The Role of Advisory Boards in Scaling- A Competitive Edge for Private Companies – Part Two
Our last installment explored the basic concept of an advisory board. This second, and final, installment moves from concept to implementation, identifying roles and considerations for designing and building an advisory board and attracting valuable advisors.
The Primary Roles of an Advisory Board in the Scaling Process
Navigating Strategic Inflection Points (Macro View)
Board members with macroeconomic expertise help the leadership team anticipate, not just react to, market trends and shifts in the competitive landscape. Their role is to ensure the company is aiming at the right target.
De-Risking Operational Execution (Micro View)
Advisors provide tactical guidance on how to do it efficiently, leaning on their past operational leadership experience. This includes advice on executive hiring, implementing scalable infrastructure, and optimizing sales playbooks to improve the Customer Acquisition Cost (CAC).
Enhancing Credibility and Access to Capital
For founders interacting with sophisticated PE funds and VC investors, the presence of a respected advisory board is a significant due diligence advantage. It acts as an independent signal of management maturity and provides direct network effects, unlocking connections to capital sources and strategic partners.
Advisory Board Compensation: Structuring for Maximum Alignment
The compensation package is crucial for attracting top-tier advisors and ensuring their interests are aligned with the company’s long-term scale and eventual success.
Compensation Type
Typical Structure
Purpose & Application
Equity (Stock)
0.1% – 0.5% of fully diluted shares, depending on stage and time commitment; typically vests over one to two years with a short cliff
Primary motivator in early stage; aligns the advisor’s financial interest with a successful liquidity event (e.g., acquisition or IPO)
Cash Remuneration
Annual Retainer ($5,000 – $15,000) or **per-meeting fee** ($1,500 – $3,000 per meeting)
Primary motivator in later stage; Compensates for recurring time commitment; used by more mature companies with revenue
Perquisites
Reimbursement for all travel, accommodations, and meeting-related expenses
Standard practice; ensures advisors do not incur personal costs for company service
Key Principle: For early-stage companies, emphasize equity to conserve cash and maximize long-term alignment. For later-stage, profitable companies, shift toward a hybrid model that includes a cash retainer and a smaller, performance-based equity refresh.
Risk Management and Liability Concerns
A key advantage of the advisory board structure is the significant reduction in personal liability, but this aspect requires careful legal attention.
Authority and Lawsuit Liability
No Fiduciary Duty, No Authority: Advisory board members, by definition and as clearly stated in their advisory agreement, have no voting rights, no governing authority, and no fiduciary duty. This non-fiduciary status is the primary shield against most shareholder and regulatory lawsuits common to formal directors.
The Risk of ‘De Facto’ Directors: A risk arises if the advisory board begins to act like a board of dDirectors (a ‘de facto’ director). If management always implements their recommendations without independent review, or if the board members are granted governance-like titles, a plaintiff’s attorney could argue they have assumed a fiduciary role, making them personally liable.
Mitigation: The advisory agreement must explicitly state their advisory-only role, and meeting minutes should clearly reflect that final decisions are made by the management team or the formal BOD.
Insurance Coverage: Directors & Officers (D&O) Insurance
While the risk is lower than for a formal BOD, the cost of defense for even a meritless claim is significant. Top advisors will almost universally require coverage as a condition of their service.
Coverage Type – Directors and Officers (D&O) Liability Insurance: This policy is designed to protect the personal assets of individuals from legal claims resulting from their service.
Advisory Board Inclusion: Most modern D&O policies for private companies specifically include “advisory board members” in the definition of an “insured person.” You must confirm this inclusion with your broker.
Appropriate Levels:
Defense Costs: D&O insurance covers the costly legal defense against a claim, which is the most immediate and likely risk.
Limits: For a growing private company seeking PE/VC funding, a policy limit between $1 million and $5 million is typical, but this should scale with the company’s valuation, employee count, and fundraising activity.
Key Takeaways for Scaling Businesses
For entrepreneurs, owners, and the financial sponsors backing them, the lesson is clear:
An Advisory Board Is a Strategic Investment: It dramatically improves the probability of a successful, efficient scale by providing external validation and expert guidance.
Select Purposefully: Structure the board with three to five independent experts to cover the pillars of operational leadership, market strategy, and capital/dealmaking.
Compensate Strategically: Use equity to align long-term interests and conserve cash in the early stages.
Insure the Asset: D&O insurance is a mandatory protective measure that attracts top talent and financially de-risks the advisory relationship.
In the competitive landscape of emerging growth, the external wisdom provided by a well-chosen, well-structured, and protected advisory board is often the defining factor that separates a fast-growing company from a market-defining success.
Mass. Court Limits Chapter 93A Claims Against Insurers in Robles v. Selective Insurance Decision
In Robles v. Selective Insurance Co. of America, 2025 U.S. Dist. LEXIS 204595 (D. Mass. Sept. 2, 2025), Magistrate Judge Hennessy issued a report and recommendation granting in part and denying in part Selective’s motion for judgment on the pleadings in a Chapter 93A and Chapter 176D case arising from a fatal construction accident. The plaintiff alleged that Selective engaged in unfair settlement practices by failing to effectuate a prompt, fair, and equitable settlement when liability became “reasonably clear.”
First, the court dismissed all claims against two of the three Selective entities because the plaintiff’s Chapter 93A demand letter was addressed only to one insurer. The ruling underscores that a 93A demand letter should specifically identify each defendant and the alleged misconduct; failure to do so may foreclose recovery.
The court also struck all allegations of unfair practices beyond those expressly described in the demand letter, reaffirming that claimants cannot expand the scope of their 93A theories through later pleadings or correspondence. The court, however, allowed the 93A claim to proceed as to the alleged failure to tender policy limits for a release of the insured contractor, Turnkey, under §3(9)(f) of Chapter 176D. In doing so, the court noted that while insurers must offer fair settlements once liability is reasonably clear, they are not obligated to pay policy limits absent a full release of their insureds. However, the court found factual issues that precluded judgment at the pleadings stage.
For defense counsel, Robles highlights three key takeaways for consideration: (1) scrutinize and insist on strict compliance with the 93A demand letter requirement; (2) ensure that all correspondence clearly documents the scope and purpose of settlement offers; and (3) recognize that liability being “reasonably clear” is evaluated narrowly—insurers are protected when legitimate coverage or causation disputes exist. The decision reflects a view of Chapter 93A enforcement that preserves the insurer’s right to negotiate in good faith while limiting expansive post hoc claims of bad faith.
Abby Druhot contributed to this article
Old North State Report – October 27, 2025
UPCOMING EVENTS
October 27, 2025
Thinkers Lunch: Can We Still Trust the Polls?
November 13, 2025
Women Lead NC
January 12, 2026
Economic Forecast Forum
LEGISLATIVE NEWS
MEDICAID FUNDING CLASH
The North Carolina General Assembly is facing a significant deadlock over how to fund the Medicaid rebase, a critical adjustment needed to ensure the state’s Medicaid program remains solvent and providers are paid adequately. Adding to the problem, the NCDHHS Secretary unilaterally cut Medicaid reimbursement rates, ranging from 3% to 10%, which went into effect on October 1. the Medicaid rebase impasse reflects deeper political divisions within the North Carolina legislature. The House and Senate remain at odds over both the amount of funding and the legislative strategy for delivering it. Until a compromise is reached, the uncertainty threatens the stability of Medicaid payments and the broader healthcare system in the state.
The Carolina Journal (Staff) 10/23/25
NC BUDGET STALEMATE CONTINUES
North Carolina’s budget negotiations have reached a standstill, with Republican leaders in the General Assembly unable to agree on a new two-year spending plan. The budget was legally due on July 1, and as of this week, it is more than 110 days overdue. Despite the delay, the state government continues to operate under the previous budget thanks to a 2016 law passed by Republican majorities and signed by then-Governor Pat McCrory, which allows state government to continue operation at prior years’ funding levels in the absence of a new budget.
On Thursday, Governor Josh Stein signed Senate Bill 449 into law, a mini budget bill that provides targeted funding and regulatory changes to support recovery from Hurricane Helene and other statewide needs. The bill includes provisions such as extending Golden LEAF bridge loans, delaying state cashflow loans until FEMA reimbursements are received, and funding repairs not covered by FEMA. It allocates millions for various projects: $25 million for the Pay Plan Reserve, $20.85 million for the state’s budget information system, $12 million for broadband fiber damaged by the hurricane, and additional funds for ferry maintenance, State Fairgrounds renovations, and a new human resources system.
Education funding includes support for Cooperative Innovative High Schools and the NC Promise program. Environmental and agricultural initiatives also receive funding, including $3 million for avian flu response and $700,000 for staffing at the Environmental Management Commission. The mini-budget passed overwhelmingly in both chambers—46-0 in the Senate and 104-6 in the House.
Governor Stein has proposed a $67.9 billion budget, while both legislative chambers have suggested a slightly lower figure of $65.9 billion. The differences between the proposals include the size of pay raises for state employees and teachers, and the extent of income tax cuts. Stein favors larger raises for teachers and has expressed support for the House’s proposed amounts.
North Carolina House Speaker Destin Hall declared at the close of Wednesday’s session that the House is unlikely to reconvene for further legislative business this year. As a result, six outstanding veto override attempts—targeting high-priority bills related to guns, immigration, and diversity, equity, and inclusion—are expected to remain unresolved until the short session next year.
The Center Square (Wooten) 10/22/25
WRAL News (Staff) 10/23/25
The News & Observer (Bajpai) 10/24/25
NORTH CAROLINA LEGISLATURE APPROVES NEW CONGRESSIONAL MAP
North Carolina’s legislature has approved a mid-decade redrawing of its congressional map aimed at increasing the GOP’s advantage. The new lines, passed by the state Senate and affirmed by the House, would likely give Republicans 11 of the state’s 14 U.S. House seats—an increase from the current 10—fortifying their 2026 prospects. Most notably, the revised map significantly alters the 1st District, now represented by Democratic Rep. Don Davis, shifting its political composition from one Trump carried by three points in 2024 to one he would have won by about 12 points, according to General Assembly data.
Governor Josh Stein cannot veto the maps since an agreement made by state Democrats in the 1990s took redistricting out of the governor’s control.
This marks North Carolina’s fifth congressional map in as many election cycles—a series of shifts that began after the 2020 census with court-drawn lines in 2022, followed by GOP-era redraws in 2024 and now in 2025 . The change aligns North Carolina with other Republican states such as Texas and Missouri that have undertaken similar mid-decade redistricting moves, even as California Democrats have responded by redrawing their own map to protect seats.
The new North Carolina map has already sparked a fresh legal challenge, as plaintiffs in a long-running lawsuit against the 2023 congressional map amended their complaint to include the newly drawn districts. The amended case seeks to halt the use of the new map in upcoming elections while litigation continues, and the court has requested input from both sides regarding how to proceed following the redrawing. Meanwhile, additional lawsuits are expected to follow, as part of a broader national trend among Republicans to redraw maps in their favor and counter-reactions from Democrats in other states.
Roll Call (Altimari & Menezes) 10/22/25
WRAL News (Doran) 10/24/25
WHAT WE’RE LISTENING TO
Under the Dome Podcast
Do Politics Better Podcast
WUNC Politics Podcast
Carolina Newsmakers Podcast
NC Capitol Wrap Podcast
WHAT WE’RE READING
Asheville Citizen Times
Carolina Journal
Charlotte Observer
Fayetteville Observer
Greensboro News & Record
NC Insider
New Bern Sun Journal
News & Observer
North State Journal
Our State Magazine
Triangle Business Journal
Under the Dome
Wilmington Star News
Winston-Salem Journal
WRAL
Healthcare Preview for the Week of- October 27, 2025 [Podcast]
One month of government shutdown
This week will prove a key inflection point in the government shutdown. On November 1, 2025, the shutdown will pass the one-month mark. November 1 is also the date the Supplemental Nutrition Assistance Program will run out of federal funding and the health insurance Marketplace open enrollment period will begin, where consumers will see significant premium increases due to the pending expiration of the enhanced advanced premium tax credits after December 31, 2025. Whether there are funds for the administration to keep paying military personnel is also unknown, and federal employees will miss another paycheck this week. Any of these items could spur more public outrage and cause lawmakers to choose to end the shutdown. However, with the House out of session, subject to a 48-hour callback, and President Trump overseas this week, next week is the one to watch for potential congressional action.
Last week, the Senate failed to pass two bills related to federal employee pay, and further developments could impact whether the House returns to session in the near future. Sen. Johnson (R-WI) led the Republican-supported version, and Sen. Van Hollen (D-MD) led the Democratic alternative. This week, the senators are working toward a compromise bill that, if quickly developed, agreed to by the two senators, and passed by the Senate, could prompt the House to return to consider that legislation.
Senate committees also will consider key US Department of Health and Human Services (HHS) nominees. The Senate Health, Education, Labor, and Pensions Committee will consider Casey Means, MD, nominated for surgeon general, who will join the hearing virtually. The Senate Finance Committee will hear from four nominees, including Thomas Bell, nominated for HHS inspector general after the former inspector general, Christi Grimm, was fired early this year. Means has been a key supporter of Secretary Kennedy’s Make America Healthy Again movement, and members are likely to focus questioning during both hearings on HHS restructuring, reductions in force, and vaccines.
Furloughed staff at the Centers for Medicare & Medicaid Services (CMS) returned to work October 27, 2025, after the agency announced it would use research user fees to pay staff to work on key CMS priorities, including Medicare and Marketplace open enrollment. The return of all staff may mean that CMS will try to release the calendar year 2026 Medicare payment final rules close to their required deadline of November 1, 2025, including the Physician Fee Schedule and Outpatient Prospective Payment System final rules.
Today’s Podcast
In this week’s Healthcare Preview podcast, Debbie Curtis and Rodney Whitlock join Maddie News to discuss the upcoming start of the health insurance marketplace open enrollment, and what any potential congressional action on the enhanced premium tax credits could mean for the marketplaces.
CMS Suspends Most Medicare Certification Activity During Government Shutdown
Key Takeaways
CMS has paused most certification and survey activities during the government shutdown. Key functions like processing initial certification and change of ownership (CHOW) applications, conducting initial, standard and revisit surveys, and complaint investigations other than those alleging immediate jeopardy or patient harm are on hold until operations resume.
Providers undertaking activities that require action by CMS state survey agencies should expect prolonged approval timelines.
Delays in CMS certification activities that slow processing of initial enrollments and CHOW applications may delay billing activities.
Providers should evaluate upcoming changes for shutdown-related disruptions. Transactions, expansions and operational updates may require revised timelines and contingency planning.
As the government shutdown enters its fourth week, the Centers for Medicare & Medicaid Services Quality, Safety & Oversight Group and Survey & Operations Group (CMS) clarified what the shutdown means for Medicare-certified providers and suppliers: nearly all certification and survey activities are on pause.
In a revised memo issued Oct. 21, 2025, CMS reaffirmed that any activity or function requiring action by the CMS state survey agencies is suspended until government operations resume.
CMS Halts Key Certification and Survey Activities
The memo outlines specific activities that are suspended during the shutdown, including:
Medicare certification surveys, including initial, standard and “deemed status” surveys conducted by accreditation organizations
Most complaint investigation surveys, except those alleging immediate jeopardy or actual harm
Most revisit surveys, except revisits to ensure that immediate jeopardy or patient harm has been addressed, to prevent mandatory termination within 45 days of the termination date, or to prevent mandatory denial of payment for new admissions within 15 days of imposition
Processing certification activities where CMS state survey agency action is required, including changes of ownership (CHOWs) and changes in location
Informal dispute resolutions, except when an immediate adverse action will be taken against the provider during the shutdown, like terminating a provider agreement
MDS or OASIS reporting
Surveyor training and testing
New CMP-funded improvement projects
Additionally, providers who were in a survey cycle at the time of the shutdown will not be entitled to a revisit survey unless they meet one of the above identified exceptions. This is particularly concerning for providers who are subject to a discretionary denial of payments for new admissions, which can have significant negative financial consequences for providers.
Some Enrollments and Licenses Proceed Despite Shutdown
Not all enrollment or licensing activity has stopped. Medicare enrollment activities that don’t require action by CMS state survey agencies — including those solely managed by Medicare Provider Enrollment Operations Group and the Medicare Administrative Contractors (MACs) — are still moving forward.
Similarly, state-level licensing functions remain unaffected. Activities independent from Medicare obligations — like initial state licensing and changes to state licenses — are not impacted by the shutdown. Certified providers and suppliers remain subject to these state surveys and obligations.
Certification-Linked Activities Face Shutdown Delays
The ongoing government shutdown is expected to significantly delay Medicare provider enrollment applications that require CMS certification activity by the CMS state survey agencies, which are limited to those involving Medicare certified providers — such as hospitals, home health agencies, SNFs and hospices — and certified suppliers — such as ASCs, portable x-ray suppliers and ESRD facilities.
Certification-related delays may affect actions such as:
Initial enrollments
Changes of ownership or location
Address or name changes
Adding or removing HHA branch locations
Adding practice locations or sites
Expansion/removal and change in modalities and services for ESRD
Adding extension locations to rehabilitation agencies
Adding hospice multiple locations
Ceasing operations
CMS Delays May Affect Operational and Financial Timelines
Providers involved in transactions or adding or modifying business operations that trigger certification activities by CMS state survey agencies should expect significant delays in receiving CMS approval until the shutdown ends, as most surveys and enrollment applications won’t be processed until then.
Once government functions resume, backlogs across CMS, the MACs, CMS state survey agencies and accrediting bodies will likely slow approvals even further, at least until they are able to catch up. Certified providers and suppliers should factor in these delays when planning for any current or future projects, as it has the potential to impact transactions and business operations by slowing the timing on billing activities and receipt of payment for services.
Familiar With Maryland FAMLI? MDOL Reissues Proposed Regulations
On October 17, 2025, the Maryland Department of Labor (MDOL) reissued proposed regulations to implement the Family and Medical Leave Insurance (FAMLI) program. This new proposal—open for public comment until November 17, 2025—withdraws the prior proposed regulations and reissues four chapters: General Provisions; Contributions; Equivalent Private Insurance Plans (EPIPs); and Dispute Resolution. The Claims chapter has not yet been reissued. Several key changes appear across the reissued chapters.
Quick Hits
Maryland’s FAMLI program will provide most employees with up to twelve weeks of paid family and medical leave, with a possible additional twelve weeks of parental bonding leave per benefit year.
Following yet another delay to the program’s effective date, the MDOL reissued proposed regulations to implement FAMLI.
While the latest proposed regulations are largely the same as the prior version, there are some significant differences.
Background on the Law and Proposed Regulations
As employers may recall, the Maryland General Assembly passed the FAMLI law back in 2022. FAMLI will provide most employees in Maryland with up to twenty-four weeks of partially paid leave: twelve weeks of paid family and medical leave, with the possibility of an additional twelve weeks of paid parental leave, per twelve-month period. We discussed the detailed requirements of the law in our article, Part I: Overview of the FAMLI law.
After several legislatively enacted delays, including from the most recent General Assembly session, contributions from employers and employees to fund the program are scheduled to begin on January 1, 2027, with benefits becoming available no later than January 3, 2028.
We have discussed in prior articles the proposed regulations that were previously issued by the MDOL: Part II: Proposed regulations (General, Contributions, Equivalent Private Insurance Plans) and Part III: Proposed regulations (Claims, Dispute Resolution). Although the proposed regulations remain largely the same, there are some significant differences.
General Provisions: Definitional and Structural Shifts
The reissued definitions chapter mostly reiterates the prior proposed definitions (much of which aligns with the federal Family and Medical Leave Act), but it also sets forth a few new terms and narrows and streamlines several others.
“Anchor date” is added by cross-reference to the statute.
“Carrier” is also added, meaning an insurer authorized by the Maryland InsuranceAdministration.
“Covered individual” now means only a “covered employee,” eliminating the self-employed enrollment concepts and “qualified previous employee” from this chapter.
“Covered employee” eligibility is measured against the “anchor date” cross-referenced in statute, rather than the leave start date, and now incorporates a reference to the performance of hours of “qualified employment.”
“Qualified employment” is now defined narrowly in the General chapter and reassigns the multi-jurisdictional coverage tests to the Contributions chapter.
Additionally, the newly proposed regulations reiterate that the FAMLI Division of the MDOL may “mandate” prescribed forms and templates, to include notices, claims forms, and dispute resolution forms.
Contributions: Clarified Coverage Tests, Administrative Changes, and Stricter Enforcement
“Qualified employment” is determined first by whether unemployment insurance (UI) contributions are made on the employee’s behalf to the State of Maryland. Employment is expressly not qualified when UI is owed to another jurisdiction for that employee. If UI is not due to any jurisdiction, employment may still qualify under localization, control/base of operations, and resident fallback tests.
As before, employers must create and maintain online accounts; new employers must register within twenty days of first paying wages. The newly proposed regulations clarify that this payment is made to a “qualified employee.”
These proposed regulations impose a new timeline for written notice to all employees of at least one pay period before the commencement of contribution withholdings and before any changes to the withholding amount. If an employer fails to deduct an employee’s share of the contributions, the employer will be deemed to have elected to pay it and may not retroactively recoup; however, the newly proposed regulations add that when an employee’s paycheck lacks sufficient funds for the contribution due to higher-priority withholdings, the employer may recoup the missed employee share within the next six pay cycles.
Additionally, the newly proposed regulations establish an allocation order for contribution payments, to be applied to the oldest quarter first and in the following order: first to penalties, then to interest, and finally to contributions. Also, if a business ceases operations, contributions will be due within five days.
Enforcement is now more specific. Employers have a thirty-day cure period for contribution delinquencies. Interest accrues at 1.5 percent per month on unpaid contributions, and the FAMLI Division may assess up to two times the delinquent contributions as a penalty and order an audit. For missing or incomplete wage reports, the FAMLI Division may estimate wages, subpoena records, and order an audit.
The overpayment recovery provisions are also more specific: employers have one year to request reimbursement; employee shares must be returned within ninety days; and, if former employees cannot be located with reasonable effort within ninety days, amounts are remitted to the State of Maryland for safekeeping.
EPIPs: Revised Timelines and Safeguards
The newly proposed regulations reframe certain aspects of EPIP timing, administration, and obligations, while largely reiterating the provisions on EPIP benefits and leave sufficiency standards, job protection, use of MDOL-mandated forms and notices, recordkeeping, reporting, and EPIP termination.
First, the EPIP timelines have been reset. Employers may submit a Declaration of Intent (DOI) to Obtain Approval for an EPIP during a submission window to be announced by Maryland’s secretary of labor. The seeding period is January 1, 2027, through December 31, 2027, and all DOIs expire on December 31, 2027. EPIPs approved through this process will have an effective date of January 1, 2028. Employers that submit a DOI within the announced timeframes will be exempt from State-plan contributions during the 2027 seeding period, subject to clawbacks for early termination.
In addition, cost-sharing terminology has been clarified. Employee “withholdings” to EPIPs may not exceed State-plan employee contributions, and withholdings may not begin before the policy’s effective date. Withholdings are not employer assets and may only be used to pay benefits or premiums. the failure to comply with the requirement that withholdings not be considered an employer asset for anything other than the payment of benefits or premiums replaces “misuse of EPIP money” as a ground for involuntary termination of EPIP approval.
Self-insured EPIP eligibility remains available to employers with fifty or more employees, subject to surety bond requirements. A new limited pathway permits employers with fewer than fifty employees to self-insure if they provide a qualifying, comprehensive benefits package on or before July 31, 2026, and maintain it continuously through application.
EPIP applications may be submitted at any time. Application fees for commercially insured EPIPs are tiered by the number of employees performing qualified employment at submission; the self-insured EPIP fee remains $1,000. The deficiency cure period for EPIP applications is shortened to thirty days (down from ninety days); a failure to cure a contribution deficiency may result in denial of an EPIP application.
The oversight provisions have been loosened; if the FAMLI Division initiates a review, employers or the EPIP administrator now have thirty days, rather than ten days, in which to respond. In addition, a failure to submit quarterly reports no longer results in the automatic termination of the EPIP.
Dispute Resolution: Revised Procedures and New Employer Contribution-Liability Appeals
The Dispute Resolution chapter introduces a formal path for employers to dispute contribution liabilities. Employers may seek reconsideration within thirty days of a notice of contribution liability; appeals must be filed within thirty days of reconsideration denial, with hearings typically held within sixty days. Unlike claimant appeals hearings, employer contribution liability hearings are open to the public. Employers bear the burden of proving their entitlement to a change in liability. Decisions are due within ninety days of the hearing’s conclusion and are subject to judicial review.
Claimant reconsideration timelines remain largely the same, but hearing procedures have been revised. Hearing notices must be provided at least fifteen (instead of ten) days in advance. The new proposed regulations now contemplate late-introduced evidence: additional evidence is allowed only if it is relevant and material, was not previously discovered, and could not have been discovered with due diligence before the claim was filed. The claimant’s burden of proof has been revised from providing entitlement to proving the FAMLI Division or EPIP administrator erred in making the initial decision based on the evidence available at the time of that decision. Final orders must be issued within ten business days, rather than at the conclusion of the hearing.
As before, employers may request a FAMLI Division review of EPIP denials or involuntary terminations within ten business days, filed in the manner prescribed by the FAMLI Division; decisions are due within twenty business days. These review processes continue to be handled by personnel who did not participate in the initial decision.
Continuing Concerns for Employers
The reissued proposed regulations do not resolve several pain points that were identified in the prior proposed regulations. Employers continue to have a narrow window to respond to initial claims and limited avenues to challenge suspected fraud. Additionally, employers still do not have an avenue in these regulations to appeal the award of an individual employee’s benefits.
The rules also continue to provide seven days of continued benefits after a family member’s death, where leave was taken to care for that family member, effectively creating a limited bereavement benefit not expressly enumerated in the statute.
Next Steps
Interested parties may submit comments on these sections of the proposed regulations through November 17, 2025, to the FAMLI Division: [email protected]. Following the comment period, the FAMLI Division may make additional changes to the regulations before issuing them in final form.
Data Center Development and the Rise of SLA Insurance
Data center development is booming—driven by AI and other high-throughput workloads. But beyond the physical buildout, a new product is emerging that might enhance the sector’s value proposition: SLA insurance.
The capital intensity of data center projects attracts institutional investors. One common vehicle is asset-backed securitization, where data center leases and their associated cash flows are pooled into tradeable bonds, offering predictable returns. Another is commercial mortgage-backed securities (CMBS), which bundle loans that data center properties secure, generating returns from aggregated mortgage repayments. These instruments thrive on stability. Long-term leases with creditworthy tenants, standardized contract terms, and sustained demand for digital infrastructure make data centers attractive assets in secondary markets.
However, investors remain cautious about operational risks—especially those tied to service level agreements (SLAs). Complex arrangements to build and operate data center campuses couldexpose operators to steep service credits, rent abatement, or even termination rights if performance obligations are not met. These contingencies may threaten income flow and, by extension, the value of securitized instruments.
Drawing inspiration from M&A rep and warranty insurance — a way to guarantee the income-producing contracts and other assets that sellers promise — SLA insurance seeks to offer a similar safeguard for data center investors and operators. The policy pays out in the event of an SLA breach to mitigate downtime risk, strengthen contract enforceability, and enhance the credit profile of the underlying assets. The mere availability of SLA coverage may improve financing terms, potentially making it easier to raise capital.
As SLA insurance gains traction, it might become a standard feature in digital infrastructure transactions. By de-risking operational performance, it could support more aggressive growth strategies, broader investor participation, and deeper liquidity in the data center financing ecosystem. As such, SLA insurance may become a cornerstone of how digital infrastructure is financed, protected, and scaled.
Real Lessons about Insurer Investigations from the Real Housewives
Even Real Housewives need insurance. Real Housewives of Potomac star Wendy Osefo, and her husband Edward, were recently indicted on charges of insurance fraud, among other charges.[1] The housewife’s predicament is a cautionary tale for those with commercial and personal lines of coverage about the investigative tools insurers may use to investigate a suspicious or large insurance claim. In insurance, as in life, honesty is the best “policy.”
Background
As often is true in insurance, the facts matter; and specifically what is said in any kind of paper trail (including texts and emails) matters. The Osefos reported a burglary at their home to law enforcement, claiming a resulting theft of about 80 items, including designer purses, jewelry, and other luxury goods. Points of the claim raised suspicions, and investigators found the Osefos claimed a $200,000 personal property loss and filed allegedly fraudulent insurance claims claiming a personal property loss totaling more than $450,000 to three insurance companies.
The investigation also unearthed an email Edward sent to Wendy with an itemized list of items reportedly stolen in the burglary. According to investigators, in his email, Edward asked Wendy whether additional high value items could be added to the inventory. Edward’s email also stated: “I’m trying to get the total to exceed $423,000 which is our policy maximum.”
When insurers receive large or otherwise suspicious claims from policyholders, they are likely to launch a claims investigation, using a variety of tools to help validate the legitimacy and amount of a policyholder’s reported loss. As stated in policy endorsements, insurance fraud, like other kinds of fraud, is illegal and can be prosecuted; insurers argue that fraudulent claims can drive up the cost of insurance for everyone. The vast majority of claims submitted, of course, are legitimate and while subject to negotiation between the insured and insurer, are submitted by policyholders who seek the protection for which they bought the coverage. Policyholders can assist insurers in resolving their claims and maximizing their available coverage for a loss by practicing good recordkeeping, making accurate statements to insurers about a loss, and documenting any changes in the condition of items or premises claimed as part of a loss.
Key Takeaways for Policyholders
Practice Good Record Keeping: When making a claim, insurers want to see receipts, proof, timelines, and everything an insured has that can justify a policyholder’s claim. The Osefos claimed the theft of more than 80 items of jewelry and other designer goods, with a loss totaling over $200,000 in retail value. The investigators investigating the Osefos claimed $20,000 of the items that were reported as stolen by the Osefos had been returned to the store in which they were originally purchased for full refunds. Insurers will often examine invoices, purchase records, photos, and other documentation associated with a loss. Keeping records of costs, maintaining current inventories, and keeping photos of items or a premises can help policyholders obtain the maximum recovery under their policies.
Verify Accuracy of Statements to Insurers: When submitting insurance claims, being as detailed as possible and in the form expected by insurers can assist insurers in the claims-handling process and expedite resolution, and payment, of the claim. For losses submitted under property insurance as in this Real Housewives example, using an insurer’s proof of loss form is ideal. As also shown in this example, however, “padding” claims or otherwise making written or oral misrepresentations to insurers about the cause of a loss and the damage incurred in a loss can result in denial of coverage for policyholders, policy cancellation or worse–criminal or civil penalties in extreme cases.Worse off is Edward Osefo, who allegedly gave recorded statements to two of the insurers about the inventory of stolen items he provided, and stated that none of these items had been returned. Investigators investigating the Osefos claim almost $20,000 of items claimed as stolen were returned to the stores from which those items were purchased for full refunds. Property insurance policies typically give insurers the right to conduct, as part of their claims investigation, an “examination under oath,” or deposition/sworn testimony. Having good records and a well-supported claim can help make the EUO go as quickly, and easily, as possible. Requests for EUOs should be prepared for as diligently and thoroughly as a deposition.
Keep Track of Changes in Condition: In the event of a loss, changes in the condition of an item or premises can conflict with a policyholder’s previous statement(s) about those items or premises. For the Osefos, many items that were reported as stolen were allegedly returned. Further, according to the sheriff’s department, the investigation revealed the Osefos tried to make two claims for a diamond wedding band that was reported stolen in the burglary; however, as the investigation revealed, Wendy was later spotted wearing what appears to be the same ring in a photo posted on social media less than two weeks after the reported burglary.
Cooperate with Insurers During Their Investigation: When claims are large or suspicious to insurers, insurers may retain private investigators, third-party appraisal services, accountants, and other experts to help verify the statements made by an insured about a loss. Insurers can also use social media, surveillance, and store return logs to help verify or challenge an insured’s claims under the policy.As noted above, insurers often conduct EUOs as part of their claims investigation. Submitting to an EUO is generally considered part of the insured’s duty to cooperate with the insurer. EUOs are often used when an insurer has amassed conflicting or recognized information is missing during its investigation. Non-cooperation or incomplete cooperation with an EUO request can bar coverage for a claim, or even void a policy.
[1] See TV’s ‘Real Housewife’ and Her Real Husband Charged With Fake Burglary Report, InsuranceJournal.com
Assignees Can’t Collude Their Way into Federal Court
In Gore and Associates Management Company, Inc. v. SLSCO Ltd., — F.4th —, 2025 WL 2938795 (2025), Plaintiff Gore and Associates Management Company sued Defendant SLSCO Ltd. and its surety, Hartford Fire Insurance Company, as an assignee, for alleged financial losses Gore’s subcontractors (all LLCs) sustained after SLSCO and Hartford Fire allegedly failed to pay for work related to rebuilding projects in Puerto Rico and the Virgin Islands after Hurricane Maria in September 2017. At the outset of the litigation, Gore claimed that the federal courts had diversity jurisdiction over the action.
On appeal, the First Circuit sua sponte questioned whether this was so because the plaintiff had alleged in the operative complaint that it was an assignee of three subcontractors’ claims but failed to allege the citizenship information of the assignors and the record did not provide additional information. The parties were asked to submit supplemental briefs on whether the court had diversity jurisdiction. In addition, Gore was specifically ordered to provide information about the citizenships of the assignor subcontractors. Since the subcontractors were alleged to be LLCs, Gore was obligated to provide information about the citizenship of all the members for each assignee.
While the parties submitted briefs, Gore did not submit any evidence supporting its position that there was complete diversity. Accordingly, the First Circuit remanded the case to the district court for jurisdictional factfinding that directed the district court to determine: (1) whether the subcontractors were completely diverse from the defendants and, if not; (2) whether the assignments to Gore were a collusive attempt to manufacture diversity jurisdiction in violation of 28 U.S.C. § 1359, which provides that “[a] district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made … to invoke the jurisdiction of such court.”
The Result
Upon remand, the parties agreed before the district court to exchange written discovery and reserved the right to take depositions and request an evidentiary hearing—no party sought an evidentiary hearing. Instead, the parties submitted simultaneous briefs to the district court. In a subsequent report issued in September 2025, the district court explained that Gore failed to present sufficient evidence to assess the citizenship of its subcontractor-assignors because it relied on unreliable, speculative, inconsistent documents that were inadmissible (due to lack of authentication and hearsay) under the Federal Rules of Evidence such that the Court could not make adequate factual findings regarding diversity of citizenship much less move to the second question assessing the motive behind the assignments. The First Circuit held that this was fatal to Gore’s suit because it bore the burden of demonstrating the validity of the assignments, as the party seeking to invoke diversity jurisdiction. While Gore sought another remand to conduct additional discovery and seek an evidentiary hearing, the First Circuit refused to do so because Gore had already been given seven months for that purpose. The case was dismissed.
Looking Ahead
It is important to remember that an assignee of an insurance claim steps into the assignor’s shoes. As such, if an insurer has a good faith basis to suspect that diversity jurisdiction exists only as a result of an assignment, then it should alert the federal court to the potential jurisdictional defect. This will force the assignee to provide the court with sufficient evidence that there is complete diversity and there was no collusion. If an assignee cannot, then that may end a suit close to its inception (or even after it has been fully litigated because there was no federal jurisdiction to begin with). It is also important to recognize that LLCs have the citizenship of all their members, and typically the identity of an LLC’s membership is not publicly known. This should be ascertained or confirmed early in litigation, to avoid a potential problem on appeal years later.
Intentional Conduct and Negligence Are Not Mutually Exclusive; The Concurrent Cause Doctrine Applies Only When Each Independent Cause Can Injure Without the Other
When it comes to liability insurance, the distinction between intentional acts and negligence can have major implications for coverage—especially in cases involving violent conduct. A recent decision from the California Court of Appeal in State Farm Fire and Casualty Company v. Curtis Diblin, et al., 2025 WL 2837668, – – Cal. Rptr. 3d – – (October 7, 2025), underscores how courts analyze the interplay between intentional torts, negligence, and the meaning of “occurrence” under an insurance policy. It also clarifies when the concurrent cause doctrine does — or doesn’t — apply, offering important takeaways for attorneys, insurers, and policyholders alike.
Monee Gagliardo sued her housemate, Curtis Diblin, for personal injuries she sustained after he struck her multiple times on the head with a mallet. She asserted several causes of action for intentional torts, including gender violence, as well as negligence, and alleged that Diblin acted with malice and intent to injure such that punitive damages were appropriate.
At trial, Diblin admitted to striking Gagliardo, but his expert, a forensic psychiatrist, testified that the behavior resulted from a “hypomanic episode” caused by side effects of his testosterone therapy.
The jury found Diblin liable on two causes of action: (1) the intentional tort of gender violence and (2) negligence. The jury also determined that he acted with malice and oppression, awarding more than $2 million in compensatory damages. Gagliardo waived her claim for punitive damages.
State Farm insured Diblin under a homeowner’s policy that provided coverage for bodily injury caused by an “occurrence,” defined as an accident. State Farm defended Diblin in the underlying action and also filed a declaratory relief action to determine whether it was obligated to indemnify him. The trial court found in favor of State Farm, holding that Diblin’s liability did not arise from an occurrence. The Court of Appeal affirmed.
The Court disagreed with Diblin’s contention that the jury’s finding of negligence was inconsistent with a finding that he acted intentionally. It reasoned that: “a jury could conclude that a person who intentionally injures another person has also failed to use reasonable care to prevent injury to another . . . the defendant did ‘something that a reasonably careful person would not do in the same situation.’” Thus, the fact that Diblin was found to be negligent did not mean his conduct was accidental or unintentional, nor did it require a finding of coverage.
The Court also rejected Diblin’s argument that he was entitled to coverage for negligence under the concurrent independent causes doctrine. In finding the doctrine inapplicable, the Court explained that each risk must operate independently to cause the injury. In this case, however, Diblin’s alleged negligence – his failure to properly manage his medication or warn Gagliardo of the side effects – could not have caused her injuries unless he also acted intentionally and violently to bludgeon her. Thus, Diblin’s negligence was “integrally connected to” his violent conduct and was not independent of it.
The Court’s decision serves as a reminder that not all findings of negligence will trigger insurance coverage—particularly when the negligent conduct is inextricably tied to intentional harm. The case reinforces that, for coverage to apply under a liability policy, the underlying act must qualify as an “accident.” It also narrows the application of the concurrent cause doctrine to situations where each cause can independently result in injury.
Builder’s Risk Insurance In Peak Hurricane Season- Three Things Policyholders Need to Know Now
The United States recently dodged direct hits by Hurricanes Erin and Imelda, but those in the construction industry are still in the cone of uncertainty when it comes to protecting their projects this hurricane season. According to NOAA, 93% of hurricane landfalls along the U.S. Gulf and East coasts occur between August and October. Property owners and contractors should approach insurance coverage for peak hurricane season with Category 5 focus.
This is especially true in states like Florida and Texas, where construction is booming. Property owners and contractors face significant risks to their construction projects during this season. But builder’s risk insurance can help mitigate those risks.
Below is a primer on what builder’s risk insurance is and three things policyholders need to know about their builder’s risk policies now that hurricane season is in full swing.
What Is Builder’s Risk Insurance?
Builder’s risk insurance is a temporary, first-party property insurance product designed to cover property damage to buildings under construction, renovation or repair and on-site project materials. Some policies also cover construction project materials stored off-site and soft costs, like additional architectural or permitting fees. Delayed completion coverage is an optional add-on. It covers income losses or additional expenses resulting from the project’s delay in completion as a result of covered property damage.
While policies are often tailored to specific projects, builder’s risk policies typically cover losses from weather-related incidents. So, when hurricane season whips up, this coverage can help policyholders weather the financial storm.
Three Things to Know
To ensure that construction projects are adequately protected this hurricane season, property owners and contractors should know three things:
1. Who is responsible for obtaining coverage differs.
Responsibility for purchasing this insurance varies. Typically, contractors and property owners agree on this term in the construction contract; which party buys the policy often depends on who has greater buying power in the market. The cost of the policy itself, which is separate from who is required to obtain coverage, is typically borne by the owner as part of the contract price. In addition, if an owner is obtaining construction financing, the lender providing such loan may also have specific requirements as to the type and amount of builder’s risk coverage that the owner will need to obtain, as a prerequisite to the loan. A construction lender’s requirements will usually be determined through its internal underwriting process, and in negotiation with the owner and the general contractor.
Standard industry forms differ on who should obtain coverage. AIA Document A133™–2019 Exhibit B, which discusses insurance and bonds, provides for the owner to obtain builder’s risk coverage. In contrast, the ConsensusDocs 200 Standard Agreement and General Conditions Between Owner and Constructor (Lump Sum) originally called for the contractor to obtain builder’s risk coverage. Updates suggest the parties should focus on which party bears the risk for uncovered damage and negotiate coverage accordingly to establish a framework for risk and repair obligations.
This lack of consistency can lead to neither party obtaining sufficient coverage or both parties obtaining duplicative coverage. Neither is desirable. As the Ninth Circuit has stated, “The next worst thing to having no insurance at all is having two insurance companies cover the same claim.”[1] Insurers are repeat litigators with deep pockets, so they can spend “months, even years, wrangling with one another, while the insured and the provider of the covered services are left holding the bag.”[2]
2. Not all policies are created equal.
Unlike other types of insurance, such as commercial general liability and homeowners insurance, there is no true standard builder’s risk policy. This means that not all builder’s risk policies provide the same coverage.
When it comes to coverage for hurricane-related damages, not all builder’s risk policies even provide protection. Some offer no windstorm coverage at all. Others provide coverage for damage caused by wind, but not for flooding associated with a windstorm. Or they are subject to large deductibles or low caps, squeezing coverage from one side or the other – or both. That can leave policyholders in the eye of a coverage gap.
So, it is critical that property owners and contractors read their builder’s risk policies carefully to ensure they have the coverage they need to ride out the storm.
3. How your builder’s risk policy handles multiple causes of loss.
As discussed above, some builder’s risk policies provide coverage for damages or loss caused by a windstorm, but not by a flood. Hurricanes often bring both. To avoid the storm of coverage litigation this can lead to, some insurers have included anti-concurrent cause exclusions in policies in an effort to deny coverage when there is a dispute regarding the cause of the loss. An example of such an exclusion is as follows:
“We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”[3]
The enforceability of these exclusions came into focus after Hurricane Katrina, when it was heavily disputed whether losses were caused by wind, flood, or both. So what can policyholders do? Carefully review your policy to ensure that both wind and flood are covered. If that is not possible, review your policy for an anti-concurrent cause exclusion and try to negotiate around it. Finally, seek the guidance of coverage counsel to determine whether the law of the applicable jurisdiction recognizes the enforceability of the anti-concurrent cause exclusion. This proactive approach before a claim may help ensure that your project proceeds with little interruption in the calm after the storm.
[1] PM Grp. Life Ins. Co. v W. Growers Ass. Trust, 953 F.2d 543, 543 (9th Cir. 1992). This case involves two ERISA-covered health benefit plans, but it is a truism for many insurance coverages.
[2] Id.
[3] Cheetham v. Southern Oak Ins. Co., 114 So.3d 257, 260 (Fla. 3d DCA 2013)
Medicare Telehealth Flexibilities Expire – Immediate Impacts and Next Steps
Congress has previously extended the Medicare fee-for-service telehealth flexibilities that were originally implemented during the COVID-19 public health emergency in 2020 multiple times, with the latest extension expiring September 30, 2025. While there is broad bipartisan support for these flexibilities, Congress has included the short-term extensions in government funding legislation. Because Congress did not reach an agreement on government funding prior to the expiration of these flexibilities, as of October 1, 2025, the Medicare telehealth flexibilities revert to pre-pandemic limitations:
Return of geographic and originating site requirement. Medicare patients can only receive non-behavioral/mental health telehealth services from specific originating sites, such as a provider’s office, a hospital, or a skilled nursing facility.
Limited provider type eligibility. The list of providers eligible to provide Medicare covered telehealth services is limited to physicians, physician assistants, advanced practice registered nurses, certain behavioral health providers, and registered dietitians or nutrition professionals.
Audio-only telehealth ends. Audio-only telehealth services will only be covered for behavioral/mental health.
Rural health clinic/federally qualified health center flexibility as distant sites ends. For non-behavioral/mental telehealth, these rural entities may no longer serve as distant sites. However, they may continue to do so for behavioral/mental telehealth.
Waiver of the mental health visit in-person requirement. For diagnosis, evaluation, or treatment of a behavioral health disorder via telehealth to be covered by Medicare, an in-person visit is required within six months before the initial telehealth visit and every 12 months thereafter, with limited exceptions.
IN DEPTH
The Centers for Medicare & Medicaid Services (CMS) issued an MLN Connects Bulletin on the morning of October 1, 2025, that in summary states:
When certain legislative payment provisions (extenders) are scheduled to expire, CMS directs all Medicare Administrative Contractors (MACs) to implement a temporary claims hold. This standard practice typically lasts up to 10 business days and ensures that Medicare payments are accurate and consistent with statutory requirements. The hold prevents the need to reprocess large volumes of claims if Congress acts after the statutory expiration date and should have a minimal impact on providers because of the 14-day payment floor. Providers may continue to submit claims during this period, but payment will not be released until the hold is lifted.
Absent congressional action, beginning October 1, 2025, many of the statutory limitations that were in place for Medicare telehealth services prior to the COVID-19 public health emergency will take effect again for services that are not behavioral and mental health services. These include prohibition of many services provided to beneficiaries in their homes and outside of rural areas, and hospice recertifications that require a face-to-face encounter. In some cases, these restrictions can impact requirements for meeting continued eligibility for other Medicare benefits. In the absence of congressional action, practitioners who choose to perform telehealth services that are not payable by Medicare on or after October 1, 2025, may want to evaluate providing beneficiaries with an Advance Beneficiary Notice of Noncoverage. Practitioners should monitor congressional action and may choose to hold claims associated with telehealth services that are not payable by Medicare in the absence of congressional action. Medicare also will not be able to pay certain kinds of practitioners for telehealth services.
What does this mean for you and your patients?
Continuity of care. Identify patients with upcoming telehealth appointments that may be impacted by a termination of telehealth flexibilities. While there are coverage and billing requirements that you must consider, providers continue to have a professional obligation to provide a continuity of care to patients.
Patient communications. Consider sending a notice to affected patients (or all patients), and include such notice on the provider’s patient-facing portals or website explaining the impact, including whether there will any changes to a patient’s upcoming telehealth visit (e.g., if it will be converted to phone, move to in-person, or be billed differently) and why. If you choose to continue providing telehealth visits to impacted patients, notify the patient that Medicare may not cover the visit, and that the patient may be financially responsible for the visit. As detailed in the MLN from CMS, consider providing Medicare beneficiaries with an Advance Beneficiary Notice of Noncoverage.
Reimbursement and cash flow. You may choose to hold claims associated with telehealth services that are not payable by Medicare in the absence of congressional action, but you should budget for the added expenses until a reinstatement occurs. It is possible – but not guaranteed – that CMS will apply a retroactive reimbursement policy to telehealth claims submitted on or after October 1, 2025. However, it is not guaranteed that Medicare would pay certain kinds of providers for telehealth services. For further information continue to monitor CMS’s telehealth coverage website. Your approach to reimbursement during the time that the telehealth flexibilities are no longer in effect may have potential fraud and abuse implications that should be carefully considered as well.
Payor and provider agreement reviews. While Medicare telehealth flexibilities are terminated, most commercial plans (including Medicare Advantage (MA) plans) and Medicaid still provide coverage for telehealth under CMS’s telehealth flexibilities framework. Note, MA plans have statutory authority to deliver any Medicare Part B benefits via telehealth. Therefore, changes in Medicare fee-for-service coverage for telehealth do not automatically result in any changes to coverage of telehealth services provided to MA plan members. However, be mindful that commercial plans and Medicaid may also terminate telehealth flexibilities. You should immediately review your provider and/or plan agreements to identify whether their telehealth reimbursement policy is tied to Medicare and be mindful of any updates to your coverage and reimbursement policies from commercial plans (including MA plans) and Medicaid.
While there has generally been bipartisan support for an extension of the telehealth flexibilities, the timing of an additional extension and the potential for it to be retroactive is unknown. We will continue to keep you updated as things progress. Consider engaging with professional groups or state medical societies to continue to advocate to extend or codify telehealth flexibilities. Coalitions, such as the Partnership for Virtual Care, have been leading the charge on advocacy in this regard.