individuals perform frequent notarial acts in financial institutions, service organizations and title companies. The Pennsylvania Bar Association supported Subchapter D and reports that pending SB 1097 would make remote notarization permanent. Given that longer horizon to amortize the investment, more notaries might invest in the three technologies required for remote-individual services.

Fifth, the Act authorizes political subdivisions to conduct hearings, meetings, proceedings or other business through authorized telecommunications devices. The authorization runs to “an agency, department, authority, commission, board, council, governing body or other entity of a political subdivision.” 35 Pa. CSA §5741(A). The political subdivision must be affected by the Disaster Emergency and may operate through such technology only “until the expiration or termination of the COVID-19 Disaster Emergency.” 35 Pa. CSA §5741(A). “Authorized telecommunications devices” include “any device which permits, at a minimum, audio communication between individuals.” 35 Pa. CSA §5741(J). Such activities conducted through an authorized telecommunications device do not require a quorum present physically at the meeting location if the quorum is otherwise established. 35 Pa. CSA §5741(B). Does that mean at least one person must be at the meeting location to run the device and marshal participants or is the meeting location a place where third persons may appear or submit questions for the proceeding?

Due process protected by the Constitution is fair prior notice and an opportunity to be heard. The required notice provisions of remotely conducted activities authorized under 35 Pa. CSA §5741(A) are ambiguous. The terms of the notice are clear: the date, time, technology to be used and public participation information. But public participation may be by authorized telecommunication device or written questions “to the extent practicable,” a subjective determination. 35 Pa. CSA §5741(C). Further, the publication requirements allow subjective judgment. “To the extent practicable, …., a political subdivision shall post advanced notice of each [such meeting] on the entity’s publicly accessible internet website, if any, in an advertisement in a newspaper of general circulation, or both.” 35 Pa. CSA §5741(C). What makes an internet posting practicable? How many days of advance notice is required for the meeting?

Minimum advance notice is required only for consideration at a public meeting of an “application, plat, plan, submission, appeal or curative amendment unrelated to the Governor’s Declaration of Disaster Emergency related to COVID-19” (each, a “Rights Request”). In such a case, there must be notice to the public and interested parties at least five days before the meeting by “a post on the entity’s publicly accessible internet website, if any, in a newspaper of general circulation, or both.” 35 Pa. CSA §5741(E). The Act contains special rules for Rights Requests pending at the time of the Disaster Proclamation or filed during the COVID-19 Disaster Emergency. The statutory number of days for consideration or action on a Rights Request are suspended and tolled as of the date of the Disaster Proclamation or the date received during the COVID-19 Disaster Emergency “and shall resume 30 days after the effective date of this section.” 35 Pa. CSA §5741(G)(1). By May 20, 2020 (within 30 days after the effective of that section), an applicant may request consideration or action as required by law with respect to the Rights Request but the “political subdivision shall have discretion to proceed with a request under this paragraph.” 35 Pa. CSA §5741(G)(2).

SB 841 was signed in the Senate on April 15, 2020 and on April 16, 2020 it was signed in the House and presented to the Governor. Governor Wolf approved the Act on April 20, 2020 and it became effective immediately. The Act addresses present public issues: health care cost containment and administration of state laws during the COVID-19 Disaster Emergency. How long the emergency provisions last depends on the duration of the COVID-19 Disaster Emergency. That uncertain time frame and the personal rights affected makes it important to understand the benefits conferred and limitations inherent under the Act.

© 2020 Robert J. Hobaugh, Jr.