Pierluisi cancels PREPA restructuring agreement

Governor Pedro Pierluisi announced last week the cancelation of the Restructuring Support Agreement (RSA) for the Puerto Rico Electric Power Authority (PREPA), arguing that its implementation would no longer be in Puerto Rico’s best interests due to changing circumstances, including spikes in inflation and oil prices. “I am committed to ensuring that PREPA exits bankruptcy, which is why I favor sweeping negotiation or mediation that ensures an electric power service that is more efficient, clean, and reliable for the people of Puerto Rico, while at the same time honoring the commitment of our government with the company’s pensioners, and dealing fairly with the claims of PREPA’s creditors,” said Pierluisi in a written statement.

Just hours after the cancelation was announced, Judge Laura Taylor Swain denied a motion by the ad hoc group AEE, a group of PREPA creditors, to designate a mediator or to set a timeline to confirm a new POA by November this year.

Court of Appeals rejects attempt to stop implementation of Plan of Adjustment

The First Circuit Court of Appeals last week dismissed a motion brought forward by the Teachers’ Federation of Puerto Rico and other teachers’ unions to stop the implementation of the Plan of Adjustment (POA). Puerto Rico teachers have claimed that they will be adversely affected by the POA, whose provisions freeze future retirement benefits, require working until age 63 in order for a teacher to be eligible for a pension, and force them to pay into Social Security. Supporters of the POA point out that the teachers’ pensions were virtually insolvent before reforms were made.  The dismissal of this request does not mark the end of the debate: teachers have also appealed to have the plan be declared unconstitutional on the grounds that it violates the provisions set forth in PROMESA.

The week in COVID

Less than a week after the government’s COVID restrictions were eased, complete with an end to the Island-wide mask mandate, Puerto Rico’s COVID numbers continue heading in the right direction. The positivity rate is currently 3.9%, (0.2% lower than last week, when it was 4.1%) and the number of hospitalized is 44, twenty-one fewer than a week ago. Deaths now total 4,150, an increase of 16 since last week, but this week featured two days without new deaths—the first time this had occurred since December of last year. The seven-day average of new cases (including both confirmed and probable cases) is now 154, compared to last week, when it was 179. With the latest easing of mandates only coming into effect on March 10, it remains too soon to determine what their effects will be. 

Court of Appeals hears arguments in attempt to keep doctors in Puerto Rico

In 2019, the Puerto Rico government enacted a law forbidding Medicare Advantage Organizations (MAOs) from paying doctors less for services than under traditional Medicare and granting doctors additional employment protections. It was an attempt to stem the tide of doctors who had for years been leaving the Island for higher pay on the mainland U.S. MAOs challenged the law and obtained a ruling in their favor. The Puerto Rico government has since appealed to the First Circuit Court of Appeals in Boston, and has found an unsympathetic audience.

At the core of the case is whether Puerto Rico can regulate MAOs by setting floors on how much they can pay, which the lower court found went against a 2003 federal Medicare statute. “Congress decided it would get out of the business of dictating terms and assign that to MAOs that would set their own terms,” argued Michael Kimberly, an attorney for the plaintiffs. The judges appeared to agree, with one, U.S. Circuit Judge O. Rogeriee Thompson, suggesting that a more promising alternative for Puerto Rico might be lobbying to have the law itself changed. Even such a legislative victory for Puerto Rico, however, would not necessarily be enough to mitigate the exodus of doctors: the Island’s Medicare rates for doctors are the lowest in the U.S. By 2018, there were only 9,500 physicians left in Puerto Rico. The Island continues to lose hundreds of doctors each year.