Telemedicine Treatment Must be Billed Same as Patient Visit, Insurance Regulator Says

Photo by National Cancer Institute on Unsplash

Federal, Local Regulations Require Insurers to Ensure Such Payment Parity During Covid-19 Emergency

SAN JUAN – The Puerto Rico Insurance Commissioner’s Office (OCS by its Spanish initials) issued a normative letter “to stress” that, during the Covid-19 emergency, health insurers and maintenance organizations, including Medicare Advantage plans, must pay health providers for treatment services rendered remotely as if they were in-person consultations.

Deputy Insurance Commissioner Rafael Cestero said Normative Letter CN-2020-274-D is in line with Joint Resolution 19-2020, signed by Gov. Wanda Vázquez, which, among other things, discourages the congregation of people in hospitals and other medical offices. Toward this end, Section 2 of the resolution states that health insurers must pay for services rendered to patients using telemedicine or over the phone at the same rate as in-person medical services.

On March 20, Vázquez enacted Senate Joint Resolution 491, which makes provisions to the Puerto Rico Telemedicine Act more flexible, while making the requirements for doctors to practice telemedicine amid of the novel coronavirus disease (Covid-19) threat, more accommodating. The measure authorized physicians to evaluate their patients and follow up on treatment via teleconferencing, telephone or any other authorized means.

Doctors are now authorized to send a prescriptions, referrals or medical orders via photograph or digital document to service providers, who must accept and dispatch them.

Cestero pointed out that the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 also requires insurers and health service organizations to provide parity in coverage of mental health conditions as well as physical health conditions.

“Thus, it is appropriate to specify that the provisions as established in the Joint Resolution shall apply equally to mental health coverage benefits in commercial medical plans,” he said in a statement.

Cestero also noted that the federal Coronavirus Preparedness and Response Supplemental Appropriations Act, enacted March 6, has a chapter called Telehealth Services During Certain Emergency Periods Act of 2020 (Telehealth Act). This chapter states that during the Covid-19 emergency period, the government has eliminated certain regulations to expand and facilitate the use of telemedicine under the Medicare program, including Medicare Advantage programs, with the purpose of offering beneficiaries greater access to healthcare services, he said.

Telehealth Act provisions, as interpreted by the Centers for Medicare & Medicaid Services (CMS), allow patient consultations with health providers from their home; eliminate the requirement of a previous relationship with the medical provider; expand services that can be provided which are not limited to conditions related to Covid-19, including behavioral and physical conditions; and specify that the program will pay for services rendered by providers through the use of telemedicine using the same rate as if the consultations had been in person. 

The providers that are allowed to use telemedicine to treat Medicare and Medicare Advantage patients include doctors and certain non-medical professionals, such as licensed clinical social workers, clinical psychologists, registered dietitians or nutrition professionals, among others.

Moreover, the U.S. Department of Health and Human Services’ Office for Civil Rights is allowing “more flexibility” with regard to health care providers’ compliance with the Health Insurance Portability & Accountability Act (HIPPA) when treating patients “in good faith” using everyday communication technologies such as FaceTime or Skype during the Covid-19 emergency, Cestero said.

“The OCS, consistent with the provisions of state and federal regulation, will ensure that health service providers are honored with the payment of services provided through telemedicine services at the same rate as if the service were provided in person,” he said. “We will not allow a reduction in the fee payment to health service providers who use telemedicine.”

Cestero stressed that patients are exempted from the payment of deductibles or copayments for the use of telemedicine services under their medical plan.

“Our commitment is to guarantee that patients receive the necessary health care services through telemedicine, free of the barriers that limit access to it, in accordance with the priorities of the government of Puerto Rico,” he said, adding that more information on the normative letter can be obtained by accessing the agency’s website, www.ocs.pr.gov.




Fiscal Board Launches COVID-19 Web Page

Provides Information on Emergency Aid Programs, Features Gov’t Spending Tracker

SAN JUAN– The Financial Oversight and Management Board for Puerto Rico launched Thursday a web page providing information on the emergency measures by the U.S. and Puerto Rico governments, and on how funds provided by various agencies can be accessed. 

The page provides information on various emergency programs, organized by their target audience: government agencies, individuals, healthcare sectors, businesses and nonprofits, and education. The page has links to the agencies providing the funding, fact sheets, and application material. 

The page also has a tracker monitoring how the Puerto Rico government is spending the funds available from the Emergency Reserve Fund and the $787 million Emergency Measures Support Package, “providing the transparency required by PROMESA’s [Puerto Rico Oversight, Management and Economic Stability Act] mandate of fiscal responsibility,” the board’s press release reads. 

“Notwithstanding the need to move quickly with procurement, it is also critical in this time of emergency that any simplified procurement delivers value for the money, equal opportunity and fairness, transparency, integrity and accountability. This COVID-19 web page will support transparency and integrity of spending,” the board said. 

“The COVID-19 crisis has touched all of our lives, and those fighting the pandemic on the front line or those who lost their jobs and business income because of this crisis deserve our support,” said board Executive Director Natalie Jaresko. “The two governments have made unprecedented funding available to help those affected, and it is important that all are aware of the various programs. These funds should go from governments to the people and businesses as fast as possible to help those in need and to mitigate the tremendous effect on the economy.” 

“That is why we created this web page,” Jaresko added. “We hope it will help nurses and doctors, police officers and paramedics, hospitals and nonprofits, restaurants and other businesses to navigate the government programs that apply to them. We have made a specific effort to analyze how federal programs apply specifically to Puerto Rico. We will update the site regularly as information change and new programs become available.” 

Access the board’s COVID-19 web page here: https://oversightboard.pr.gov/covid19-info/




U.S. Commerce Department Invests $4.5 Million to Convert Former Roosevelt Roads Naval Station to Commercial Use

(Screen capture of http://www.rooseveltroads.pr.gov)

Grant Will Rehabilitate Port Control Building to House ‘Early-Stage Tourism Businesses’

SAN JUAN — U.S. Commerce Secretary Wilbur Ross announced Thursday that his department’s Economic Development Administration (EDA) is awarding a $4.5 million grant to the Local Redevelopment Authority for Roosevelt Roads to rehabilitate a building and make other infrastructure improvements on former Naval Station Roosevelt Roads.

The grant will support “early-stage businesses focused on the visitor economy,” said the EDA, which makes investments in economically distressed communities to create jobs and drive economic growth. The grant is expected to create 134 jobs and “spur $1.5 million in private investment.” The project, which is located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $1.25 million in local funds.

“The redevelopment of the Roosevelt Roads Naval Station will bring businesses back to a vital waterfront area,” Ross said.

“This investment will rehabilitate Roosevelt Road’s Port Control Building for use as a multi-tenant, commercial space that will house early-stage tourism businesses,” explained Dana Gartzke, who according to the press release is performing the delegated duties of the assistant secretary of Commerce for Economic Development. “The project will also improve streets and sidewalks to facilitate pedestrian and vehicle traffic between the commercial site and the ferry terminal, and the project’s location in an Opportunity Zone will encourage additional business development.”

Puerto Rico Gov. Wnada Vázquez Garced was quoted in the release as saying: “As the island continues to combat the COVID-19 pandemic, we must take proactive measures to alleviate the economic damage caused by previous natural disasters. We will continue to work with the U.S. Department of Commerce to ensure a full recovery for the island.”

“This is an important economic boost that assists with the revitalization of the Roosevelt Roads base at the town of Ceiba,” added the Resident Commissioner Jenniffer González Colón. “I am thankful for the collective effort to work on this initiative after we secured some of these funds with the Bipartisan Budget Law of 2018. This adds up to other efforts we have led such as the language incorporation into the conference report on the National Defense Authorization (NDAA) Law of 2020 that commits the federal government to collaborate with local and private stakeholders to effectively address economic challenges and opportunities in Vieques, Culebra and the adjacent communities of the former Naval Base Roosevelt Roads.”

The project is funded under the Bipartisan Budget Act of 2018 (Pub. L. 116-20) (PDF), in which Congress appropriated to EDA $600 million in additional Economic Adjustment Assistance (EAA) Program (PDF) funds for disaster relief and recovery as a result of Hurricanes Harvey, Irma, and Maria, wildfires, and other calendar year 2017 natural disasters under the Stafford Act.

On April 9, the said it was awarding a $1.1 million grant to the University of Puerto Rico to hire three Disaster Recovery Coordinators to execute disaster recovery efforts throughout the island. The grant was said to be matched with $266,400 in local investment.




Controversy Over Health Contracts Reaches Fever Pitch

Atypical Companies, Processes in Covid-19 Tests, Ventilator Procurement

SAN JUAN — All the companies from which the Puerto Rico Health Department has purchased rapid tests to detect Covid-19 have history that should have raised flags in that agency before putting millions of dollars from the island’s treasury in their hands to deal with one of the most severe crises in our modern history.

The first is Apex Contractors, which according to what has been revealed in a public House of Representatives hearing, was selected without sufficient evaluation of its expertise and financial capacity. A recommendation from coronavirus task force coordinator Dr. Segundo Rodríguez and task force member Dr. Juan Santiago, was enough to deposit $19 million in advance in less than 24 hours to buy rapid Covid-19 tests, which never came because the transaction was stopped for being suspicious.

The second company, 313 LLC, a construction company with no medical equipment expertise and whose partners are related to Apex Contractors, has two contracts for the delivery of a combined 101,500 Nova rapid tests, at $45 and $36 a test, respectively.

Caribbean Business left messages with the Health Department seeking confirmation that the 101,500 tests—purchased from 313 LLC on March 20 and March 24—had been received. A request for comment was also left with 313 LLC’s press spokesperson as well.

According to the contract, the 101,500 tests, which cost $3,667,000, were supposed to have arrived by March 31.

The third purchase order was made from a company based in Florida, Maitland 175 Inc., whose owner, María Hsueh, appears with more than 11 other companies registered in her name in that state. Some of the companies are investment companies, others are building managers, others are related to education, and another is The Inflatable Store Inc., which reportedly filed for chapter 7 in 2010.

Maitland 175 produced the 200,000 rapid tests at $26 each, and began to be distributed this week, Health Secretary Lorenzo González told the media.

Caribbean Business has been requesting an interview with the secretary since he was appointed, and despite having promised to be available Monday, the interview has yet to take place.

The fourth company to provide rapid tests is Castro Business Enterprises, owned by Ricardo “Ricky” Castro Ortiz, a local businessman who has donated to the majority New Progressive Party (NPP) and was president of the Chamber of Food Marketing, Industry & Distribution (MIDA  by its Spanish acronym).

Ricky Castro

According to documents provided to Caribbean Business by Health Department Press Director Eric Perlloni before he resigned Tuesday, the department purchased some 50,000 rapid tests from Castro Business that were slated to arrive in a staggered fashion between March 31 and April 6, at a cost of $650,000.

According to a press release issued by Popular Democratic Party (PDP) Sen. Rossana López León, the contract with Castro Business for $2.2 million to acquire ventilators. The senator denounced that Castro Business operates a small grocery store in the Villa Palmeras sector of Santurce.

“It is with great indignation that we have to denounce this new move by the current administration to carry out highly questionable contracting with public funds in the midst of the pandemic. We are talking about the Castro Business company, which according to its incorporation in the State Department, is a for-profit entity with $4.2 million in capital. When you verify what type of business it does, it is the administration of a grocery store on Eduardo Conde Avenue in Santurce. How do you give $2.2 million to a company of this type to acquire ventilators for $22,400 each, when there are other companies that are recognized medical suppliers that sell ventilators for $18,650?” said López León, who is running for mayor of San Juan.

The senator said Castro Business has a long history of lawsuits, including the Municipality of San Juan, Fast Lane Enterprises, Carlos Erazo Ortega, the Department of Labor and Human Resources, Muñagorry Perfumería, Radamés Marín Montalvo and Brunilda Torres Delgado, according to the Puerto Rico Judicial Branch’s registry.

Following the lawmaker’s press release, Castro Ortiz denounced what he called her “false expressions” and “denigrating our effort for having, among other businesses, a supposed grocery store. What is alleged by the Senator is totally and completely false,” according to his statement.

“Firstly, in the contract mentioned by the Popular [Party] candidate, we did not formalize any transaction with the government regarding the purchase of the ventilators. Therefore, it is false that they have paid us $2.2 million for a transaction that does not exist,” he said.

“Second and more importantly, Castro Business Enterprises is a Puerto Rican conglomerate with operations in different commercial sectors of Puerto Rico. It provides more than 250 jobs and has a history of over 15 years in the logistics and distribution business of all kinds of items in Puerto Rico. As a Puerto Rican businessman, I have more than 30 years of experience serving a multiplicity of industries, including, but not limited to, supplies for the medical and scientific industry,” he assured.

“In these difficult times that Puerto Rico is going through, where we all must work together, it is an attack against the emotional stability of the people that a candidate tries to advance her particular political agendas, launching false accusations without observing the minimum rigor of responsibility. If the Popular senator respects the people…she must retract and correct the false information that she has disseminated,” Castro concluded.

López León had said in her release that there was “no doubt that we are facing a highly corrupt and insensitive government administration, that in the midst of the agonizing struggle that the Puerto Rican people are experiencing to defend themselves from the Covid-19 pandemic, unscrupulous people have the sole mission of becoming millionaires with public funds at the cost of people’s lives. In the same way that we saw cases of terrible corruption after the passage of Hurricane Maria, today we are seeing a new case that breaks the people’s trust in their institutions. My call to the state and federal investigative authorities is to honor their mission and intervene in this case that I am presenting to the media today.”

The senator recommended that Gov. Wanda Vázquez eliminate the Health task force and establish an independent group that includes the heads of the health associations to offer concrete actions to the government and render daily accounts of what they recommended.
“These will be the voice of the people without ties or relations to La Fortaleza,” the lawmaker said.

In the House hearing Tuesday, it was made evident that the purchases in the Department of Health during the pandemic were made without following the procedures provided by law and without any type of oversight of the companies that were contracted or what was bought.




Puerto Rico Governor Restores Stricter Curfew

Gov. Wanda Vázquez Garced

Residents Must Again Remain Indoors From 7 p.m. to 5 a.m. Starting Wednesday

SAN JUAN — Puerto Rico Gov. Wanda Vázquez Garced will amend Executive Order 2020-033 for the island-wide curfew to again begin at 7 p.m., as of Wednesday, April 15.

“Responding to the call of the mayors, health professionals and especially listening to the…people, I have made the decision to re-establish the curfew to 7:00 at night, starting tomorrow, Wednesday, April 15,” the governor said in a statement.

The new curfew does not affect the business hours established by the executive order.

The governor’s office, La Fortaleza, quoted the president of the Mayors Federation—which represents the majority New Progressive Party municipal heads—Arecibo Mayor Carlos Molina as saying: “On behalf of the Federation of Mayors, I thank the Governor for restor[ing] the curfew at 7:00 pm in agreement with the opinion of the majority of us mayors who seek the best interest of the public’s health. This effort must also have the support of citizens, who have the responsibility of complying with the directives of the Executive Order for the protection and care of all.”

 Ponce Mayor María “Mayita” Meléndez, La Fortaleza added, said that several mayors expressed our concern about what we saw yesterday in the stores in our city and the lack of public awareness about the importance of protecting ourselves against the threat of COVID 19. After conversations we had; we understand that the Governor’s determination is correct.”




No man’s land: Buying tests and supplies for the COVID-19 emergency in Puerto Rico

Emergency units outside the Puerto Rico’s Medical Center to treat people and provide COVID-19 tests. Photo by Eric Rojas | Center for Investigative Journalism

Center for Investigative Journalism Finds Procurement Process Marred by Mistakes, Delays, Inefficiency and Questionable Purchases

By Luis J. Valentín Ortiz and Cristina del Mar Quiles

The Government of Puerto Rico’s procurement process for materials and equipment to deal with the coronavirus emergency has been plagued with mistakes, delays, inefficiency, questionable purchases and a lack of details.

The Center for Investigative Journalism (CPI, in Spanish) interviewed more than three sources who identified Adil Rosa Rivera as responsible for buying supplies and equipment for the emergency, such as ventilators, tests and protective equipment.

Up until a few days ago, Rosa Rivera coordinated the procurement process, first through the Health Department and then through the Bureau for Emergency and Disaster Management’s (NMEAD, in Spanish) Emergency Operations Center (COE). From the COE, together with Medical Task Force members Dr. Juan Salgado and Dr. Segundo Rodríguez, they have coordinated what to buy and from whom, three sources confirmed.

Rosa Rivera previously worked as the Family Department’s Administration Director for the Caguas region, and until last week was in charge of the Health Department’s Undersecretary of Administration office. She arrived at the agency under the tenure of former Health Secretary Rafael Rodríguez Mercado and his chief of staff, Mabel Cabeza Rivera.

Two sources identified Cabeza as the person La Fortaleza appointed to supervise the purchases handled by Rosa Rivera and the Task Force from the Health Department and the COE.

“I was temporarily assigned to work in La Fortaleza. There, I was asked to work with La Fortaleza’s Task Force led by Dr. Segundo Rodríguez. I wasn’t given a specific title or duties. […] I was neither a liaison nor a coordinator,” said Cabeza in a written statement. On Mar. 30, she left Health for the executive mansion.

“I’ve never had any role in the purchasing or contracting process of the Health Department, La Fortaleza or the emergency,” she added.

But sources validated that until Mar. 30, Cabeza was the link between the executive mansion and the Medical Task Force, and she referred names of companies to Rosa Rivera so she would ask for quotations.

Several companies referred by La Fortaleza managed to sell their products to the Government, including the three companies that provided rapid tests to the Health Department: Zogen (whose authorized representative on the island is 313 LLC); Castro Business; and Maitland 175 Inc. The process requires a review before transactions are completed by the Office of Management and Budget (OGP, in Spanish), the Treasury Department and the Health Department.

Cabeza denied giving Rosa Rivera instructions or suggestions regarding suppliers. “Any email or text message related to proposals that came to me was sent to the Health Department so they would be the ones to evaluate it and make their decisions. I have NEVER issued any recommendation to any legal person or entity regarding procurement of tests or any other acquisition that was under the Task Force’s consideration,” she said.

The sources said Rosa Rivera channeled suppliers that approached the Government and the Task Force during the emergency, asking for proposals according to the demands of the group of doctors, particularly from Dr. Salgado and Dr. Rodríguez. Although the Task Force insists that its role is limited to recommending what is needed and evaluating the available options, more than three sources said that both Dr. Rodríguez and Dr. Salgado have decision-making power and issue out instructions on procurement.

Cabeza identified Rosa Rivera, former Acting Health Secretary Dr. Concepción Quiñones de Longo and Dr. Rodríguez as the people responsible for the evaluation and procurement process. “I did not participate in the procurement and/or contracting meetings that they held,” she declared.

The CPI learned that federal authorities interviewed Rosa Rivera regarding the purchases. Rosa Rivera is a New Progressive Party (PNP, in Spanish) activist and she has publicly shown her support on social media for the party, Gov. Wanda Vázquez Garced and former Gov. Ricardo Rosselló Nevares, among other people associated with the PNP. According to a source, there is a friendship between Cabeza and Rosa Rivera, but Cabeza said it is a professional relationship.

The three secretaries the Health Department has had in the past month have appointed Rosa Rivera to oversee the agency’s procurement process. An internal agency communication dated April 3 announced the appointment of Johnny Colón González to the position of Health’s undersecretary of Administration, but it is unclear whether Rosa Rivera continues to work in the Health Department. The agency did not answer whether she was removed from her post or if she is still involved in the procurement process.

The CPI tried to contact Rosa Rivera but it was unsuccessful.

In an interview with the CPI, Dr. Salgado admitted his intervention in the procurement process from the COE and denied that he recommended companies owned by friends or acquaintances, although he did refer suppliers who have contacted him. A request for an interview made to Dr. Rodríguez went unanswered.

At least three sources said that La Fortaleza has directly intervened in the procurement process, mainly through Cabeza, when she oversaw the purchases that Rosa Rivera and her group conducted.

The Governor reiterated on Wednesday that La Fortaleza did not intervene in the process, including the order for a million rapid tests that was later canceled. She held the Health Department responsible.

The CPI asked former Acting Health Secretary Dr. Quiñones de Longo, whether the purchasing orders from the Health Department handled under her responsibility were being processed through La Fortaleza.

“That’s right, purchases and quotations were managed from La Fortaleza and they contacted us only to sign the approval. I believed the processes were inadequate, which is what ultimately motivated my resignation, because I was unwilling to participate in that kind of procurement process, because I believe they weren’t in the Health Department’s nor the Government’s best interests,” she replied.

Cabeza insisted to the CPI that “I had nothing to do with the procurement or awarding process.”

Quiñones de Longo approved the purchase of tests and other materials for the emergency carried out under her tenure. Two sources assure that the doctor evaluated the orders and had a person from the Centers for Disease Control (CDC, in English) assisting her.

The purchasing of materials and equipment was done through the Health Department until Mar. 26. That day, NMEAD took control of the process but only on paper, according to what José Burgos, the head of the Bureau, told El Nuevo Día. Burgos identified Rosa Rivera as the person who directed the purchase of a million rapid tests which was canceled last week. Burgos did not grant a request for an interview.

Apex, the company that would supply these tests, had submitted a quotation before the COE requested it. The CPI saw evidence that the company’s proposal had been previously submitted by Juan Maldonado, former director of the Maritime Transport Authority and Apex’s lawyer, to three people: Dr. Rodríguez, Dr. Roberto Rosso — an assistant to Quiñones de Longo who resigned after she left — and Cabeza.

The evidence also shows that Eduardo “Tito” Laureano, linked to the PNP and who worked for former Gov. Pedro Rosselló, helped establish contact between the Task Force and Apex’s attorney, Maldonado. Laureano, who Dr. Rodríguez hired at the University of Puerto Rico’s Medical Sciences Campus — as Metro reported — is Dr. Rodríguez’s friend, a source said.

At a press conference on Wednesday, Dr. Rodríguez avoided answering questions directly about his relationship with Laureano but admitted he had gotten Maldonado’s and Apex’s contact information from him.

Another source said Dr. Salgado keeps a close friendship with Maldonado’s father.

Meanwhile, Cabeza said she did not know anyone related to Apex. “I never recommended this company or any other. I never solicited a quotation from any of the companies that the Health Department or the NMEAD contracted. I didn’t recommend any of them.”

The transactions to buy tests to detect the coronavirus show the irregularities and setbacks of the Government’s procurement process to tackle the epidemic.

The Health Department showed evidence of the delivery of the first tests that arrived in Puerto Rico on Mar. 17 — 200 molecular or “PCR” tests from Quest Diagnostics— except for 50 that went to the Luis Muñoz Marín International Airport. The agency said the tests were handed over to an employee of Medical Services Administration and were intended to be used at the airport. These are the tests that Quiñones de Longo said were delivered outside the agency’s chain of command.

Cabeza stated that Rosa Rivera was the person responsible for the receipt and delivery of the tests. But a source said that Rosa Rivera did not have yet that responsibility when the tests arrived on Mar. 17.

A request for all purchase orders issued by the Health Department and NMEAD during the emergency went unanswered.

The “rapid” tests

In addition to the “PCR” tests, the Government overpaid about 1.3 million serological or “rapid” tests, another type of test that detects antibodies to COVID-19. The Health Department and NMEAD handled the purchases, and when they were bought, none of the brands were backed by the Federal Food and Drug Administration (FDA). Several of the vendors have ties to the PNP.

Rosa Rivera, the Task Force and the Health Department Secretary’s office gave the go-ahead to buy the tests, three separate sources said. As for NMEAD’s, the Task Force approved the failed transaction, in the absence of a Health Secretary at the time, another source said.

On Wednesday, the Governor said it was Mariel Rivera, a Health Department mid level employee working at the COE who gave the go ahead. But Rivera has no authority to approve purchase transactions, the CPI found.

Of the total number of rapid tests that the Government bought, NMEAD acquired one million of the Promedical brand, at $38 each, for a total of $38 million — or about 200% more expensive than the market value at the time, according to sources and documents reviewed by the CPI.

After prepaying half of the invoiced amount, the Government assured it canceled the order because the company did not comply with the established delivery time and because the tests did not comply with FDA regulations, and got the money back. The acquisition was from a company named Apex, whose owner, Robert Rodríguez López, also has ties to the PNP and 313 LLC, as El Nuevo Día reported.

In a written statement, the founding partner of 313 LLC, Ricardo Vázquez Hernández, denied having a relationship with Rodríguez López and Apex.

But what the Government has not said is that the Health Department bought more than 100,000 rapid tests from 313 LLC, for which it also overpaid, just like NMEAD did for the Promedical tests. Ricardo Vázquez Hernández registered 313 LLC in Puerto Rico in 2018, and two days before the transaction, modified the incorporation certificate to include three new partners: Juan Suárez Lemus; Wilfredo Rodríguez Moreno; and Miguel García Robles, Caribbean Business reported on Saturday. Suárez Lemus and Vázquez Hernández are PNP party donors.

The CPI found that Vázquez Hernández also appears as the owner of Vertical Consulting PSC. The company is a legal advisory firm, according to the tax incentives decree that Vázquez Hernández received in 2019 from Puerto Rico Trade and Export as a young entrepreneur through a business creation initiative.

The nearly 100,000 NovaTest kits sold by 313 LLC were purchased for $45 and $26, despite the fact that there were other similar options on the market at a lower cost. The Health Department prepaid more than $2.2 million.

At a press conference, the Governor distanced herself from the procurement process. She said that people approached her and members of the Task Force to offer them rapid tests and that they referred them to the Health Department. “Quotations were requested and these people submitted them,” she said without specifying who made the first approach.

“I may not know the details, but all of this was discussed in the multiple meetings I had… The governor cannot get into micromanagement and I trust my officials,” she said to justify her lack of knowledge of the issue.

In addition, she justified the purchases at a premium by pointing to the international demand for the product, although she acknowledged that she was unaware of the profit margin the companies would generate from the transaction.

The current market price for this type of test fluctuates between $13 and $20, said Juan Rexach president, of the Puerto Rico Clinical Laboratories Association.

“I’m sure that if you buy in large quantities, you can negotiate a better price,” said the physician who holds a license in medical technology.

The two NovaTest purchase orders were never canceled, as Health Secretary Lorenzo González confirmed to the CPI on Tuesday, although it wasn’t until that same day that the test was included in the FDA’s list of brands that have been independently validated to identify COVID-19 antibodies, but that the FDA has yet to review.

In the interview, González said he was unaware of the NovaTest kits.

The Health Department’s purchase orders show 313 LLC’s Vázquez Hernández as the contact person for a company named Zogen, which he said is the authorized distributor in America for China-based Atlas Link, maker of the NovaTest kit. Zogen is a Mexican company that has Vázquez Hernández listed as its contact person in Puerto Rico.

Dr. Michael Soler shows the NovaTest in a demonstrative video published by El Nuevo Día on April 1. Despite the fact that Dr. Soler assured that he had the endorsement of the FDA, the company that distributes the test in Puerto Rico, 313 LLC, said that the approval was received on April 7.

Dr. Michael Soler told El Nuevo Día a week ago that the government had already received more than 1,000 NovaTest kits and that 500 more were “on their way.” The number matches the 1,500 NovaTest included in the first order made to 313 LLC. Soler added that Zogen sent two samples of its product, one to him and the other to the Health Department.

The agency used its sample during a press conference, according to Soler, who used his in this demo video for El Nuevo Día in which an FDA authorization that does not correspond to the NovaTest kit — but rather a test belonging to a company called Novacyt — can be seen on the computer screen.

The doctor did not answer a request for an interview.

The CPI found that as of Mar. 28, the Health Department had already received and distributed almost 1,000 NovaTest kits to hospitals throughout the island, prior to getting the FDA’s approval. The agency was unable to explain the whereabouts of the NovaTest kits that have been distributed.

As of Saturday afternoon, although more than 2,000 tests had been distributed, the government had not conducted any of the rapid tests, Health Secretary González said at a press conference.

When asked for a breakdown of the rapid tests received and delivered, the Secretary said he would submit a report with the results. “It has to be somewhere in the agency.” That report has not been released to the CPI.

González reiterated that upon his arrival to his post, the procurement process changed, including requiring more than one quotation for each order, seeking the evaluation of federal agencies prior to the purchase and avoiding the use of go-betweens.

Without providing further details, González said he would refer on Tuesday everything he has uncovered related to the procurement process at the agency to the proper authorities. The Justice Department announced it launched an investigation limited to the rapid tests acquired by NMEAD from Apex. The Fiscal Control Board also asked to review the rapid test purchase orders since they were not submitted to them for an evaluation.

González told the CPI that he asked for a meeting with the Board on Tuesday to understand the process they are requiring, “recognizing that they have jurisdiction” and that he will add such requirements to the agency’s procurement structure.

Former Health Secretary Dr. Concepción Quiñones de Longo approved the more than 300,000 rapid tests acquired through the Health Department, according to two sources.

Although the Governor implied that former secretaries Rafael Rodríguez Mercado and Quiñones de Longo were solely responsible for the failed procurement of the rapid tests, the only purchase order that has been canceled to date was authorized and signed through the NMEAD and not the Health Department.

“That is where the controversy stems from, because I didn’t agree with what was being done. They treated me badly by wanting to force me to do things with which I didn’t agree,” she said, adding that she is cooperating with different ongoing investigations related to these purchases.

Overpriced purchases and people with PNP ties

In addition to the NovaTest kits, the Health Department purchased 50,000 rapid tests from a second vendor, Castro Business. At $13 for each test, it is the only transaction done at market value prices.

Castro Business is registered in Puerto Rico under the name of Ricardo “Ricky” Castro Ortiz, former Chamber of Marketing, Industry and Food Distribution (MIDA, in Spanish) president and also a PNP donor. In 2017, the Comptroller’s Office singled out Castro for irregularities in two multimillion dollar contracts with the National Guard. The government received and distributed several of these tests before they got FDA clearance.

The CPI tried to reach Castro Ortiz by phone but it was unsuccessful.

This outlet asked the Health Department about the status of these 50,000 tests but received no response.

In an interview with the CPI, González said: “I can tell you about last week, what we have found. We received around 7,000 tests, they came in last Friday. I don’t have details about the company. They did arrive in Puerto Rico implying that they passed through U.S. Customs. There was a concern from the FDA about the regulatory aspect.”

González explained that the FDA requested changes to the test’s labels and instructions before they could be used. He added that 200,000 additional tests arrived on Sunday and that the final delivery was completed on Monday, after getting the FDA’s approval. It remains unclear whether these are the tests the Health Department bought from Florida-based Maitland 175 Inc, with a purchase order for the same amount.

The CPI found that two of the rapid test manufacturers are Healgen, another Chinese company, and Phamatech, a California-based company. Both are listed in the FDA registry.

FDA warns of misinformation

Part of the delay in testing for the coronavirus in Puerto Rico is attributed to the fact that until now the island has relied on molecular tests, rather than serological, or “rapid” tests, which can take minutes to produce a result. However, the rapid test is less reliable than the molecular test since it only comes up positive if it identifies antibodies against the virus. Contrary to molecular tests, this increases the possibility of false positives or negatives in people who are asymptomatic despite having the disease.

“Serological tests will play an important role in research and surveillance but are not currently recommended for case detection,” the World Health Organization states in its Laboratory testing strategy recommendations for COVID-19.

Molecular tests from Quest and LabCorp, which provide service to municipalities and the Health Department, are on the FDA list.

The FDA’s diagnostic policy allows tests to be used without its authorization, provided they are properly labeled, including a statement that they cannot be used as the sole basis for diagnosis or to rule out infection.

The federal agency has been emphatic that the tests that have not received an authorization for emergency use, such as those bought by the Government of Puerto Rico, cannot be declared as “authorized” because “they are not.”

Given the COVID-19 emergency, the FDA has allowed the “unapproved medical products or unapproved uses of approved medical products” to be used to diagnose, treat, or prevent serious or life-threatening diseases when there are no adequate, approved, and available alternatives through an Emergency Use Authorization. Only the CDC’s, New York public laboratories, and some 28 companies have such authorization for their COVID-19 screening tests.

As the spread of infection has picked up the pace in the United States, the FDA issued on Mar. 16 a new “Policy for Diagnostic Tests for Coronavirus Disease-2019 during the Public Health Emergency,” which states that it will not object to the development, distribution and use of serological tests to identify antibodies against SARS-CoV-2, also known as rapid tests. However, it establishes that the test must be validated by the laboratory where it will be administered and include the warning that it has not been reviewed by the FDA and that it should not be used as the only basis to diagnose or rule out infection with the virus.

The president of the Puerto Rico Clinical Laboratories Association said there is no uniform validation process for rapid tests in Puerto Rico.

The Clinical Laboratory Improvement Amendments (CLIA), which are standards that apply to clinical laboratory tests performed on humans in the United States, offer guidelines for validating tests that have not been approved by the FDA. They establish that the test to be validated must be used on among five to 10 patients who have tested positive for the molecular test (PCR), and on the same number of patients who have had a negative result.

“That way, I confirm that the tests are working, but that process must also be documented, and that process takes time,” said Rexach. So, he said that as soon a delivery of tests arrives, each hospital, clinic and laboratory that gets them has to reserve about 20 of them to complete this process before using them on the general population for which they have been designated.

An industry source said the validation process can take about three days from the time the laboratory receives the test.

Omaya Sosa Pascual and Rafelli González contributed to this story.




Resident Commissioner Calls Court Ruling ‘Recognition of Equality’ for Puerto Rico

Boston Court Upholds Judge Gelpí Decision Stating Island Residents Entitled to SSI Program Benefits

SAN JUAN – Calling it a “recognition of the equality of American citizens living in Puerto Rico,” island Resident Commissioner Jenniffer González Colón applauded a ruling handed down Friday by the U.S. First Circuit Court of Appeals in Boston, which said that the federal government cannot exclude Puerto Rico residents from receiving Supplemental Security Income (SSI) disability benefits.

The resident commissioner, who intervened in the case as a friend of the court, said that the ruling validates bipartisan legislation she filed in Congress (House Resolution 947) that would extend the SSI program to Puerto Rico.

“The opinion of the First Circuit court [on Friday] confirms the decision annulling the provision of the law that allows Americans residing on the island to not qualify for SSI, upholding the decision by [San Juan District Judge Gustavo] Gelpí in our struggle for equality for Puerto Rico, given that there is no rational reason to exclude us,” González said in a press release, contending that the island’s territorial status has made residents’ American citizenship vulnerable to be degraded to second-class citizenship.

“We have struggled for this from Congress and as a friend of the court, in support of the residents of Puerto Rico who could not participate in the program merely because of place of residence. We have once more validated access to the program and what this represents for senior citizens on the island,” she added.

U.S. Circuit Judges Juan R. Torruella, Jeffrey R. Howard and O. Rogeriee Thompson upheld Friday a summary ruling in February by Gelpí in favor of José Luis Vaello-Madero, who was sued by the federal government as it sought to collect $28,081 in SSI payments he received after moving from New York to Puerto Rico.

The federal government maintains that island residents are not entitled to SSI payments because they do not pay the federal income taxes that fund the program. SSI benefits are available to low-income disabled adults and children. Although the Social Security Administration manages these benefits, funding comes from the U.S. Treasury’s general funds and not Social Security payroll taxes.

Gelpí said in his ruling that the government’s policy creates a group of second-class citizens and violates the equal protection component of the Fifth Amendment.

The Boston U.S. Circuit Court panel concurred with Gelpí, stating that denying SSI payments to Puerto Rico residents is “not rationally related to a legitimate government interest.” The panel said “the appellant fails to point to any instance where the government has justified the exclusion of a class of people from welfare payments (which are untied to income tax receipts) because they do not pay federal income tax.”

The court panel also rejected the federal government’s argument that Puerto Ricans not paying income taxes is grounds to deny them federal benefits, saying that local residents contribute to the U.S. Treasury outside of income taxes, including Social Security, Medicare and unemployment compensation taxes.

“The residents of Puerto Rico not only make substantial contributions to the federal treasury, but in fact have consistently made them in higher amounts than taxpayers in at least six states, as well as the territory of the Northern Mariana Islands,” the court ruling states.

Moreover, the court panel dismissed the federal government’s contention that the estimated $1.8 billion annual cost of including Puerto Rico residents in the SSI program is a rational base for their exclusion.

“What the appellant plainly fails to grapple with is that cost alone does not support differentiating individuals,” the panel said. “If it did, how would Congress be able to decide upon whom to bestow benefits? Presumably along the lines of its legislative priorities which, at minimum, must be supported by some conceivable rational explanation. The circularity of this logic defeats itself.”

Vaello-Madero moved to Puerto Rico in July 2013 after his wife, who moved there to be closer to her extended family that could help her with her health issues. Vaello-Madero continued to receive his disability benefit payments in his New York bank account until August 2016 and contends he was unaware that his move would affect his entitlement to the benefits. In August 2017, the U.S. government sued him to collect $28,081 it said he had been overpaid.

The federal government will likely take the case to the U.S. Supreme Court, given that it is basing its case on two high court rulings from 1978 and 1980, Califano v Torres and Harrris v Rosario, which affirmed that Congress may treat Puerto Rico differently from the states if it can point to a rational basis.

In the Harris case, the U.S. Supreme Court concurred with the federal government that Puerto Rico should not get block grants related to Aid to Families with Dependent Children because its residents do not pay federal income taxes. In the Califano case, the high court held up the denial of SSI benefits to a beneficiary who acquired them while a resident of Connecticut but was denied them when he relocated to the island.

The Boston First Circuit panel said the Califano ruling did not apply because it dealt with the constitutional right to travel and not with equal protection under the law, which the court applied in its ruling favoring Vaello-Madero. The court also said the Harris ruling did not apply directly to SSI benefits.

The Boston court ruling technically just applies to the Vaello-Madero case, but could set a precedent for islanders demanding SSI benefits if the high court does not overturn it.

Friday’s court decision could open the way for more than 300,000 island residents to receive SSI benefits, González said, noting that it is “an achievement that will bring tranquility, hope and social justice to the people.”

The resident commissioner said that SSI is the only federal income-support program geared toward families with disables minors. The program that applies to Puerto Rico – the commonwealth Aid to the Aged, Blindo or Disabled (AABD) – does not provide aid to disabled minors who are not blind, she said.

SSI assists people 65 years old or younger under the poverty line who have disabilities, including children with disabilities and special conditions such as cancer, cerebral palsy, Down Syndrome, multiple sclerosis, among other conditions, that can negatively impact a family’s income, González said.

“Unlike traditional Social Security, SSI does not require a beneficiary to make payments to the program to be eligible for program benefits,” she said.

In the states, SSI aid maintains 66 percent of all beneficiaries and 59 percent of families with disabled minors above the poverty level, the resident commissioner said. About 14 percent of SSI beneficiaries are minors with disabilities that include Down Syndrome, autism, cancer and cerebral palsy.

“SSI is a program of last resort given that beneficiaries must apply for all other benefits for which they may be eligible before they can receive assistance under that program,” she pointed out.

To qualify for SSI, an individual’s and couple’s monthly income cannot exceed $750 and $1,125, respectively, González said, adding that the average SSI beneficiary receives $533 a month ($662 a month for minors with disabilities). The AABD program on the island just provides an average payment of $77 a month, she said.




Puerto Rico healthcare centers to receive $18.4M in CARES Act funding

CDC Photo

Allocated for shoring up Covid-19 care in 23 medical centers serving low-income patients

SAN JUAN — Puerto Rico Resident Commissioner Jenniffer González Colón announced Thursday that the U.S. Department of Health and Human Services (HHS) allocated $18.4 million for prevention, detection and treatment of the Covid-19 disease in 23 island healthcare centers serving low-income or uninsured patients.

The funding for the local medical providers is part of the $1.3 billion approved under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) for 1,400 health care centers serving 13,000 locations throughout the United States, the resident commissioner said in a press release.

The DDHHS’s Health Resources & Services Administration (HRSA) — which finances health care centers serving the most vulnerable individuals and families, including the homeless, agricultural workers, residents of public housing projects, and veterans – will disburse the money to the Puerto Rico health care centers, González said, noting that HRSA funds centers providing accessible medical care to more than 28 million people a year, regardless of their ability to pay.

“We are now seeing the disbursement of funds and help that we got for Puerto Rico under the CARES Act — legislation that contains a historic amount of $2 trillion and which is vital to help our communities mitigate the effect of Covid-19,” she said in a statement. “This investment by HRSA that we are announcing is vital so that health care centers on the island, which are a key element in the public health response, have the necessary tools for immediate response.”

This is the second allotment of funds to Puerto Rico under the CARES Act for health centers. The first involved $1.4 million for 22 designated 330 primary medical centers, funded by a combination of federal and local funding and which serve mostly low-income, uninsured patients.

The 23 health care centers receiving the latest HRSA disbursement, including individual allotments, include: $1.42 million for Consejo de Salud de Puerto Rico Inc.; $1.31 million for NEOMED Center Inc.; $1.43 million for Salud Integral en la Montaña Inc.; $1.07 million for Corporación de Servicios de Salud y Medicina Avanzada; $996,275 for Migrant Health Center Western Region Inc.; $895,790 for Centro De Salud De Lares Inc.; $866,645 for HPM Foundation, Inc; and $838,445 for Corporación De Servicios Medico Primario y Prevención de Hatillo.

The other health centers and disbursements include: $627,380 for Corporación De Salud Asegurada Por Nuestra Organización Solidaria, Inc. (S.A.N.O.S.); $719,525 for Centro De Servicios Primarios De Salud Inc.; $544,385 for Community Health Foundation of Puerto Rico Inc.; $743,285 for Costa Salud Community Health Centers Inc.; $721,445 for Morovis Community Health Center Inc.; $861,200 for Centro De Servicios Primarios de Salud de Patillas Inc.; $771,020 for Camuy Health Services Inc; $503,000 for Puerto Rico Community Network for Clinical Services, Research and Health Advancement (Prconcra) Inc.; $749,615 for Centro De Salud Familiar Dr. Julio Palmieri Ferri, Inc.; $745,625 for Servicios De Salud Primarios De Barceloneta, Inc.; $676,940 for Hospital General De Castaner, Inc.; $688,070 for Prymed Medical Care, Inc.; $739,670 for Concilio De Salud Integral De Loiza, Inc.; and $524,000 for the municipality of San Juan’s health care system.

González also stressed other benefits provided by the CARES Act stimulus package for health care providers amid the novel coronavirus outbreak crisis.

These include the expansion of Medicare’s accelerated and advance payment program to help providers and suppliers with their cash flow by allowing them to request up to six months of advanced lump sums or periodic payments; a moratorium of up to four months for qualified hospitals in the payment of loans, allowing them 12 months to complete the reimbursement without interest charges.

The CARES Act also provides a temporary exemption of Medicare from the mandatory sequester order contained in the Budget Control Act of 2011, immediately increasing Medicare payments by 2 percent. Medical providers may request advances of 100 percent in payments under Medicare Part A and Part B received during a three-month period, with at least 210 days for repayment.

The law provides immunity from state and federal civil lawsuits to medical professionals who provide their services as volunteers, as long as they do not incur in criminal misconduct or gross negligence. Moreover, the law provides $100 billion for the Public Health & Social Services Fund to reimburse providers of medical services for loss of income due to the Covid-19 emergency.

Moreover, $150 billion in federal funds were allocated for the acquisition of protection gear for health workers, an increase in the labor force and training, construction of structures to house patients, emergency operation centers, as well as additional Medicare payment increases for hospitals and providers to guarantee they receive enough funding during the virus crisis.

Additional aid for post-hurricane disaster recovery coordinators

Meanwhile, U.S. Secretary of Commerce Wilbur Ross announced Thursday that the Department’s Economic Development Administration (EDA) awarded a $1.1 million grant to the University of Puerto Rico to hire three disaster recovery coordinators to execute disaster recovery efforts throughout the entire island. The project, to be located in a Tax Cuts and Jobs Act designated Opportunity Zone, will be matched with $266,400 in local investment.

“The Trump Administration is fulfilling its promise to help Puerto Rico recover after the devastation of Hurricanes Irma and Maria in 2017,” Secretary of Commerce Wilbur Ross said in a press release. “The disaster recovery coordinators hired at the University of Puerto Rico will serve as liaisons between local, state, and federal partners to further advance recovery efforts and rebuild the local economy back stronger than ever before.”

In 2018, EDA made $587 million available to eligible grantees in communities impacted by natural disasters in 2017, said Dana Gartzke, Assistant Secretary of Commerce for Economic Development.

“We are pleased to support collaborative economic recovery efforts to help Puerto Rico further recover following Hurricanes Irma and Maria and to do so in Opportunity Zones across the island,” she said in a statement.

In a statement, Gov. Wanda Vázquez thanked President Trump and Secretary Ross for “this important EDA grant awarded to the University of Puerto Rico,” adding that the funding is important as the island continues to recover from Hurricanes Irma and María, the January earthquakes, and the current Covid-19 pandemic.

“We welcome this partnership and look forward to continue collaborating with the U.S. Department of Commerce through this process,” she said.

This project is funded under the Bipartisan Budget Act of 2018 (PL 115-123) (PDF), in which Congress appropriated to EDA $600 million in additional Economic Adjustment Assistance (EAA) Program (PDF) funds for disaster relief and recovery as a result of Hurricanes Harvey, Irma, and Maria, wildfires, and other calendar year 2017 natural disasters under the Stafford Act.

 The funding announced Thursday goes to a designated Opportunity Zone, created by President Donald J. Trump’s Tax Cuts and Jobs Act of 2017, Opportunity Zones are spurring economic development in economically-distressed communities nationwide.




PRMA Head Says House Bill to Bring Back Manufacturing is ‘Starting Point’

Puerto Rico Manufacturers Association (PRMA) President Carlos M. Rodríguez (Screen capture of http://industrialespr.org/)

Cautioned that Effectiveness of Measure Has Yet to Be Analyzed

SAN JUAN – Puerto Rico Manufacturers Association (PRMA) President Carlos M. Rodríguez welcomed bipartisan legislation filed in Congress by Puerto Rico Resident Commissioner Jenniffer González Colón to provide federal tax incentives for the manufacturing of vital medical supplies now made in other countries, but cautioned that the measure would have to be studied further to determine how effective it could be in bringing back pharmaceutical operations that left the island after the phaseout of U.S. Internal Revenue Section 936.

“It is a good initiative. It is a starting point for discussion of the subject in the [U.S.] House of Representatives. It has bipartisan support and that is good. She included the distressed zones in her proposal, which is a good initiative because it includes practically all of Puerto Rico,” Rodríguez told Caribbean Business. “What we still must carefully evaluate is if the proposed incentives are enough to attract new manufacturing.”

The Securing the National Supply Chain Act of 2020 (H.R. 6443) would secure the national stockpile supply chain by providing incentives to manufacturers to relocate to economically depressed areas, also known as distressed zones, in the United States, including the territories.

The bill would provide a dollar-for-dollar credit against federal taxes to U.S. companies for 50 percent of wages, investments and purchases made in the areas for manufacturing the needed medical supplies. It also provides manufacturers with a credit of 40 percent of wages and investments, and 30 percent to 40 percent of local purchases in the case of other products, with the 40 percent applying for purchases from minority businesses.

To qualify for the incentives, the manufacturing facility must produce property required to be maintained in the strategic national stockpile under Section 319 F-2 of the Public Health Service Act. Moreover, the production of such a manufacturing facility must be moved to the United States—including any U.S. territory such as Puerto Rico—from a foreign country that the U.S. trade representative has determined could “pose a risk to the national supply chain because of political or social factors,” the House bill states.

An economically distressed zone is defined in the bill as “any population census tract which has a poverty rate of not less than 35 percent for each of the 5 most recent calendar years for which information is available.” The bill also says that a qualifying jurisdiction must have “low” labor-force participation rate and a “prolonged period of economic decline measured by the gross national product.” The poverty rate for Puerto Rico was 44.4 percent in 2018, according to the latest one-year estimate of the U.S. Census American Community Survey.

The “economically distressed zone” designation is for a 15-year period and the qualifying territory must have a strategic economic plan to ensure the area benefits from the incentives. In the press release announcing filing of the bill, González said it would “help drive the consolidation of the manufacturing industry in Puerto Rico, creating new jobs and boosting the island’s local economy.”

Last month, PRMA created a task force made up of experts in the areas of manufacturing, taxes and the economy with the aim of including the island in federal initiatives to bring back manufacturing to U.S. soil due to national security considerations amid the Covid-19 pandemic.

“In our task force we are searching for mechanisms to develop consensus proposals that do not become partisan proposals. We think we could achieve that. The resident commissioner’s bill is a good step forward. We will be issuing our comments on the bill in due time,” Rodríguez said.

The PRMA head expressed caution about whether the incentives contained in the measure would be enough to attract U.S. pharmaceutical operations currently operating in highly competitive locations such as India and China.

“Jenniffer González’s bill proposes credits on the base of salary investment and other credits on the base of capital investment. We have to look at that more closely to see if that is sufficient to attract more manufacturing—because this is a matter of costs,” he said. “You can tell these companies, ‘Come over here because we have more incentives,’ but if making a product costs a $1 in China and here it costs $10, and after applying the incentives it costs $6, it is still not competitive.”

Rodríguez stressed that different potential scenarios must be studied using the congresswoman’s “proposals and see how they compare with similar costs in other countries such as China and India to see if we are competitive.”

He acknowledged, however, that it was unrealistic to expect Congress to approve the same level of incentives that were offered to U.S. companies to relocate in Puerto Rico under Section 936, which was phased out between 1996 and 2006. Other local efforts in the early 2000s to obtain federal incentives to attract U.S. manufacturing to the island failed to gain traction in Congress. Many lawmakers have seen them as “corporate welfare” measures that have failed to deliver the creation of jobs promised on the island.

“We have to be creative with this,” Rodríguez said.

The latest efforts were prompted by an editorial in the New York Post and a column in Forbes magazine last month that endorsed tax incentives for U.S. manufacturers relocating their drug production from such locations in China and India to Puerto Rico. The writings cited U.S. lawmakers’ national security concerns involving overreliance on China for the manufacture of key drugs amid emergencies such as the Covid-19 pandemic.

In a Forbes column published March 16, policy editor Avik Roy went as far as proposing the partial restoration of the Section 936 tax break in exchange for other Puerto Rican fiscal reforms. Such policies would include exempting generic drug manufacturers from corporate taxes in Puerto Rico and create a “most-favored nation” Puerto Rican tax rate for pharmaceutical intellectual property, he said.




Initiative Underway to Help Small Businesses, Nonprofits Affected by COVID-19

(Cybernews)

SAN JUAN – Gener8tor, in a collaborative effort with the Titín Foundation and Causa Local, unveiled an initiative to support local small businesses affected by COVID-19.

For a week, small business owners, startups, freelancers and non-profit institutions will be able to access, free of charge, webinars to guide them in identifying opportunities and available resources to continue their work amid this public health crisis.

“In these moments of crisis and uncertainty, we reaffirm our commitment by facilitating initiatives to strengthen the third sector, which is the engine of responsible economic development on the Island. For the Titín Foundation, it is of utmost importance to publicize the opportunities available for businesses and organizations to continue operating and making the social impact on the communities they serve,” Hazel Colón, director of the Titín Foundation Program, said in a statement.

The webinars of the Emergency Response Program include topics ranging from completing the application for available aid from the Small Business Administration (SBA), aid resources for philanthropic and civic organizations, guidance on labor law tempered to applicable laws and regulations, federal aid programs, and mental health and wellness resources for business owners.

In addition to the webinars, gener8tor will be facilitating free one-on-one mentoring with small business owners. Joining the Titín Foundation will help to draw up a roadmap specifically for NGOs (non-profit organizations) since their resources have been decimated and they need to be able to access funds that guarantee the stability of their operation during the crisis, since they are the engine and center of most communities. While through the partnership with Causa Local, companies will be helped to enter the world of non-traditional resources to expand their reach.

The Titín Foundation has been collaborating with federal agencies such as the Economic Development Administration (EDA) to identify resources and boost initiatives aimed at creating economic resilience on the island.

“Having collaborators such as the Titín Foundation and gene8tor early in the response helps promote access to federal recovery funds once they are available,” said Juan Bauzá, the EDA representative for Puerto Rico and U.S. Virgin Islands and Field Coordinator of the U.S. Department of Commerce for the support function in economic recovery matters for DR4339.

For his part, Joe Kirgues, cofounder of gener8tor, highlighted that “we have seen firsthand the impact that entrepreneurs have in the community and therefore we will turn to our network of mentors, investors and partners to support small business owners through this new initiative.”

Those interested in benefiting from this program can visit gener8tor.com/emergency-response-program/puerto-rico to register or email Javier Soto at javier@gener8tor.com. The webinars begin April 14.