3 Nolan Heller Kauffman Attorneys Named to 2022 Super Lawyers®

Nolan Heller Kauffman is proud to share that the 2022 New York Super Lawyers Upstate Edition has recognized three of our outstanding attorneys.

Only the Top 5% of Attorneys in Upstate NY Receive Super Lawyers® Recognition

Super Lawyers® is a rating service that acknowledges outstanding lawyers, from more than 70 practice areas, who have attained a high degree of professional achievement and peer recognition. The rigorous candidate selection process includes independent research, peer nominations and peer evaluations. Only the top 5% of attorneys in Upstate New York receive this yearly Super Lawyers® recognition.

Founded in 1964, Nolan Heller Kauffman is a preeminent award-winning business law firm providing a full range of legal services in business and commercial matters. Its clients include publicly traded and privately held companies, financial institutions, commercial real estate owners and developers, contractors, entrepreneurs and startups, municipalities, and state government agencies.

Click here for more information about our firm, or contact us at (518) 449-3300.

SBA Issues New Guidance for PPP Lender Decisions Partially Denying Forgiveness

On January 27, 2022, the United States Small Business Administration (“SBA”) published new guidance regarding lender decisions partially denying forgiveness applications and created a process by which the borrower can request that the SBA review the lender’s decision. 

The Old Rule

This is a significant development because, before this new guidance, a borrower could only request an SBA review of a decision denying loan forgiveness in full.  As a result, borrowers who received lender decisions partially denying forgiveness had no administrative remedies available to contest these decisions because lender decisions are not appealing to the SBA’s Office of Hearing and Appeals (“OHA”). 

The New Rule

The SBA has changed course and is now permitting borrowers to request SBA review of a lender decision partially denying forgiveness in a similar fashion as the process for requesting SBA review of a lender decision denying forgiveness in full. Now, a borrower has the same opportunity to potentially turn a non-appealable lender forgiveness decision into an appealable SBA decision if the SBA agrees to review the lender’s decision. To preserve this possibility, the borrower must request SBA review through its lender within thirty days of receiving the lender’s notice that the lender received a partial loan forgiveness payment from the SBA. If the borrower misses this deadline, they will be precluded from requesting an SBA review of the lender’s decision. It is also essential to understand that the SBA decides, in its sole discretion, whether to review a lender’s decision. 

Borrowers can request an SBA review of lender decisions issued under the old rules.

Importantly, this SBA notice has the effect of resurrecting old forgiveness applications denied in part by lenders. This notice requires lenders to notify, by February 26, 2022, borrowers for which lenders had previously issued forgiveness decisions denying applications in part that they have 30 calendar days from receipt of the notice to request SBA review of those decisions. These borrowers will now have a shot at a remedy that did not exist when they received decisions on their forgiveness applications. 

Borrowers must make payments after requesting SBA Review. 

Although this is all good news for borrowers, it should be noted that requesting an SBA review of a lender decision does not stay the obligation of the borrower to continue to make regular payments on the amount of the loan currently not forgiven. This differs from filing an appeal petition with the SBA OHA, which does stay payments while the appeal is pending.

What can you do?

Suppose you believe your lender wrongfully partially denied your forgiveness application. In that case, you need to act quickly to request an SBA review and preserve the possibility of getting an appealable final SBA decision. If you fail to timely request SBA review, then you will lose the opportunity to contest the lender’s decision through the SBA appeals process.  

Contact Us

If you have questions or concerns regarding requesting SBA loan review or other problems with PPP loan forgiveness, please contact Matthew M. Zapala, Esq., by e-mail (mzapala@nhkllp.com) or phone (518.432.3133) for a no-cost consultation to see how Nolan Heller Kauffman LLP may be able to assist you.

Attorney Advertising


Your PPP Lender Refused to Fund Your SBA-Approved PPP Loan – Now What?

Challenges with the Paycheck Protection Program

It does not take much effort online to see there is a massive, lingering problem with the Paycheck Protection Program – PPP lenders across the country refused to fund thousands of borrowers’ PPP loans even though the loans were SBA approved and the borrowers had signed and submitted all required PPP loan documents.

It seems the group of PPP borrowers most impacted by unfunded loans were sole proprietors and the smallest of small businesses seeking loans smaller than $50,000.

In early 2021, the loan processing fees for small PPP loans were increased substantially such that lenders could receive $2,500 flat fees for each loan compared with their having only received a few hundred dollars for previous similar loans. The result was a predictable disaster – PPP lenders and loan servicers were overwhelmed by PPP loan applications. In the chaos of the last few months of the Program, it appears likely that lenders violated many PPP rules and breached their contracts with PPP borrowers.

Lenders most commonly:

  1. Failed to timely process PPP loan applications;
  2. Prevented PPP loan applicants from applying with other PPP lenders;
  3. Was unable to communicate and work with borrowers to resolve issues;
  4. Refused to fund SBA approved PPP loans;
  5. Requested the same or additional documents from borrowers long after they had already signed their loan documents;
  6. “Denied” PPP loans after approving them, and after borrowers had already signed and submitted their PPP loan documents, including their promissory notes; and
  7. Reported unfunded loans as fully disbursed, resulting in payment of the loan processing fees.

In many instances, it appears the lenders looked for or even created excuses or reasons to get out of funding PPP loans because the lenders did not have the means to timely process and fund the loans.

Nolan Heller Kauffman files class-action cases

While it is undeniable that PPP loan demand was high in 2021, that does not excuse PPP lenders’ conduct or relieve lenders of their contractual obligations to their PPP borrowers. It was solely the responsibility of PPP lenders to process and fund PPP loans within the time frames set by the PPP and SBA rules.

We have filed two class-action cases on behalf of putative classes of individuals and small businesses whose loans were never funded despite SBA records showing that they were. If you find yourself in a similar situation, you can contact us at the number below.

What can you do?

If you believe your PPP lender did not properly process your PPP loan or loan application for any of the above reasons, you may have a right to sue your PPP lender for the damage caused to you and your business as a result. This is particularly true if you timely applied for a PPP loan, it was SBA approved, you signed the loan documents, and you never received your PPP loan funds for one reason or another.

Contact Us

If you have questions or concerns regarding an unfunded Paycheck Protection Program loan or how to navigate a dispute with your PPP lender regarding your PPP loan, please get in touch with Matthew M. Zapala, Esq., by e-mail (mzapala@nhkllp.com) or phone (518.432.3133) for a no-cost consultation to see how Nolan Heller Kauffman LLP may be able to assist you.

Attorney Advertising

Partner, Francis J. Brennan, Esq., Speaks on Subchapter V of Chapter 11 of the US Bankruptcy Code

Francis J. Brennan, Esq., a partner at Nolan Heller Kauffman LLP, will be a member of a panel discussing Subchapter V of Chapter 11 of the Bankruptcy Code for the Upstate New York Chapter of the Turnaround Management Association (TMA) on February 17, 2022.  

Event Details

Is Your Client or Borrower Eligible for the Benefits that a Subchapter V Bankruptcy Can Provide?

Presented by the Upstate New York Chapter of the Turnaround Management Association on Thursday, February 17, 2022, at 5:00 PM – 7:00 PM

Register Here

Bankruptcy Code: Subchapter V of Chapter 11

Enacted in 2019, Subchapter V of Chapter 11 of the United States Bankruptcy Code, is specifically designed for small businesses to attempt to reorganize their debts. For qualifying small businesses, the statute provides a simplified process to proceed under Chapter 11 and avoids the more cumbersome and complicated procedures applicable to businesses that don’t qualify as small businesses. Until the enactment of Subchapter V, small businesses, defined as those with less than $2,725,625 in debt, were subject to the same statutes, rules, and procedures applicable to larger businesses such as airlines and General Motors.  

With the temporary (at this point) increase of that debt limit to $7,500,000 under the CARES Act and Covid-19 Bankruptcy Relief Extension Act of 2021, small businesses have been able to successfully reorganize and continue in business at a rate substantially greater than non-Subchapter V debtors.  

Contact Us

If your small business is experiencing financial difficulty and you would like to discuss the potential benefits of Subchapter V of Chapter 11, contact Francis J. Brennan, Esq. at (518) 449-3300, or by email at fbrennan@nhkllp.com

3 Nolan Heller Kauffman Attorneys Named to 2021 Super Lawyers®

Sparkler by Suvan Chowdhury

We are proud to announce that 2021 New York Super Lawyers Upstate Edition has recognized three Nolan Heller Kauffman LLP attorneys.

The Top 5% of Attorneys in Upstate NY Receive Super Lawyers Recognition

Super Lawyers is a rating service of outstanding lawyers, from more than 70 practice areas, who have attained a high degree of professional achievement and peer recognition. The rigorous candidate selection process includes independent research, peer nominations and peer evaluations. Only the top 5% of attorneys in Upstate New York receive this yearly Super Lawyers recognition.

Learn More About Nolan Heller Kauffman

Founded in 1964, Nolan Heller Kauffman is a preeminent award winning business law firm providing a full range of legal services in business and commercial matters. Its clients include publicly traded and privately held companies, financial institutions, commercial real estate owners and developers, contractors, entrepreneurs and startups, municipalities and state government agencies.

New York Has Legalized Marijuana… Now What??

Person Holding Green Cannabis

On March 31, 2021, New York became the fifteenth State in the U.S. to legalize recreational marijuana. Some of the changes, such as expungement of past possession convictions, legalization of possession of certain amounts, and the ability to grow plants at home, are effective immediately, Others, such as the creation and adoption of laws regulating the sale of marijuana, will take substantially longer to come into play. 

Immediate Actions:

Effective immediately upon the signing of the New York State marijuana legislation, there will be no penalties for possession of less than 3 ounces of marijuana for individuals over the age of twenty-one, and anyone with past convictions for cannabis-related offenses which would no longer be criminalized will have their records expunged. Further, the New York State marijuana legalization laws will allow individuals to grow marijuana for personal consumption and will allow for the growth of  three immature and three mature plants at any given time. There will be a limit of six mature and six immature plants per household, regardless of the number of household members.. 

Legal Framework:

The legislation calls for the creation of a new agency, the New York State Office of Cannabis Management, which will operate as an independent entity within the Office of Alcoholic Beverage Control. The Office of Cannabis Management will operate similarly to the New York State Liquor Authority (“SLA”) in that there will be a Board which will, among other things, have discretion to: 

  1. Issue or refuse to issue any registration, license or permit;
  2. Limit the number of registrations, licenses and permits of each class to be issued within the state  or any political subdivision thereof; and
  3. Revoke, cancel or suspend for cause any registration, license, or permit and impose civil penalties. 

The New York State Cannabis Control Board will consist of a Chairperson, nominated by the governor, and four other members; each having one vote. The Chairperson, after receiving a recommendation and relevant application information and providing such information to all board members, will issue a preliminary determination on whether the license, registration or permit at issue shall be granted, denied, or held for further action. Within fourteen days of the Chairperson’s preliminary determination, any board member may object to the Chairperson’s preliminary determination, or request the matter be brought before the full board for consideration. A majority vote of all of the members will be required for the approval of any action taken by the full board.

While it will take some time- estimates range from 18-24 months- for the underlying legal framework to be approved and adopted, the existing New York Alcoholic Beverage Control Law should serve as a likely guide for many of the cannabis-related provisions. Both alcohol and cannabis are highly regulated substances with similar concerns, including qualifications to hold a license, physical standards for retail premises, required separation from schools and places of worship, etc. 

Take Action

If you are considering applying for a New York State marijuana dispensary license, please contact Alexandra B. Becker, Esq. by email (abecker@nhkllp.com) or phone (518.432.3188) for a no-cost consultation to see how the attorneys at Nolan Heller Kauffman LLP may be able to assist. 

Second Draw PPP Loan Applications & Eligibility Issues


American paper money on black surface

On March 11, 2021, President Biden signed into law the American Rescue Plan Act. Among many other things, the law extended the Paycheck Protection Program (PPP) loan application deadline from March 31, 2021 to May 31, 2021 for both First Draw and Second Draw Paycheck Protection Program loans.

Are you eligible for a Second Draw PPP loan?

If you are considering applying for a Second Draw PPP loan, you should know that a Second Draw loan is subject to additional eligibility requirements compared to the First Draw PPP loan you already received. The first requirement of requesting a Second Draw PPP loan is that the applicant must “have used or will use the full amount of the initial PPP loan for authorized purposes on or before the expected date of disbursement of the Second Draw PPP loan.”

Considering Applying for a Second Draw PPP Loan?

It is important to note a few things regarding this requirement if you are considering applying for a Second Draw PPP loan:

  1. It is best practice to have used the entirety of the First Draw PPP loan at the time that you apply for the Second Draw PPP loan. Doing so prevents any eligibility issues that could arise due to unforeseeable circumstances that prevent using the funds on authorized purposes before the disbursement date of the Second Draw loan.
  2. This requirement does not simply mandate spending the money prior to disbursement of the Second Draw loan – it requires use of “the full amount . . . for authorized purposes.” When you apply, you have to understand that if, for example, it later turns out that you accidentally used any portion of your First Draw PPP loan for something that did not qualify as an authorized purpose, your Second Draw PPP lender and/or the Small Business Administration (“SBA”) could take the position that you were not eligible for the loan. This could have several severe consequences, including that (1) the lender will declare the full amount of your Second Draw loan immediately due and payable, and (2) no portion of the Second Draw loan will be forgiven.

As the Paycheck Protection Program has evolved, “authorized purposes” for which PPP loan proceeds could be used have changed several times and the changes have been significant. Prior to applying for a Second Draw PPP loan, you should understand whether or not you have used “the full amount . . . for authorized purposes” and the potential issues you may face if your PPP lender or the SBA disagrees with you.

Nolan Heller Kauffman Is Here To Help

If you have questions or concerns regarding the Paycheck Protection Program, PPP authorized purposes, or specific issues relating to Second Draw PPP loans, please contact Matthew M. Zapala, Esq., by email (mzapala@nhkllp.com) or phone (518.432.3133) for a no-cost consultation to see how Nolan Heller Kauffman LLP may be able to assist with any of your Paycheck Protection Program questions, concerns and applications.

New York State Liquor Authority Updates: New Rules & Enforcement due to COVID-19

Person reading the news

The attorneys at Nolan Heller Kauffman LLP understand that many businesses in the hospitality industry have been negatively impacted by COVID-19. We are here to help you navigate both the financial and regulatory compliance aspect of keeping your business during this difficult time.

If your New York licensed business has been charged with violations of the COVID-19 or other regulations, or if you are interested in ensuring that your business is fully compliant with these regulations and with the terms of your license, please contact Alexandra B. Becker, Esq. by email (abecker@nhkllp.com) or phone (518.432.3188).

Task Force Crackdown:

On July 23, 2020, Governor Cuomo announced a new multi-agency New York State task force to enforce COVID-19-related regulations at licensed establishments, including bars and restaurants. The task force is led by the New York State Police and New York State Liquor Authority (“SLA”) Chairman Vincent Bradley and will include investigators from:

The goal of the task force is to ensure that all licensed establishments are fully complying with the State’s rules regarding COVID-19, including but not limited to enforcement of social distancing measures, proper use of face coverings, and the prohibition on indoor dining and alcohol consumption (for the New York City area).

Licensed establishments found in violation of COVID-19 regulations face fines up to $10,000 per violation. Egregious violations may result in the immediate suspension of a bar or restaurant’s liquor license.

Between July 21 and 23, the task force conducted over 1,000 compliance checks, which resulted in documented violations at 84 establishments, and 10 liquor licenses being suspended. Between July 25 and 26, the task force conducted over 1,300 additional compliance checks, documenting violations at 132 establishments, leading to 12 further summary suspensions. An additional 644 compliance checks were completed Monday night, with investigators observing 26 violations in New York City.

Since the start of the pandemic, the New York State Liquor Authority has brought 443 charges against licensees statewide and imposed 33 Emergency Orders of Suspension, immediately closing establishments in order to protect public health and safety. A frequently updated list of licensees who have been charged and/or summarily suspended is posted on the New York State Liquor Authority’s website: www.sla.ny.gov.

NYS Liquor License Food Requirements:

Pursuant to Executive Order 202.52, effective Friday July 17, 2020, all licensed establishments with on-premises privileges (e.g. restaurants, taverns, manufacturers with tasting rooms, etc.) cannot serve alcoholic beverages unless such alcoholic beverage is accompanied by the purchase of a food item which is consistent with the food availability requirement of the license under the Alcoholic Beverage Control Law.

Under normal (pre-COVID-19) circumstances, any on-premises licensee is required to have some degree of food available for purchase at their premises. The type of food required is dependent on the type of license. Restaurants have the most extensive food requirements, and must offer “meals”, defined as “ the usual assortment of foods commonly ordered at various hours of the day”. Taverns and manufacturers with tasting rooms are permitted to offer a more limited scope of food options. Under pre-COVID rules, all licensees were required to have food available, but patrons were not required to purchase food in conjunction with a purchase of alcohol.

The Executive Order is aimed at permitting outside and limited indoor dining (outside of New York City and Long Island), with alcoholic beverages, while restricting the congregating and mingling that arise in a bar service/drinking only environment. The Order provides : “for each patron in a seated party, an item of food must be purchased at the same time as the purchase of the initial alcoholic beverage(s) . . . However, one or more shareable food item(s) may be purchased, so long as it/they would sufficiently serve the number of people in the party and each item would individually meet the food standard below.”

The New York State Liquor Authority has provided additional guidance as to the standards of food required:

For Manufacturers with On-Premises Service Privileges: sandwiches, soups or other such foods, whether fresh, processed, pre-cooked or frozen; and/or food items intended to compliment the tasting of alcoholic beverages, which shall mean a diversified selection of food that is ordinarily consumed without the use of tableware and can be conveniently consumed, including but not limited to: cheese, fruits, vegetables, chocolates, breads, mustards and crackers.

For On-Premises Retailers with a Food Availability Requirement, Including Restaurants and Taverns: sandwiches, soups or other foods, whether fresh, processed, precooked or frozen.

The guidance further clarifies that for restaurants and taverns, “other foods” are “foods similar in quality and substance to sandwiches and soups; for example, salads, wings, or hotdogs” are considered acceptable’ whereas; “a bag of chips bowl of nuts, or candy alone are not.” Further, that dessert-type items can satisfy this requirement, as long as it is a “substantial item, such as a piece of cake/pie, an ice cream sundae, etc.” as opposed to a “drink with whip cream, a cookie, a piece of candy, etc.”

Patrons are not required to purchase a food item with each alcoholic beverage purchase. So long as food is ordered at the time of initial order of any alcoholic beverages that is sufficient in substance and is also of a quantity sufficient to serve the number of patrons who are present and being served alcohol.

Ongoing Efforts to Mitigate COVID-19 Impact on Licensees:

On March 16, 2020, in response to the COVID-19 crisis, Governor Cuomo issued a statewide mandate that restaurants operate only for takeout and delivery, causing many of those businesses to experience huge losses of revenue. In order to help those impacted businesses, the New York State Liquor Authority issued a series of directives aimed to ease the restrictions on operations and financial obligations of businesses licensed to serve alcohol.

Normally, on-premises licensees (restaurants, bars, taverns, clubs, arenas, catering establishments, etc.) are only permitted to sell alcohol for consumption on their licensed premises, with the exception of takeout beer. In order to boost revenues, the SLA is temporarily allowing on-premises licensees to sell wine and spirits- in addition to beer- by the bottle for takeout and delivery in conjunction with a food sale. The sale of mixed drinks for takeout or delivery in conjunction with a food sale is also permitted so long as they are in closed containers consistent with any open container ordinance. Licensees do not need to obtain any waiver or permission from the SLA in order to make such sales. These off-premises sales privileges have been extended multiple times, and currently run through August 5, 2020.

The New York State Liquor Authority has also extended its deferment of liquor license renewal fees through August 31, 2020, which will allow on-premises licensees, wholesalers, and manufacturers with licenses expiring between March 31, 2020 and July 31, 2020 to defer the submission of renewal payments until August 31, 2020. Licensees are still required to file their applications prior to their expiration date, despite not having to submit a renewal payment.

Each of these Advisories and temporary procedures are subject to further changes and/or extensions as the State Liquor Authority continues to evaluate the scope and status of the COVID-19 crisis and its impact on New York State licensed businesses.

The New York State Liquor Authority is continuing to process and review applications during this time, though Full Board Meetings are not open to the public. Any presentation in support or opposition of licensing and miscellaneous matters must be submitted via email by the date set forth in the notice (as is the current practice) and no appearances or other submissions will be permitted. All licensing applicants can request to have their application held in abeyance until normal Full Board Meetings resume.

How We Can Help:

We appreciate that maintaining compliance with the requirements of your liquor license, as well as with the ever-evolving COVID-19 restrictions is extremely difficult, and urge you to contact us to see how we may be able to assist you. Please contact Alexandra B. Becker, Esq. by email (abecker@nhkllp.com) or phone (518.432.3188).

Real Property Tax Assessment Grievance Day Deadlines and Procedures May be Different Due to COVID-19

Individual reading a newspaper

Property Tax Assessment Changes Due to COVID-19

Are you planning to challenge your real property tax assessment this year? If so, it is critical that you check with your assessors’ office about any changes in the deadline or procedure. Normally, the grievance deadline for most taxing jurisdictions is the 4th Tuesday in May (this year is May 26, 2020). However, the Governor’s Executive Order 202.22 allows taxing jurisdictions to extend the deadline.

Executive Order 202.22 also changes some of the grievance procedures. It permits the assessment roll to be produced online, as well as offers changes in hearing schedules and procedures to allow for video-conference hearings.

If you are considering filing a tax assessment grievance with your taxing jurisdiction this year, Nolan Heller Kauffman LLP has a wealth of experience helping clients pursue assessment reductions. If you have questions, please contact John V. Hartzell at jhartzell@nhkllp.com, or call (518) 432-3106.

Important MLMIC Update: Major Victory for Policyholders in New York State

courthouse exterior

April 24, 2020 Decision in the Maple-Gate Case Is a Major Victory for Policyholders in New York State.


The Appellate Division, Fourth Department issued its decision in Maple-Gate Anesthesiologists, P.C. v. Nasrin, CA 19-00612, 2020 NY Slip Op 02389 (4th Dep’t Apr. 24, 2020) (“Maple-Gate”), creating a split of authority with an earlier appellate decision of the First Department in Matter of Schaffer, Schonholz & Drossman, LLP v. Title (171 A.D.3d 465 [1st Dep’t 2019]) (“Schaffer”).  As explained below, Maple-Gate represents a major victory for MLMIC policyholders in disputes with employers over entitlement to the cash consideration resulting from the demutualization and sale of MLMIC to Berkshire Hathaway.


On October 1, 2018, Medical Liability Mutual Insurance Company (“MLMIC”) was converted from a mutual insurance company to a stock company and sold to Berkshire Hathaway for $2.502 billion in cash consideration. Under the New York Insurance Law, mutual insurance companies are owned by their policyholders.  Consistent with Insurance Law § 7307(e)(3), MLMIC’s Plan of Conversion provided that all MLMIC policyholders during the time period July 15, 2013 through July 14, 2016 would be eligible to share in the cash consideration. Eligible MLMIC policyholders would receive a cash payout of approximately 1.9 times the amount of premiums paid on their policies during this three-year period.  In nearly all cases, the healthcare professionals covered through MLMIC policies are on record as the eligible policyholders.


Following MLMIC’s sale, litigation ensued throughout New York State between healthcare providers and their employers or former employers over which of them was entitled to receive the cash consideration:  (i) the employee/healthcare providers, who became MLMIC policyholders—and thereby acquired an ownership interest in MLMIC—as part of the bargained-for exchange of consideration under their employment agreements; or (ii)  their employers, who paid the MLMIC premiums pursuant to, and in exchange for their employees’ services under, the employment agreements.  The answer to that question is simple, compelled by, among other things, the statutory framework of the Insurance Law, the Plan of Conversion, the plain terms of the employment agreements, and controlling New York  common law:  The employee/policyholder is entitled to the MLMIC cash consideration.


Indeed, this was the holding of the Erie County Supreme Court in Maple-Gate Anesthesiologists, P.C. v. Nasrin (96 N.Y.S.3d 837 [Sup. Ct. Erie Cty. 2019]), which, among other things, confirmed that “Insurance Law § 7307 does not confer an ownership interest … to the cash consideration to anyone other than the policyholder,” and stressed that “the cash consideration was clearly intended to be in exchange for the extinguishment of the [policyholder’s] membership interest in MLMIC.”


However, shortly after the Erie County Supreme Court issued its decision, the Appellate Division for the First Department issued a decision in Schaffer. The First Department, acting as a court of original jurisdiction under CPLR 3222, summarily held that the doctor/policyholder would be unjustly enriched by receiving the cash consideration because her employer had paid her policy premiums.  The Schaffer decision was unusual in that the First Department did not cite to the Insurance Law, did not reference the MLMIC Plan of Conversion or the Department of Financial Services’ Decision approving the MLMIC Plan, did not refer to the parties’ employment agreement, did not rely upon any New York unjust enrichment law, and did not provide any reasoning for its conclusion.


Schaffer has had a significant impact on MLMIC policyholder litigation throughout New York as a result of the doctrine of stare decisis (Latin, meaning “stand by thing decided”).  As background to understanding stare decisis, it is important to understand New York’s court structure. In New York, the basic trial level court is the Supreme Court. Appeals from the Supreme Court are taken to the Appellate Division, which is divided into four Departments.  The First Department hears appeals from New York County and the Bronx.  The Second Department hears appeals from the downstate counties surrounding New York and Bronx Counties, and north to Dutchess and Orange Counties.  The Third Department covers the eastern part of upstate New York, and the Fourth Department covers the central and western parts of upstate New York.  Appeals from the Appellate Division are taken to the New York Court of Appeals.


While the doctrine of stare decisis has many nuances and exceptions, for purposes of this discussion and as applicable to MLMIC policyholder cases, the doctrine requires that where an issue has been decided by the Court of Appeals or the Appellate Division for a particular Department, the Supreme Court judges within that Appellate Division Department are required to adhere to the Court of Appeals’ or Appellate Division’s decision.


Where neither the Court of Appeals nor the Appellate Division for the Department where an action is pending has decided the issue, but the Appellate Division for another Department has a decision on point, all Supreme Court judges throughout the state must follow that decision. Where there are conflicting Appellate Division decisions (and no Court of Appeals decisions) on an issue, Supreme Court judges within a Department whose Appellate Division has issued a decision must follow the decision of their own Department; but Supreme Court judges in other Departments are not bound by stare decisis and may render decisions on the merits.


With the foregoing in mind, Schaffer (which was decided on April 4, 2019) has for the past year been the only Appellate Division decision to have decided a dispute as to the MLMIC cash consideration.  Consequently, Supreme Courts, relying on Schaffer as binding authority, have decided numerous MLMIC cases throughout New York against policyholders.  In the cases we are handling, we are pursuing appeals of these adverse decisions.


On April 24, 2020, the Appellate Division for the Fourth Department issued its decision in Maple-Gate (2020 NY Slip Op 02389 [4th Dep’t Apr. 24, 2020]) affirming the above decision of the Erie County Supreme Court. Whereas Schaffer (a) did not reference the parties’ employment agreement, (b) did not cite the Insurance Law, the MLMIC Plan of Conversion or the DFS Decision, and (c) did not rely upon any New York unjust enrichment law, the Fourth Department (i) emphasized the employer’s agreement to pay the premiums pursuant to the parties’ employment agreements, (ii) stressed that the Insurance Law, the Plan of Conversion and other documentary evidence establish that the named policyholders (the employees) are to receive the MLMIC cash consideration, and (iii) relied upon New York unjust enrichment law in unequivocally holding that, “as a matter of law . . . [the employer] had no legal or equitable right of ownership to the demutualization payments.”


As a result of the Fourth Department’s Maple-Gate decision, there are now conflicting Appellate Division decisions, and Schaffer cannot even arguably be viewed as binding authority outside the First Department. Under the doctrine of stare decisis, Maple-Gate is likely to be viewed as binding authority within the Fourth Department. Supreme Court judges in the Second and Third Departments are now free to decide cases based on their own views of the merits, and we expect many of these judges will find Maple-Gate persuasive.


Nolan Heller Kauffman LLP represents more than 100 healthcare professionals in over 50 cases throughout New York State relating to disputes over MLMIC cash consideration.  If you are or were a MLMIC policyholder and have questions, or would like to learn more about this subject,  please contact Justin A. Heller, Esq. at jheller@nhkllp.com or Alexandra B. Becker, Esq. at abecker@nhkllp.com, or call us at (518) 449-3300.


Nolan Heller Kauffman LLP is a preeminent, award-winning business law firm with offices in Albany and Syracuse, New York, and serving clients throughout New York State.


Attorney Advertising