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“Piggybacking” is Not a Substitute for the Competitive Bidding Requirements under General Municipal Law § 103

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By: Chandler Barganier, Law Clerk, Sheats & Bailey, PLLC

In Lynch, Inc. v. Board of Education of the Maine-Endwell Central School District, the Appellate Division Third Department, affirmed the Broome County Supreme Court’s decision, holding that General Municipal Law § 103(16) excludes public works contracts from the practice of “piggybacking”.[1] This case stems from a multi-year and multi-phase capital project involving various buildings and facilities of Maine-Endwell Central School District. In the summer of 2023, Phase One was completed by Smith whose work pleased the district enough for it to want Smith to complete HVAC work on Phase Two. In October 2023, the District submitted plans for Phase Two to the State Education Department for review and approval as required by Education Law § 408 and 8 NYCRR § 155.2. Such approval was delayed, and the district decided to hire Smith directly by using cooperative purchasing though The Interlocal Purchasing System (“TIPS”), as opposed to undergoing the competitive public bidding process after approval.

In July 2024, the District awarded the Phase Two HVAC contract to Smith by piggybacking it onto their Phase One contract. Several local contractors later petitioned the court, alleging that they were denied the opportunity to competitively bid on the Phase Two HVAC contract pursuant to the competitive bidding requirements under the General Municipal Law. The Broome County Supreme Court granted petition to the extent of finding that the district’s use of TIPS constituted impermissible piggybacking for public works projects. The Supreme Court enjoined the district from using TIPS or any similar process to award further public works contracts and allowed Smith to complete their HVAC work without penalty as their work was already almost halfway complete.

The Third Department upheld the lower court ruling emphasizing that cooperative purchasing is a narrow exception under General Municipal Law§ 103 (16), not a substitute for the required competitive bidding process that governs public works contracts. The court went on to state that it was contemplated by the legislature that the piggybacking provision would facilitate procurement in the context of purchase contracts as opposed to construction and renovation projects.

Though in this case the court declined to impose disgorgement largely because the project was nearly halfway completed, that may not always be the case. Penalties to contractors for violations of competitive bidding requirements may be imposed at the Court’s discretion. While government agencies bear the burden of adhering to competitive bidding requirements, contractors bear the financial risk when these requirements are violated. The potential for disgorgement makes it important for contractors to exercise due diligence during the procurement process to safeguard their financial and legal interests.

Going forward cooperative purchasing cannot be used to avoid competitive bidding for public works. Public entities should exercise caution when considering using cooperative purchasing/piggybacking for construction related projects.

 Contractors who perform work on public works contracts in violation of competitive bidding laws potentially face significant financial risks including the possibility of forfeiting all compensation received under an improperly awarded contract. Therefore, contractors should be aware of how the project was awarded and should not blindly rely on the public entity’s procurement process. Contractors should verify the scope of the work and if the public entity correctly followed competitive bidding laws before entering into a contract and performing work.

If you need further assistance or have additional questions, please contact Sheats & Bailey, PLLC.  www.TheConstructionlaw.com; Tel. 315-676-7314.

The information provided above is not intended to serve as specific legal advice for any particular situation. Competent legal and experienced counsel should be consulted.

[1] Daniel J. Lynch, Inc. v Bd. of Educ. of Maine-Endwell Cent. School Dist., 2026 NY Slip Op 03209 [3d Dept May 21, 2026]

How Prevailing Wage Expansion and Workers’ Compensation Costs Are Reshaping New York State Construction

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Robert C. Reeves, CPA, CFE, Dannible & McKee, LLP

Many New York contractors continue to battle material inflation and labor shortages, but two less visible issues are increasingly affecting profitability: expanding prevailing wage requirements and rising workers’ compensation costs driven by experience modification factors. Together, these factors influence payroll administration, labor burden rates, job costing, bidding strategies and financial reporting, making them critical financial management issues rather than solely operational concerns.[/caption]

Prevailing Wage Expansion Creates New Compliance and Cost Challenges

Prevailing wage requirements now extend beyond traditional public works into certain privately developed projects. Under New York Labor Law §224-a, a private project generally becomes subject to prevailing wage requirements when:

  • Total project cost exceeds $5 million; and
  • Public funds represents at least 30% of project costs.

Public funding includes state subsidies, tax credits, abatements and certain clean energy incentives. As these funding sources become more common, contractors that have historically performed only private work may unexpectedly fall under prevailing wage requirements. Evaluating project funding early in the bidding process is essential.

Contractors should also monitor legislative activity. Although recent proposals to broaden prevailing wage coverage have not been enacted, the trend suggests continued expansion.

Operational and Financial Impacts

Prevailing wage compliance creates challenges in four key areas:

  • Certified payroll reporting and fringe benefit documentation.
  • Accurate worker classification to avoid back wages, penalties and potential debarment.
  • Proper fringe benefit accounting.
  • Detailed labor tracking and job costing.

Poor labor tracking can distort work-in-progress (WIP) schedules, margin reporting and project profitability.

The impact extends well beyond payroll. Prevailing wage errors can affect cost-to-complete estimates, overbilling and underbilling positions, indirect cost allocations, bonding capacity and bank covenant calculations, making compliance an important financial reporting consideration.

Rising Experience Mods Are Affecting Contractor Profitability

New York remains one of the nation’s most expensive workers’ compensation markets. Experience modification factors are rising because of increasing injury frequency, higher medical costs, heat-related illness claims, stricter classification enforcement and greater carrier scrutiny.

Higher experience mods increase insurance premiums while also affecting:

  • Labor burden rates.
  • Bid competitiveness.
  • Bonding capacity.
  • Financial reporting if labor cost accruals are not updated.

Failing to incorporate current workers’ compensation costs into labor burden calculations can understate project costs and reduce the accuracy of WIP schedules and profitability reporting.

Safety as a Financial Strategy

Leading contractors increasingly view safety as an investment rather than simply a compliance requirement. Strong safety programs help reduce claim frequency and stabilize experience mods through initiatives, including robust near-miss reporting, heat illness prevention, return-to-work programs and the use of job site technology, such as wearable sensors and AI-based monitoring tools that help identify unsafe conditions and worker fatigue.

These efforts often produce measurable returns through lower insurance costs, improved margins and stronger bonding capacity.

Where Prevailing Wage and Workers’ Compensation Intersect

Although prevailing wage compliance and workers’ compensation are often managed separately, they are closely connected.

Labor classification errors can create prevailing wage violations while also resulting in incorrect workers’ compensation classifications, higher premiums and costly audit adjustments.

Similarly, certified payroll errors and improper fringe benefit allocations can distort labor burden calculations, affecting job costing, bid estimates, WIP schedules and profitability analysis.

Safety performance also plays an important role on prevailing wage projects, which often involve larger crews and more complex work environments. Higher injury rates increase workers’ compensation costs, reducing competitiveness when bidding future work.

Practical Steps Contractors Can Take in 2026

There is still time left this year to make improvements, and several key strategies can help strengthen performance and reduce risk.

  • Strengthen certified payroll processes by reconciling payroll to job costs, documenting fringe benefit plans and reviewing subcontractor payroll compliance.
  • Update labor burden rates regularly using current workers’ compensation rates and experience modification factors.
  • Invest in proactive safety programs, including training, injury prevention and return-to-work initiatives.
  • Prepare for increased audit activity by maintaining complete payroll records, job costing documentation and supporting schedules.

The Bottom Line

Expanding prevailing wage requirements and rising workers’ compensation costs are reshaping the financial landscape for New York contractors. Organizations that proactively manage payroll compliance, labor burden rates, safety performance and financial reporting will be better positioned to protect margins, strengthen bonding capacity and remain competitive in an increasingly challenging market.

Rather than treating prevailing wage compliance and workers’ compensation as separate administrative functions, contractors should view them as interconnected components of a broader financial management strategy.

For contractors looking to strengthen their systems or validate their labor cost structure, Dannible & McKee can help. Contact our construction team to discuss how these changes may impact your projects and financial reporting.

 

Robert C. Reeves, CPA, CFE, is an audit partner at Dannible & McKee, LLP, a public accounting firm with offices in Syracuse, Auburn, Binghamton and Schenectady, NY, and Tampa, FL. He has over 10 years of experience at the firm, he provides financial audit, assurance and consulting services to clients primarily in the construction, manufacturing and architectural and engineering industries. Bob also specializes in employee benefit plan audits and forensic accounting services. For more information on this topic, you may contact Bob at  rreeves@dmcpas.com or (315) 472-9127.

Code Rule 59: Time to Restore Balance Between Safety and Fairness

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By: Wael Khalil, CPS, SSM, Vice-President/Safety Director Lovell Safety Management Co., LLC

For nearly three decades, New York State Industrial Code Rule 59 has served an important role in improving workplace safety and reducing workers’ compensation losses. Created in the mid-1990s as part of broader workers’ compensation reforms, the rule requires employers with poor loss experience to implement formal safety and loss prevention programs under the guidance of a certified safety consultant.

The concept behind the rule remains sound. Employers experiencing significant workers’ compensation losses should receive professional assistance to identify hazards, improve management practices, and reduce future injuries. In many cases, Code Rule 59 has helped employers strengthen their safety programs and improve their claims performance.

The challenge today is not the purpose of Rule 59. The challenge is that the rule’s triggering criteria have not kept pace with economic realities.

Under the current framework, employers become subject to Code Rule 59 when their payroll exceeds $800,000 and their workers’ compensation Experience Modification Rate (EMR) exceeds 1.20. When these thresholds were established in 1996, an $800,000 payroll represented a substantially larger employer than it does today. After decades of inflation, wage growth, and rising labor costs, many small businesses now exceed that payroll threshold despite operating with only a handful of employees.

As a result, employers that would have been considered small businesses when Code Rule 59 was enacted are increasingly being drawn into a regulatory process originally designed for larger employers with greater administrative resources.

At the same time, the EMR itself is a backward-looking measurement. Experience modifications are based largely on historical claims data and often do not reflect an employer’s current safety performance. An employer may have corrected deficiencies, replaced management, implemented new safety procedures, or significantly reduced claims, yet still trigger Code Rule 59 based on losses that occurred years earlier.

Recent changes in experience rating methodology have further amplified this issue. Smaller employers have fewer payroll dollars and claim exposures over which losses can be spread. Consequently, a single lost-time claim or moderate injury can have a significant impact on an employer’s modification factor. Larger employers generally experience less volatility because individual claims are diluted across a much larger payroll base.

In practice, this means that many small employers can find themselves subject to Code Rule 59 despite maintaining reasonable safety programs and having no ongoing pattern of poor performance.

Many of these cases stem from isolated incidents rather than systemic safety failures. A single claim involving an employee injured in a motor vehicle accident, a travel-related incident, or a public premises accident may significantly impact an employer’s experience modification rating. While such claims are compensable under workers’ compensation law, they do not necessarily indicate deficiencies in employee training, hazard control, supervision, or management commitment to safety.

Nevertheless, once Code Rule 59 is triggered, employers face substantial obligations. They must retain certified NYS consultants, participate in facilities/jobsite surveys and meetings, implement corrective action plans, complete documentation requirements, and certify compliance. Failure to comply can result in premium surcharges and the loss of policy discounts, creating additional financial strain for smaller employers.

None of this suggests that Code Rule 59 should be eliminated. Employers with persistently poor safety performance should continue to be identified and required to take corrective action. However, there is a strong case for modernizing the rule so that regulatory resources are focused on employers with current and demonstrable safety deficiencies rather than employers whose loss experience may be attributable to historical events or isolated claims.

Several practical reforms could accomplish this goal. The payroll threshold could be indexed to inflation or adjusted to reflect current wage levels. A tiered threshold could recognize the differences between small, medium, and large employers. Greater consideration could be given to recent safety performance, documented corrective actions, participation in safety groups, and ongoing loss-control efforts. The Department of Labor could also be provided with greater flexibility to distinguish between employers experiencing systemic safety problems and those impacted by isolated or non-preventable events.

Such changes would preserve the original intent of NYS Code Rule 59 while improving its fairness and effectiveness. Workplace safety would remain the primary objective, but the burden of compliance would be more appropriately aligned with an employer’s current risk profile and operational realities.

After nearly 30 years, Rule 59 remains a valuable tool. Updating it for today’s economy would ensure that it continues to improve workplace safety while avoiding unnecessary burdens on the small businesses that form the backbone of New York State’s economy.

For more information on Code Rule 59 please reach out to a Lovell representative at 1-800-556-8355.

The Hidden Costs Impacting Construction Risk in 2026

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By: Brett Findlay, Senior Vice President, Construction Practice Leader, OneGroup

Construction firms across Central New York are seeing some stabilization in the insurance marketplace after several years of sharp increases. In certain areas, rates are beginning to soften and capacity is improving. However, many contractors are still experiencing higher overall insurance costs, even when rate and premium increases appear more moderate on paper.

The reason is simple: while portions of the insurance market may be easing, the underlying cost of construction risk continues to rise.

From labor shortages and wage inflation to escalating material costs and larger claim settlements, contractors are operating in an environment where even a relatively routine loss can become significantly more expensive than it was just a few years ago.

Locally, the time a project takes to complete has increased, the cost of the materials for that project have increased and the pay scale for the employees executing that project have increased. All those variables can and do drive insurance costs.

What further amplifies those variables is the onset of large local projects like I-81 & Micron that are utilizing much of the local labor force. With companies struggling to find labor to complete their backlog, traditional infrastructure projects and other private projects face longer project timelines. Outside labor is going to become a necessity; subcontracting, is going to become a necessity. Those exposures have insurance costs as well.

One of the largest drivers is construction inflation itself. Material pricing remains elevated across many categories, particularly for electrical components, specialty materials, roofing systems, and mechanical equipment. Even when pricing volatility slows, replacement costs remain far above pre-pandemic levels. That has important insurance implications.

If property values, equipment schedules, or builder risk limits have not been updated to reflect current costs, contractors may unknowingly be underinsured. In a major loss scenario, that gap can become financially significant.

There is also growing concern around project delays tied to supply chain challenges. Longer lead times can extend project timelines, increase exposure periods, and ultimately increase the overall cost of claims.

Labor inflation is creating another layer of pressure. The construction industry continues to face workforce shortages, particularly among skilled trades. As firms compete for experienced workers, wage growth has accelerated. While higher pay can help attract talent, it also impacts claim severity, especially in workers’ compensation.

Medical costs are rising. Lost-time claims are becoming more expensive. Inexperienced workers may require additional training and supervision, which can also influence safety outcomes and insurance performance over time.

At the same time, contractors are managing increased auto liability exposure, rising litigation costs, and larger jury awards across the country. Even relatively small incidents now carry the potential for substantial financial impact.

Active claim management throughout these types of situations is critical. Timelines have slowed everywhere, including the judicial system. Legal costs have increased, which in turn inflates claim costs. Claim costs can also have a direct impact on insurance pricing. Workers’ Compensation EMR’s and Auto Experience Rating can be volatile, actively managing those claims can directly impact these variables, in turn, affecting the insurance pricing. This leads directly into proactive risk management.

For contractors, this environment reinforces the importance of proactive risk management rather than viewing insurance strictly as an annual transaction. Carriers are placing greater emphasis on safety culture, fleet management, subcontractor oversight, cybersecurity practices, and operational controls when evaluating accounts. Firms that can demonstrate strong internal processes are often in a better position to manage long-term insurance costs and secure favorable terms.

This is especially important as projects grow more complex and technology becomes more integrated into day-to-day operations. Drones, connected jobsites, digital project management systems, and electronic payments create efficiencies, but they also introduce new forms of risk that many firms are still evaluating.

While there are encouraging signs in portions of the insurance marketplace, contractors should not mistake a softening market for a reduction in exposure. The hidden costs impacting construction risk today extend far beyond premium percentages alone.

The firms best positioned for long-term success will be those that regularly reassess valuations, strengthen operational controls, invest in workforce development, and work closely with trusted advisors to identify emerging risks before they become costly problems.

In summation, insurance is becoming more complex by the day. But a good partner can walk you through the complexities of the industry and develop a plan that works for you as the contractor. Being active in your risk management program is now critical, and now is the time to do it, if not yesterday. Now is the time to reassess your risk strategy—before these hidden costs show up in your next claim or renewal.

Brett Findlay is a Senior Vice President and Construction Practice Leader at OneGroup, a subsidiary of Community Financial System Inc. OneGroup.com

2026 Mid-Year Report to the Upstate New York Construction Industry and Members of the Syracuse Builders Exchange

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Earl R. Hall, Executive Director, Syracuse Builders Exchange

Reflecting on mid-year data, including membership utilization, I am pleased to report that the Syracuse Builders Exchange continues to demonstrate exceptional strength, stability, and growth. The Association remains well-positioned to serve the regional construction industry today while preparing for future opportunities.

The Syracuse Builders Exchange is proud to be the largest construction industry association in New York State with approximately 1,100 member firms. For more than 150 years, our mission has remained unchanged—to provide the resources, services, advocacy, and professional relationships that help our members succeed in an increasingly competitive marketplace.

Membership continues to grow as more construction firms recognize the value of belonging to an organization that delivers measurable benefits. New members are joining because they see an association that provides a wide variety of services, is financially sound, professionally managed, and committed to helping their businesses succeed. Our continued membership growth reflects the confidence the construction industry has placed in the Syracuse Builders Exchange and the value our programs provide every day.

The Builders Exchange is financially sound, generating strong operating revenues, maintaining adequate financial reserves, and operating with no debt – all while maintaining the fiscal goals and objectives of a 501c6 not-for-profit trade Association. This conservative financial stewardship ensures that the Syracuse Builders Exchange remains independent, sustainable, and capable of investing in new programs and member services without compromising our financial security.

The Syracuse Builders Exchange Electronic Plan Room is one of the Association’s most valuable member resources, providing contractors, subcontractors, suppliers, and construction professionals with immediate access to current bidding opportunities throughout the region. Members can easily view project plans, specifications, addenda, and other bidding documents from any location, allowing them to identify and pursue new business opportunities efficiently.

In addition to convenient access to bid information, the Electronic Plan Room offers powerful estimating and digital takeoff tools that help members improve the accuracy and speed of project estimates. These features enable users to measure quantities directly from electronic drawings, streamline estimating workflows, reduce costs, and enhance competitiveness. By combining comprehensive project information with advanced digital tools, the Electronic Plan Room helps members save time, increase productivity, and position their businesses for continued success in today’s competitive construction marketplace.

One of the Builders Exchange’s highest priorities continues to focus on education and safety training. Over the past year, we have expanded our schedule of education, professional development, and safety training classes, providing members with practical knowledge that enhances productivity, strengthens knowledge of regulatory compliance, and improves workplace safety. These programs have become one of the defining benefits of membership and reflect our commitment to helping member firms remain competitive and safe.

Equally important are the opportunities the Builders Exchange provides for members to build lasting and meaningful professional relationships. Throughout the year, the Association has hosted a wide variety of social gatherings, networking events, awards programs, and industry meetings that strengthen connections among contractors, subcontractors, suppliers, design professionals, and project owners. These events foster collaboration, encourage new business opportunities, and reinforce the sense of community that has always distinguished the Syracuse Builders Exchange.

Looking ahead, the Builders Exchange remains focused on innovation and continuous improvement. We will continue investing in education, safety training, technology, networking opportunities, and member services while maintaining the financial discipline that has made the Association one of the strongest and most respected trade organizations in the State.

None of these accomplishments would be possible without the support and engagement of our members, volunteer leadership from the Board of Directors, committee members, and dedicated staff. The Builders Exchange’s membership participation, ideas, and commitment have helped build an organization that serves as the voice of the construction industry throughout Upstate New York.

The future of the Syracuse Builders Exchange is bright. With consistent revenues, no debt, growing membership, expanding educational and safety programs, vibrant networking opportunities, and adequate financial reserves, our association is well prepared to meet the challenges and opportunities long into the future.

St. Joseph’s Health Orthopedic & Spine Care Expanding Access to High-Quality, Specialized Orthopedic Care in CNY

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By Elizabeth Landry

In December 2025, orthopedic care at St. Joseph’s Health in Syracuse entered a new, exciting chapter: a brand-new practice, St. Joseph’s Health Orthopedic and Spine Care, was launched as part of St. Joseph’s Physicians. With offices located in Fayetteville and Camillus, the practice includes a team of five board-certified, fellowship-trained surgeons: Kevin Kopko, MD, Medical Director of Joint Surgery; Bradley Raphael, MD, Medical Director of Sports Medicine; Aaron Bianco, MD; Justin Iorio, MD, Medical Director of Spine Surgery; and Prashant Deshmane, MD.

Although the practice is new, the providers each bring over ten years of experience gained by
practicing orthopedics and spine care both locally and around the country. “Early on,
when you start right out of fellowship, experience can be lacking. But with us in this practice,
all of us have a combined 50-plus years of experience. To me, that’s a huge differentiating point that distinguishes us from other practices,” said Dr. Deshmane, who specializes in adult
reconstruction, shoulder surgery and sports medicine, and is the most recent addition to the team of surgeons, joining the practice in April.

In addition to depth of experience, each provider brings sub-specialty orthopedic expertise, from joint replacement to spine surgery, sports medicine, and neck and back care, that all add up to a largely comprehensive service line offering that’s highly accessible to both referring providers and patients, alike.

“I think that we have a really knowledgeable, comprehensive team that offers great access
to high-quality care,” said Dr. Iorio.

Sub-Specialty Depth in an Integrated Setting

As the single orthopedic and spine practice integrated within the hospital system, St. Joseph’s Health Orthopedic and Spine Care can quickly connect with many specialized health care providers, offering the “best of both worlds” from inpatient and outpatient care, as Dr. Raphael explained.

“I think something that sets us apart from other practices is that interdisciplinary ability and service that we can provide for patients by having multi-specialties – not just multi-orthopedic specialties, but multi-medical specialties, as well,” Dr. Raphael said. If the surgeons have a question for or need to set up an appointment with other practitioners, such as cardiologists or neurologists, those connections are just a phone call or message away. “I have all these resources at my disposal, literally at my fingertips through our electronic medical records system, EPIC. On top of that, it’s an outpatient office. It’s really a great interdisciplinary program.”

Dr. Raphael, who was born and raised in Syracuse, followed in the footsteps of his father, Dr.
Irving Raphael, to practice sports medicine. He also specializes in shoulder and knee treatment, as well as cartilage and joint preservation. Both he and Dr. Deshmane have provided care for professional athletes and major sports teams around the country.

When it comes to joint surgery, Dr. Kopko specializes in both full hip and knee replacement, as well as partial knee replacement and revision surgery for previous joint replacements. He emphasized that the practice sees many patients who are looking for a second opinion. “We’re willing to see patients for almost anything,” said Dr. Kopko. “We’re not going to turn patients away because they’ve been seen by another orthopedic practice or had surgery elsewhere.”

The spine side of the practice is led by Dr. Iorio, who specializes in cervical, thoracic and
lumbar surgery, spinal tumors and degenerative conditions, and Dr. Bianco, who specializes in treatment of the neck and back. Both Dr. Iorio and Dr. Bianco discussed the upcoming exciting addition of the EOS full-body x-ray imaging system, which will facilitate comprehensive care for patients and enhance how the group’s providers can work together across sub-specialties, as Dr. Iorio explained.

“The EOS is hugely important between spine providers and hip providers like Dr. Kopko and Dr. Deshmane because the imaging Dr. Bianco and I are getting now includes the joints they’re evaluating,” Dr. Iorio said. “I’ll see patients understanding they have a spine condition, and
learn they also have a problem in the hip joint, for example. We’re getting a better analysis of
patients and working together as a single team of orthopedic surgeons at the same time.”

Advanced Technology and Minimally Invasive Options

The EOS is a prime example of how the St. Joseph’s Health Orthopedics and Spine Care team is utilizing the latest technology available to provide patient-centered care. Rather than stitching together separate x-ray images to get a full-picture view of patients’ needs, as was done previously, the EOS system provides 2D and 3D images of the full skeletal system, helping better inform surgeons in the planning and diagnosis process. St. Joseph’s Health Orthopedics and Spine Care is currently the only practice between Rochester and New York City to utilize this technology.

“The EOS system can also incorporate spinal pelvic parameters, and it uses AI technology and the cloud to help inform decisions about surgical corrections, degenerative changes and spinal deformities,” Dr. Bianco explained.

Perhaps the most well-known cutting-edge technology utilized by the new practice is one surgeons at St. Joseph’s Health Hospital have been using for many years: minimally-invasive, robotic-assisted surgery and navigation. Dr. Deshmane explained how robotics help minimize patient dissatisfaction from imprecise placement of joint replacement components, especially for younger, high-demand patients.

“For these patients, it’s important to make sure you do the joint replacement surgery in a way that’s personalized, meaning your shoulder is different than my shoulder, is different than somebody else’s shoulder,” stated Dr. Deshmane. “Whether it’s computer navigation or robotics, these advanced technologies allow us to dial in on placement of components based on each particular patient’s anatomy. That’s the reason I’m particularly interested in these technologies.”

St. Joseph’s Health also uses the TrackX surgical navigation system and is currently the only
facility in the Syracuse area to have a Mako 4 robot, which is made by Stryker. Dr. Kopko described this robot as the gold standard in robotics for joint replacement, helping to improve patient alignment and reducing risk.

“With patients who have abnormal anatomy and present a potentially challenging surgery, the
robot is kind of like a GPS guidance system to make sure you know where you’re going. It’s almost like having a second surgeon in the room because it helps you better understand and plan what to do next,” said Dr. Kopko, adding that the Mako 4 is indicated for especially complex revision surgeries on patients who’ve had a previous joint
replacement – cases which sometimes needed to be referred out in the past, but that can now be performed by the St. Joseph’s Health Orthopedic and Spine Care group.

In the realm of sports medicine, an exciting non-surgical treatment option the practice offers is orthobiologics utilizing platelet-rich plasma, or PRP. Dr. Raphael described the treatment as a straightforward, in-office procedure that isolates platelets, or growth factors, from the patient’s blood, and then injects them in the needed areas, healing the body with its own tissue rather than a foreign substance that may cause additional tissue deterioration. He said it’s especially useful for treating early arthritis, helping to regrow deteriorated cartilage in a less invasive way. Orthobiologics is one way the team is working on injury prevention and surgery avoidance in sports medicine, Dr. Raphael emphasized.

“Many injuries can be prevented, and we’re trying to educate patients and use non-operative, less invasive treatments with physical therapy as much as possible,” said Dr. Raphael. Dr. Bianco echoed this strategy, explaining that treatment decisions are patient-centered and aimed at the most conservative, least invasive methods available: “Our goal is focused on patient outcomes. We want excellent patient outcomes, patient satisfaction, and improved patient function.”

Efficient Access, Communication and Continuity of Care

An important aspect of the new practice that greatly enhances patient experience is improved access for both patients and referring providers alike, made possible by the group’s integration within the St. Joseph’s Health network. Rather than communicating via text messages or phone calls as they did before, St. Joseph’s Health practitioners now use Epic, one of the biggest medical record systems in the world, to send messages instantly to each other directly within patients’ charts. This improvement in communication

allows more care coordination between referring physicians and surgeons, including consult feedback, co-management of patient needs and post-procedure follow-up.

“It’s infinitely easier when you’re on one medical record system to talk to primary care doctors and to follow patients. Patients can also message us directly through MyChart, which is huge, and they can make appointments through that system as well. It’s the standard across many healthcare facilities in our area – not just at St. Joseph’s,” stated Dr. Kopko.

Whether patients come into the practice through referrals from their primary care providers or if they contact the practice directly for an appointment – which is more common with younger patients needing sports medicine treatments in particular – each member of the practice emphasized how patients can be seen quickly. This ease of access helps overcome traditional barriers to care. 

“I think that above all else, we want providers to be able to refer to us so we can get patients seen and there aren’t any barriers. We really try to make it easy for them, and we welcome them to reach out to us directly,” said Dr. Iorio. Both clinic locations offer walk-in hours, and most patients can be seen within a week, if not on the same day. Dr. Iorio also explained that patients are seen on a timely schedule following surgery or treatments, often for at least one or two years.

More Growth to Come in Years Ahead

Reflecting on the success of the practice so far and looking ahead to what’s next, the surgeons at St. Joseph’s Health Orthopedics and Spine Care are excited to build on the team’s progress and momentum.

“I’ve been practicing at St. Joseph’s for 15 years now, so for me, I knew how great of a place it is,” said Dr. Raphael. “I knew how incredible of a hospital system it is, with all the ancillary and inter disciplinary services. I knew that St. Joseph’s had all these incredible programs for a long time, but it didn’t have a dedicated orthopedics department. This has been a great opportunity to help build this department within the St. Joseph’s network.”

“I think for myself and my partners, we’re extremely happy with our new roles within St. Joseph’s and how the practice has treated us and allowed us to grow even in just the first four months. We’re very blessed to be part of this new practice,” said Dr. Bianco. “There’s an intent to expand the practice to essentially all orthopedic sub-specialties, like hand, foot and ankle, and ultimately a third location, which will allow us to bring on more providers as space allows.”

It all comes down to providing the highest level of care to patients, however, as Dr. Deshmane emphasized. “Looking at it from a patient’s perspective, they just want to know that they have options,” he said. “Our practice comes up as a very valid option in our community, with a lot of experience under our belt.” 

Affordability in Health Care

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Interesting conversation with a patient last week about their mounting health care debt. Higher premiums, higher deductibles, higher co-pays, more out of formulary uncovered meds all adding up to $45,000 in annual out of pocket costs.

Which led me to examine, what are the themes emerging nationally in health care and is anything different in the projections. The same top issues appeared in all my research, with health care affordability moving to the top of concerns.

Affordability has become the defining health care issue in 2026, more than technology or even access. National polling shows most people now describe health care costs as unaffordable, and about half of adults report difficulty paying their medical bills, even with insurance.

Families feel squeezed at every point: paying premiums, meeting deductibles, and then facing co‑pays and surprise bills when they actually use care.

These financial pressures directly shape behavior. Patients delay tests, skip follow‑up, or change providers based on what they think they can afford, while health systems under strain shorten visits, reduce staffing, or close services.

The result is the uneven care seen locally: some days the health system looks seamless; other days, cost and coverage barriers quietly derail care.

Medical debt is widespread and not limited to the uninsured. Tens of millions owe medical debt, and a substantial share of Americans experience “catastrophic” health costs where medical bills consume a large share of income after basic needs.

Managing Your Money states, “Healthcare providers, government programs and debt relief organizations offer various pathways to reduce or eliminate medical debt, but to take advantage of this type of relief, you’ll need to know which options are available and how to navigate them effectively. “ What options do you offer patients to pay for care over time, seek outside relief, or navigate the programs that can help them? Do patients know who to speak with in your practice? Insurers, and providers have multiple theories on what’s driving these increases, but the final impact rests with the patient. This picture looks unsustainable and calls us to look at how to reduce the patient impact. More preventative care without cost, better access using technology, employers creating purchasing of care and drugs? What are your associations advocating for the future? 

Resources
GRAPHIC https://www.healthsystemtracker.org/brief/theburden-of-medical-debt-in-the-united-states/
https://www.commonwealthfund.org/topics
https://unitedstatesofcare.org/pr-2026-predictions/Kathryn Ruscitto, Advisor, can bereached
at linkedin.com/in/kathrynruscitto or at krusct@gmail.com

The Case For Mediation: A Better Path to Resolving Health Care Disputes

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Disputes in the health care sector are inevitable. Whether they arise between physicians in a group practice, between an ambulatory surgical center and its member surgeons, or between a hospital system and an affiliated provider, conflicts over governance, compensation, non-compete agreements, or operational decisions can quickly consume the time, energy, and resources of all involved. Litigation has long been the default mechanism for resolving such conflicts, but it is rarely the best one. Mediation particularly when guided by an experienced health care attorney serving as mediator offers a faster, more cost effective, and more relationship-preserving alternative that deserves serious consideration.

Understanding Mediation in the Health care Context

Mediation is a structured negotiation process in which a neutral third party— the mediator—facilitates discussion between disputing parties to help them reach a mutually acceptable resolution. Unlike a judge or arbitrator, a mediator does not impose a decision. Instead, the mediator guides the conversation, helps each side understand the other’s perspective, and works to identify common ground. The process is voluntary, confidential, and entirely within the control of the participants. For health care organizations, where disagreements over call coverage, profit distributions, exclusivity arrangements, or operating agreements are deeply intertwined with ongoing professional relationships, this collaborative framework is far better suited  than the adversarial nature of litigation.

The Value of an Experienced Health Care Attorney as Mediator

While any skilled mediator can facilitate a productive negotiation, health care disputes present unique complexities that make the selection of the mediator critically important. Health care is one of the most heavily regulated industries in the country, and disputes unfold against a backdrop of the Stark Law, the Anti-Kickback Statute, HIPAA, Medicare conditions of participation, and state licensure rules. A mediator who is also a seasoned health care attorney understands these regulatory guardrails and can help parties craft solutions that resolve their conflict while remaining compliant with the law. A generalist mediator may inadvertently facilitate an agreement that creates regulatory exposure down the road.

An experienced health care attorney also brings familiarity with the business structures common in the industry— partnership agreements, management services agreements, joint ventures for surgical centers, and hospital physician alignment models. A mediator who has spent years advising on these arrangements can quickly grasp the substance of the dispute, ask the right questions, and keep the parties focused on what truly matters. This substantive fluency accelerates the process and reduces the time spent educating the mediator on industry basics. Moreover, a health care attorney can help the parties think beyond the immediate dispute to broader strategic considerations such as credentialing, payer contracts, referral networks, and succession planning, guiding them toward durable solutions that account for their future needs.

Preserving Professional Relationships

Physicians who share a practice, surgeons who operate at the same ambulatory surgical center, and hospital administrators who collaborate with medical staff must continue to work together long after a dispute is resolved. Litigation forces parties into opposing camps and often generates lasting animosity. Mediation encourages open communication and collaborative problem-solving, and because the parties themselves craft the resolution, they are far more likely to feel ownership over the outcome and to maintain a functional professional relationship going forward.

Confidentiality and Reputation Protection

Health care providers operate in a reputational environment where public disputes can have serious consequences. Court filings are generally public records, and even routine commercial disputes can raise questions about organizational stability. Mediation proceedings, by contrast, are confidential. Discussions are typically inadmissible in subsequent litigation, and settlement terms can be kept private, allowing parties to speak candidly and resolve their differences without public scrutiny.

Speed and Cost Efficiency

Litigation can take years to resolve, and for a physician practice or surgical center, the distraction can be as costly as the legal bills themselves. Mediation can often be scheduled within weeks and concluded in one or two sessions. The costs are a fraction of what litigation demands, and the time commitment is measured in days rather than years invaluable for organizations operating on tight margins.

Flexibility and Creative Solutions

Courts are limited in the remedies they can provide damages or injunctions that often fail to address underlying interests. Mediation allows parties to restructure governance arrangements, redesign compensation models, establish new protocols, or craft transitional arrangements that accommodate everyone’s legitimate interests. This flexibility is especially important in health care, where the operational realities of patient care require nuanced solutions tailored to the specific circumstances of the organization.

When to Consider Mediation

Mediation is most effective when parties have an ongoing relationship they wish to preserve, when confidentiality is important, and when the dispute involves interests beyond simple monetary claims. Health care leaders should consider incorporating mediation clauses into their operating agreements, partnership agreements, and service contracts—ideally specifying that the mediator be an attorney experienced in health care law. By agreeing in advance to mediate before resorting to litigation, parties establish a framework for constructive dispute resolution that reflects the collaborative values at the heart of health care delivery. The demands of modern health care leave little room for the prolonged disruption of courtroom battles, and mediation offers a path that honors both the business interests and the professional relationships that make health care organizations thrive.

If you have questions about these developments, please contact Marc S. Beckman (mbeckman@lippes.com), Bruce A. Smith (bsmith@lippes.com), or another one of our qualified Health Care Practice Team members at Lippes Mathias LLP.

2026 Syracuse Builders Exchange Awards

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Elizabeth Landry

Returning to the community for the first time in several years, the 2026 Syracuse Builders Exchange Awards mark an exciting time for the construction industry in Central New York. Previously called the Craftsmanship Awards, reinvigorating this opportunity to recognize the talent, hard work, and achievements that drive the construction community forward was a priority for the SBE.

“I felt it was important to bring it back,” said Mike Cowden, Vice President of Murnane Building Contractors, Inc., who played a key role in facilitating the recreation of the awards. “We have had several employees win an award over the years and I know it meant a lot to them and made their families proud to see them recognized…. The key component to me will always be the awards for the craftsmen and tradespeople who so seldom get the recognition they deserve.”

The redesigned awards event was well received by the SBE Association’s 1,100 member firms as there were many nominations to consider in most of the categories, including Project of the Year. The Awards Committee is comprised of Board members who have a passion for honoring those in the industry who exemplify the characteristics associated with excellence in their scope of work. Committee members deliberated, debated, and scored each nomination, ultimately selecting each category’s winners.

“The Committee is grateful to everyone who took the time to prepare and submit nominations and appreciates the commitment to showcasing the exceptional quality of craftsmanship represented throughout our region,” said Earl R. Hall, Executive Director of the Syracuse Builders Exchange. “The level of skill, dedication, and pride reflected in these projects made the selection process both exciting and challenging. It’s clear that our industry continues to set a high standard of excellence, innovation, and professionalism.”

Each year, the Syracuse Builders Exchange will host this traditional event as it is an important part of the fabric of the organization, its membership, and the industry. The SBE is pleased to share this year’s award winners, who represent excellent craftsmanship in each of their categories.

Interior/Exterior Finishes

  • Project: Hewitt Union Hall, SUNY Oswego, Oswego, NY
  • Award Winner: Mike Demm, Sherman Construction Inc.
  • General Contractor: Northland Associates, Inc., Liverpool, NY
  • AE Firm: Cannon Design, Buffalo, NY
  • Owner: New York State
  • Nominated by: Jeff Sherman, Sherman Construction Inc.

Jeff Sherman, President of Sherman Construction Inc., nominated Mike Demm, a union Carpenter Foreman with over 20 years of industry experience who’s worked for Sherman Construction for 10 years. Sherman said that Demm worked closely with Project Manager Tim Brann, managing the ordering of materials and specialties, of which this project had many. Demm organized crews daily and completed many specialty items during the project.

“I nominated Mike because of the stature of the building and all the intricate and unique designs,” said Sherman. “This was a 120,000-square-foot, three-story building in the middle of the SUNY Oswego campus. It’s a state-of-the-art academic broadcasting facility…. The area is surrounded by acoustical wood and acoustic panels, floating metal pan ceilings, skylights, and large observation windows where Mike and his team installed all the millwork picture-framing each large opening…. Every room had to be STC-rated because it’s a broadcasting facility. It was tested by a third party and ultimately every room passed inspection. This was truly a challenge to build and coordinate with other trades, and Mike made it look easy.”

Sherman also expressed how important the awards are for recognizing the talent and hard work of the men and women who build the intricate infrastructure the community uses every day.

“This award is a great way to celebrate these amazing craftsmen. I could not be happier for Mike and his team that transformed such a huge academic facility into a show piece in the center of a local university,” said Sherman.

Carpenter Nate Rice has worked for Murnane Building Contractors, Inc. for 15 years. He was nominated by Shawn Murphy for the outstanding work he completed during the construction of SUNY Cortland Cornish Van Hoesen, which was designed by JMZ Architects and Planners, P.C. Rice’s contributions during the construction of the award-winning project include delegating everyday tasks and communicating and planning with the subcontractors and the College faculty. When asked to select to a highlight of the project, he emphasized team collaboration.

“[A highlight was] watching the job come together step by step and working with the great team that made this job a success,” said Rice, who has been in the carpentry industry for 30 years.

Looking back on his decades-long career so far and receiving this recognition for a job well done, Rice said, “Every day there is a new challenge, and it keeps me on my toes. I feel very blessed to be honored for doing a job that I love.”

Structural

  • Project: SUNY Cortland Cornish Van Hoesen, Cortland, NY
  • Award Winner: Nate Rice, Murnane Building Contractors, Inc.
  • General Contractor: Murnane Building Contractors, Inc., East Syracuse, NY
  • AE Firm: JMZ Architects and Planners, P.C.
  • Owner: State University Construction Fund
  • Nominated by: Shawn Murphy, Murnane Building Contractors, Inc.

Mechanical

  • Project: Centrio Syracuse University Chilled Water Plant Modernization, Syracuse, NY
  • Award Winner: Andrew Gauthier, BOND Building Construction Inc.
  • General Contractor: BOND Building Construction Inc., Medford, MA
  • AE Firm: CHA Consulting, Inc.
  • Owner: Syracuse University
  • Nominated by: Jesse Conklin, BOND Building Construction Inc.

Leading a career in the construction industry since 2010, Andrew Gauthier is a Senior Project Manager who’s worked for BOND Building Construction since 2023. He was nominated by Jesse Conklin for the work he completed on the modernization of the Centrio Syracuse University Chilled Water Plant. Including a 15,000-square-foot addition, renovation to the existing structure, replacement of the two existing steam-driven chillers with five new 2,500-ton electric chillers, and a new 38kV electrical substation, the project sought to modernize aging infrastructure while providing additional resiliency, adding redundancy, and lowering emissions to its 270-acre main campus, which serves more than 22,000 students.

“As the project manager, it’s my responsibility to manage all aspects of the project inclusive but not limited to: safety, client satisfaction, contracts, change management, document control, schedule, budget, equipment deliveries, building/ROW permitting and team growth,” said Gauthier, adding that a highlight of the project was the milestone when all the new equipment was installed and being able to tackle the final mechanical and electrical connections prior to fill, flush, and start-ups.

Rather than viewing the project as just an industrial building, to Gauthier it’s “the epicenter that drives energy to the hospitals and university keeping the building systems on, so that all of the tremendously hard-working people that choose to live, work, learn and stay within those places have the environments they need to do the great work and healing that they set out to do.”

Reflecting on this achievement, Gauthier said it’s humbling and has allowed him to think of the many members of the BOND Building team who worked alongside him “We’re truly honored to be recognized for such an achievement,” he said.

Carpenter/Superintendent Brad Mierke has worked for Murnane Building Contractors, Inc. for 30 years, but he’s been in the construction industry for 37 years. He was nominated by Murnane Building Contractors Vice President Mike Cowden for the work he completed during the construction of SUNY Cortland Cornish Van Hoesen, which was designed by JMZ Architects and Planners, P.C. During the project, Mierke served as the Project Superintendent.

A major highlight Mierke recalled from the project was reaching substantial completion on schedule, and during his career he shared that he enjoys “seeing the end result of everyone’s hard work and knowing I played a part in it.”

Reflecting on winning this award from the Syracuse Builder’s Exchange, Mierke focused on how the success of the project resulted from a team effort. “I appreciate being recognized,” he said. “I had a lot of help from my Murnane co-workers and subcontractors.”

Supervision

  • Project: SUNY Cortland Cornish Van Hoesen, Cortland, NY
  • Award Winner: Brad Mierke, Murnane Building Contractors, Inc.
  • General Contractor: Murnane Building Contractors, Inc., East Syracuse, NY
  • AE Firm: JMZ Architects and Planners, P.C.
  • Owner: State University Construction Fund
  • Nominated by: Mike Cowden, Murnane Building Contractors, Inc.

Project of the Year

  • Project: TTM Technologies, East Syracuse, NY
  • Award Winner: John Murphy, Hueber-Breuer Construction Company, Inc.
  • General Contractor: Hueber-Breuer Construction Company, Inc., Syracuse, NY
  • AE Firm: QPK Design, LLP
  • Owner: TTM Technologies
  • Nominated by: Maggie Goss, Hueber-Breuer Construction Company, Inc.

Leading a career in the construction industry since 2010, Andrew Gauthier is a Senior Project Manager who’s worked for BOND Building Construction since 2023. He was nominated by Jesse Conklin for the work he completed on the modernization of the Centrio Syracuse University Chilled Water Plant. Including a 15,000-square-foot addition, renovation to the existing structure, replacement of the two existing steam-driven chillers with five new 2,500-ton electric chillers, and a new 38kV electrical substation, the project sought to modernize aging infrastructure while providing additional resiliency, adding redundancy, and lowering emissions to its 270-acre main campus, which serves more than 22,000 students.

“As the project manager, it’s my responsibility to manage all aspects of the project inclusive but not limited to: safety, client satisfaction, contracts, change management, document control, schedule, budget, equipment deliveries, building/ROW permitting and team growth,” said Gauthier, adding that a highlight of the project was the milestone when all the new equipment was installed and being able to tackle the final mechanical and electrical connections prior to fill, flush, and start-ups.

Rather than viewing the project as just an industrial building, to Gauthier it’s “the epicenter that drives energy to the hospitals and university keeping the building systems on, so that all of the tremendously hard-working people that choose to live, work, learn and stay within those places have the environments they need to do the great work and healing that they set out to do.”

Reflecting on this achievement, Gauthier said it’s humbling and has allowed him to think of the many members of the BOND Building team who worked alongside him “We’re truly honored to be recognized for such an achievement,” he said.

Andrew Gerardi has 25 years of experience in the plastering and stucco industry, and he’s worked for J&A Plastering & Stucco Contractors LLC for 20 years. His work on the STEAM School Renovations in Syracuse earned him this award nomination from Joseph DiBello. For Gerardi, the best part about his job is the connection to his family. “I love being able to follow in my father’s footsteps every day,” he shared.

During the project at the STEAM School, Gerardi and his team worked to restore the ornamental plaster in the school’s auditorium to its original beauty. Supporting the historical design of the space was a significant aspect of the job for Gerardi.

“The highlight was seeing the detail and craftsmanship that the original craftsmen did and then being able to recreate their original concept so that it still looks, today, the way they intended it to look,” he said.

When asked about how it feels to receive such recognition from the Syracuse Builder’s Exchange, Gerardi said, “It is an honor to win this award and be recognized by your peers for a project that we, as a team, were very proud of.”

Specialty/Other

  • Project: STEAM School Renovations, Syracuse, NY
  • Award Winner: Andrew Gerardi, J&A Plastering & Stucco Contractors LLC
  • General Contractor: Murnane Building Contractors, Inc., East Syracuse, NY
  • AE Firm: LaBella Associates, PC
  • Owner: County of Onondaga
  • Nominated by: Joseph DiBello, J&A Plastering & Stucco Contractors LLC

Electrical

  • Project: Bluefors Inc, Manufacturing, Warehouse and Office Expansion, Syracuse, NY
  • Award Winner: Brian Chmielewski, Demco New York Corp.
  • General Contractor: VIP Structures, Inc., Syracuse, NY
  • AE Firm: VIP Architectural Associates
  • Owner: Bluefors Inc
  • Nominated by: Jim Dalpe, VIP Structures, Inc.

Foreman Brian Chmielewski has been working in the electrical construction industry for about eight years and has been with Demco New York Corp. during that time. He was nominated by Jim Dalpe of VIP Structures, Inc. for the work he completed on the Bluefors Inc, Manufacturing, Warehouse and Office Expansion project. Working as the foreman overseeing day-to-day field operations, Chmielewski said his team was responsible for installing the electrical systems, including power distribution and lighting, while coordinating closely with other trades, which required a high level of organization and attention to detail to stay on schedule and ensure quality.

During the project, Chmielewski said, “the highlight was seeing the team come together to execute a complex project successfully. Everyone stayed focused and took pride in their work, and it showed in the final product.”

Chmielewski shared that what he enjoys most about his job is working with the crew, seeing the progress each day, problem-solving, and helping to develop the next group of electricians coming up in the trade by passing on his knowledge to team members.

When asked for his thoughts on being recognized with this award, he said, “It’s an honor. This recognition reflects not just the work we put into this project, but also the foundation built by the older generation of electricians who taught us the trade. I got to this point because of their knowledge and work ethic, and I try to carry that forward every day. I’m proud to be part of a team that continues that standard and delivers high-quality work.”

The Syracuse Builder’s Exchange is extremely proud of this year’s winners and looks forward to continuing the awards program in years to come. From mechanical to structural, finishes to electrical, supervision to specialty, and Project of the Year, it’s an honor for the SBE to provide a platform that recognizes the hard work, talent, and excellence in craftsmanship displayed by the construction industry within our community.

It’s not too early to begin thinking about the 2027 SBE Awards – keep an eye out for top talent at your current and future jobsites and make sure to take photos of the progress along the way. The SBE is excited to recognize another group of amazing craftsmen and hopes to receive even more nominations next year.

Email Scams and Getting Paid

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By: Chandler Barganier, Law Clerk, Sheats & Bailey, PLLC.

The construction industry is an especially attractive target for email scams and wire fraud. A frequent pattern we’ve seen among clients is subcontractors will issue an invoice, followed by a delay in payment. After 90 days pass, the subcontractor demands payment, only for the contractor to discover that payment was made, but not to whom they had intended. In these situations, hackers manage to impersonate general contractors and vendors and provide fraudulent wiring instructions resulting in payments being misdirected into unauthorized accounts. Another common scheme we have run into recently is business email compromise schemes that use phishing tactics where a third party sends an email that looks like it is from the subcontractor changing how they want to receive payment on the invoice and directing payment via ACH transfer to a fraudulent account.

These wire fraud and ACH scams can result in losses reaching hundreds of thousands of dollars. Especially, as existing laws fail to adequately protect contractors from wire fraud and ACH scams. While Federal law defines wire fraud broadly under 18 U.S.C. §1343, this statute only provides a mechanism for criminal enforcement, it does little to resolve the civil consequences faced by victims in contractual disputes. UCC article 4A protects the banks not the victims of wire fraud and UCC article 3 applies to physical checks, not wire and ACH transfers.

While physical checks remain the safest method of payment because they may be cancelled and refunded by banks if deposited into unauthorized accounts, wire transfers are common practice for most businesses. They’re instantaneous, electronic, and simply more convenient. However, it’s this convenience that makes wire transfers so susceptible to fraud. As Banks are not responsible for customer-initiated wire transfers in the same way they would be for physical checks. Further, scammers can immediately move stolen funds into offshore accounts which places them outside U.S. jurisdiction and leaves victims without recourse. Despite this, in most wire fraud situations contract parties are still obligated to fulfill their financial obligations despite being victims of these schemes. 

Unfortunately, parties who fall victim to wire fraud usually are not excused from their contractual obligations. Under New York law, the doctrine of impossibility, a common law defense, is narrowly applied and does not relieve contracting parties from liability merely because performance has become financially burdensome or even “impossible.” This principle is further illustrated in Sassower v. Blumenfeld, where the defendant, having lost funds in a fraudulent wire scheme, argued that his inability to repay a deposit should be excused because it would be impossible for him to perform his contractual obligations.[1] The court rejected this defense, emphasizing the fundamental principle that once a party to a contract has made a promise, that party must perform or respond to damages for its failure, even when unforeseen circumstances make performance burdensome.

Given these legal realities, it’s suggested that to protect your business from the threat of wire fraud and ACH scams you include contract and subcontract clauses that a) explicitly state how payment is to be made; b) identifies who may make changes to the payment method; and c) puts a verification system in place for confirming the changes were made by the other party, such   as requiring a phone call to the individual authorized to make payment changes via a trusted known phone number.  All staff should be trained in this and understand procedures put in place. Further, obtaining cyber liability insurance is recommended to best protect your business.

If you need further assistance or have additional questions, please contact Sheats & Bailey, PLLC.  www.TheConstructionlaw.com; Tel. 315-676-7314.

The information provided above is not intended to serve as specific legal advice for any particular situation.  Competent legal and experienced counsel should be consulted.

[1] Sassower v. Blumenfeld, 878 NYS2d (2009)