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Health Law Highlights

Wade’s Health Law Highlights for October 7, 2025

Alternative Medicine

  • Texas Medical Board now requires physicians to obtain structured consent before providing complementary and alternative medicine therapies. Effective January 2025, the rules apply to any non-conventional treatment including peptides, stem cells, and exosomes, regardless of FDA approval status. Physicians must use an unmodified TMB consent form that covers assessment requirements such as medical history, physical exams, and discussion of conventional treatment options. The disclosure process requires documentation of treatment objectives, risks and benefits, regulatory status of substances used, and plans for periodic review of patient progress. The executed form must become part of the patient’s medical record and cannot be customized beyond translation or supplemental pages. Source: Healthcare Empowered

Devices & Wearables

  • Patients are managing their own healthcare through direct-to-consumer tests, wearable devices, and AI chatbots due to doctor shortages and long appointment wait times. Companies like Quest Diagnostics now offer more than 150 direct-to-consumer lab tests ranging from $29 complete blood counts to $385 comprehensive health profiles analyzing over 75 markers. Two-thirds of adults use smartphone apps to track health information, while new devices can monitor heart rhythm for $79-$129, screen for sleep apnea, and measure blood pressure without cuffs. Patients and caregivers are turning to ChatGPT and other AI chatbots to diagnose symptoms, manage chronic diseases, and research treatments for serious conditions. Harvard Medical School professor Dr. Tom Delbanco notes that evidence shows patient involvement in their own care leads to better outcomes, though the trend carries risks including reliance on information not reviewed by clinicians and data privacy concerns. Source: WSJ

Emerging Tech

Fraud & Abuse

  • The OIG identified billing practices that warrant scrutiny in Medicare’s remote patient monitoring program after payments reached $536 million in 2024. The August 25, 2025 report found Medicare payments for RPM services increased 31% from 2023, with nearly one million Medicare enrollees receiving services from approximately 4,600 medical practices. The OIG flagged concerning billing patterns including 45 practices billing for patients with no prior medical relationship, 52 practices billing for patients who never received treatment management, and instances of multiple practices billing the same enrollees or providers billing for multiple devices per patient monthly. The findings follow previous fraud alerts and precede an upcoming 2026 audit of Medicare Part B RPM services announced in December 2024. Healthcare providers face increased scrutiny and audit risk as the OIG calls for CMS to implement safeguards to monitor these billing patterns. Source: The FCA Insider

HIPAA

  • Texas enacted SB 1188 to regulate electronic health records and artificial intelligence use in healthcare. The law, which took effect September 1, 2025, requires all EHRs containing Texas patient data to be physically stored in the United States beginning January 1, 2026. SB 1188 applies to healthcare entities, third-party vendors, cloud service providers, and subcontractors that manage or store EHRs. The legislation mandates disclosure when AI is used for diagnostic purposes, requires EHR systems to include dedicated fields for biological sex at birth, and prohibits collection of patient credit scores or voter registration data. The law authorizes civil penalties against entities that violate its requirements. Source: Buchalter
  • Cadia Healthcare Facilities paid $182,000 to settle HIPAA violations after posting patient success stories without proper authorization on their websites and social media. The Department of Health and Human Services Office for Civil Rights investigated the five Delaware nursing homes following a complaint that the chain disclosed patient names, photographs, and health information without valid written HIPAA authorization. The investigation revealed that Cadia disclosed protected health information for 150 patients across its websites, despite having policies requiring written consent forms. Under the settlement agreement, Cadia must implement a two-year corrective action plan monitored by OCR, provide workforce training on HIPAA policies, and notify all affected individuals of the potential breach. The company apologized and stated it had enhanced its privacy policies and increased employee training. Source: McKnight’s Senior Living

Marketing

  • Texas defends its text marketing law by arguing it targets spam messages rather than consent-based business communications. Texas Senate Bill 140, signed by Governor Greg Abbott on June 20, 2025, and effective September 1, 2025, requires businesses using text message telemarketing to register with the secretary of state, pay a $200 fee, post a $10,000 security bond, and submit quarterly reports. The state filed a brief opposing a preliminary injunction request from plaintiffs including an industry association and two e-commerce companies who challenged the law in federal court. Texas argued the law excludes transmissions that mobile customers have agreed to receive and focuses on stopping deceptive solicitations without permission. The law includes a “customer” exemption for businesses that have operated under the same name for at least two years when soliciting current or former customers. Source: The National Law Review

Medicare Advantage

Mergers & Acquisitions

  • The FTC moved to block private equity firm GTCR’s $627 million acquisition of medical device company Surmodics in the Trump administration’s first merger challenge. The FTC alleges the merger would combine the two largest providers of hydrophilic coatings used in medical devices, resulting in a market share exceeding 50% and concentration levels that surpass antitrust guidelines. The Commission voted unanimously in March 2025 to file suit, arguing the transaction would eliminate competition between direct competitors in a market with high entry barriers. The case signals a shift from the Biden administration’s focus on private equity transactions to more traditional antitrust theories centered on market concentration and competitive harm. Healthcare transactions remain a priority for antitrust enforcers regardless of political administration, reflecting the industry’s impact on patients and the economy. Source: Jones Day
  • Healthcare transaction due diligence requires a fundamentally different approach than other industries due to regulatory complexity and constant change. Healthcare deals face challenges including regulatory exposure, reimbursement risk, compliance pitfalls, and cybersecurity threats, with oversight from CMS, DOH, OIG, HIPAA and commercial payer policies making compliance more difficult than most industries. Coding and billing errors can trigger claim denials, payment delays, reduced payments, and legal exposure, while annual updates to CPT and ICD codes mean rules change constantly. Historical performance fails to predict future results because reimbursement models, regulatory frameworks, and care delivery models remain in flux, forcing investors to develop forward-looking approaches that assess how policy changes will reshape revenue models. Technology tools like analytics platforms now enhance due diligence by providing targeted sampling and audit insights, while collaboration between finance and coding teams delivers a complete view of risks and opportunities rather than isolated findings. Source: VMG Health

Patient Safety

  • Florida will require Level 2 background screenings for nearly all healthcare practitioners starting July 1, 2025, under House Bill 975. The law expands fingerprint-based criminal history checks from a select group of healthcare professions to include dentists, pharmacists, therapists, social workers, and dozens of other licensed practitioners. New applicants must complete the screening before licensure, while current practitioners must undergo screening at their first renewal on or after the effective date. The law also expands the list of criminal offenses that can disqualify someone from holding a healthcare license, including abuse, fraud, and certain felonies. Practitioners who fail to complete the screening cannot have their licenses renewed, which immediately revokes their authority to practice in Florida. Source: Health Care Law Matters

Pharmaceuticals

  • The Trump Administration plans to impose tariffs on pharmaceutical imports, ending decades of duty-free trade for the industry. The administration is conducting a Section 232 investigation into pharmaceutical imports’ impact on national security, with President Trump and key officials expressing intent to introduce tariffs in the near future. Companies must review supply agreements to identify which entity serves as importer of record, as this entity bears legal responsibility for paying tariffs on U.S. imports. Pharmaceutical companies can potentially reduce tariff exposure through the “first sale” rule, which allows dutiable value to be based on the price between manufacturer and intermediary rather than the subsequent sale to the U.S. importer. Companies should also evaluate tariff-free exemptions for products used in research and development activities and consider modifications to supply chains involving chemical compounds and bulk drug substances. Source: Jones Day

Telehealth

  • Medicare telehealth flexibilities expired for the first time since the COVID-19 pandemic, ending nearly five years of extensions and forcing coverage to revert to pre-pandemic rules. Under the restored regulations, most Medicare beneficiaries can no longer receive telehealth services from home and must instead visit specific sites such as provider offices, hospitals, or skilled nursing facilities located in rural professional shortage areas outside metropolitan statistical areas. The changes also reinstate restrictions on which practitioners can provide telehealth services and limit audio-only telehealth to certain circumstances. The Centers for Medicare and Medicaid Services advised providers through an October 1 newsletter to consider sending Advance Beneficiary Notices of Noncoverage to Medicare patients continuing telehealth care and directed Medicare Administrative Contractors to hold claims for 10 days. Healthcare providers must now reassess their telehealth operations to comply with the pre-pandemic requirements while the industry awaits potential Congressional action. Source: BakerHostetler
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Consent Requirements for Complementary and Alternative Medicine

Effective January 2025, the Texas Medical Board (TMB) adopted new Complementary and Alternative Medicine (CAM) standards that require physicians to use a specific disclosure and consent process before providing any CAM therapy. These rules apply broadly to any non-conventional treatment—whether or not it is FDA-approved—including popular offerings such as peptides, stem cells, and exosomes.

What counts as CAM under the new rules

Under Rule §171.1, the TMB defines:

  • Alternative medicine as methods of diagnosis or treatment that are not generally considered conventional and may or may not be regulated by the FDA.
  • Complementary medicine as the use of conventional care together with some form of alternative therapy.

In short, if you are offering therapies outside standard conventional care—especially those not approved by the FDA—these standards apply.

The new required consent and disclosure form Rule §171.2 requires that, before any CAM drug, device, treatment, or intervention is provided, the physician and patient must review and execute the TMB’s Complementary and Alternative Medicine Treatment Disclosure and Consent form. Key parameters:

  • The fully executed form must be part of the patient’s medical record.
  • The form cannot be altered or customized (other than translating it or adding supplemental pages as necessary).
  • Physicians must continue to comply with all applicable statutes.

What must be covered with the patient

The mandated form (22 TAC §171.2(b)) lays out a structured, line-by-line process—each section is initialed by physician and patient, with “N/A” allowed only when truly inapplicable. Among the required elements:

Assessment

  • A description of conventional and non-conventional diagnostic methods.
  • A completed medical history and physical exam.
  • Discussion of conventional treatment options and referrals if needed.
  • Documentation of any prior conventional treatments and outcomes, including if the patient declined them.
  • An assessment of whether the CAM therapy could interfere with ongoing or recommended care.

Disclosure

  • Objectives and expected outcomes (e.g., functional improvement, pain relief, psychosocial benefits).
  • Risks and benefits of the proposed treatment.
  • The extent to which the treatment may interfere with other medical care.
  • A description of the proposed treatment’s therapeutic basis or mechanism of action, in plain language.
  • The regulatory status of any drug/supplement/remedy involved:
    • FDA-approved for human use,
    • Exempt from FDA preapproval under DSHEA (dietary supplements), or
    • A non-commercial pharmaceutical compound under clinical investigation standards.
  • A documented, individualized treatment plan incorporating history, prior records, exam findings, and the need for further testing, consults, referrals, or other modalities.
  • A favorable risk/benefit profile compared to other treatments for the same condition.
  • A reasonable expectation of a favorable outcome, including preventive benefits.
  • An expectation of greater benefit than no treatment.
  • Plans for periodic review at reasonable intervals, based on the patient’s progress and any new information about the condition, to confirm treatment objectives are being met.

The form also emphasizes that consent is voluntary; patients should not feel pressured and may withdraw consent at any time. Importantly, physicians must keep accurate, complete records, including discussions about off-label use or CAM.

Why this matters—for patients and physicians

  • Transparency and trust: Patients deserve to know when a therapy is unconventional, not FDA-approved, investigational, or a dietary supplement, and how that status affects safety and efficacy claims.
  • Safety and coordination: Many CAM therapies can interact with other treatments. The required assessment and interference review help ensure care is coordinated and harm is minimized.
  • Shared decision-making: Clear objectives, risks, benefits, and mechanisms—explained in plain language—support informed choices aligned with patient goals and values.
  • Quality and accountability: A tailored treatment plan, periodic reassessment, and documentation of conventional alternatives help maintain clinical rigor.
  • Regulatory compliance and risk management: Using the TMB’s unmodified form and preserving it in the medical record reduces legal risk and demonstrates adherence to state standards.

Practical steps for clinics

  • Update intake and consent workflows to include the TMB CAM Consent before any CAM therapy is initiated.
  • Train clinicians and staff to review each required element, ensure patient comprehension, and document all discussions.
  • Build templates for supplemental pages (e.g., treatment-specific risks/benefits, literature summaries, monitoring schedules).
  • Standardize how you disclose FDA/DSHEA/compounding status for treatments like peptides, stem cells, and exosomes.
  • Schedule periodic reviews and track outcomes to meet the rule’s reassessment requirement.
  • Ensure your EHR stores the fully executed form and related notes in a consistent, auditable location.

Bottom line

Texas now requires a standardized, thorough disclosure and consent for all CAM therapies. For practices offering non-FDA-approved options such as peptides, stem cells, or exosomes, compliance isn’t just a regulatory checkbox—it’s good medicine.

By setting clear expectations, coordinating care, evaluating risk/benefit, and documenting shared decision-making, physicians can protect patients and themselves while preserving access to innovative therapies.

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Health Law Highlights

Wade’s Health Law Highlights for September 30, 2025

Artificial Intelligence

  • Shadow AI tools used without IT oversight create security risks that cost healthcare organizations $200,000 more per data breach than sanctioned AI incidents. IBM’s 2025 Cost of a Data Breach report found that 20% of organizations across all sectors suffered breaches due to shadow AI incidents, compared to 13% for sanctioned AI tools. A 2025 survey revealed that 86% of healthcare IT executives reported shadow IT instances in their health systems, up from 81% in 2024. Shadow AI displaced security skills shortage as one of the top three factors contributing to breach costs, with personally identifiable information being the most compromised data type and intellectual property compromised in 40% of shadow AI incidents. More than 60% of organizations lack governance policies to manage AI or detect unauthorized AI use, according to IBM research. Source: TechTarget

Fraud & Abuse

Hospice

HIPAA

  • A federal court vacated reproductive health care provisions of the 2024 HIPAA Privacy Rule while preserving substance use disorder protections. On June 18, 2025, in Purl v. HHS, a federal district court eliminated requirements for group health plans to update policies and Privacy Notices for reproductive health care information protections. The court preserved regulations at 42 CFR part 2 that require group health plans to implement protections for substance use disorder (SUD) records by February 16, 2026. SUD records include patient identity, diagnosis, prognosis, or treatment information maintained in connection with substance use disorder programs conducted or assisted by any U.S. government department. Group health plans cannot disclose SUD records in legal proceedings without written consent or court order, and must update Privacy Notices and distribute them to all participants by the February deadline. Source: Spencer Fane

Marketing

  • Texas Senate Bill 140 requires companies sending text messages to or from Texas to comply with telemarketing regulations starting September 1, 2025. The law redefines “telephone solicitation” to include text and multimedia messages, requiring companies to register with the Secretary of State and post a $10,000 bond. Text messages can only be sent between 9 am and 9 pm Monday through Saturday and between noon and 9 pm on Sundays in Central time, with fines reaching thousands of dollars per message for violations. The legislation strengthens consumer enforcement rights under the Texas Deceptive Trade Practices Act and allows consumers to bring multiple lawsuits for continuing violations. The changes come as the US Supreme Court’s June 2025 McLaughlin decision created uncertainty about federal Telephone Consumer Protection Act rules, making state laws more important in regulating text marketing campaigns. Source: Foster Garvey PC

Medicare

Medicaid

  • Texas overpaid $10.5 million to hospices due to lack of oversight policies during fiscal years 2020 through 2022. The Office of Inspector General found that 174 hospices, representing 36 percent of hospices that received payments, were overpaid because Texas had no policies and procedures for calculating and collecting hospice cap overpayments. Of the total overpayments, $6.9 million represents the Federal share that should have been returned to the Federal Government. The OIG recommends that Texas collect the $10.5 million in overpayments and refund the Federal share, and also develop policies and procedures for future cap overpayment calculations. Texas agreed with the second recommendation but did not indicate concurrence or nonconcurrence with the first recommendation. Source: Office of Inspector General

Mergers & Acquisitions

Non-Competes

Pharmacies

  • Four Texas pharmacy professionals received prison sentences for operating a pill mill that distributed over half a million opioid pills. Arthur Billings, 61, the owner of Health Fit Pharmacy in Houston, was sentenced to 12 years in prison and ordered to forfeit $2.6 million for his role in the conspiracy. Three pharmacists who worked at the facility received sentences ranging from 20 months to six years in prison, with forfeiture orders between $5,000 and $68,931. The cash-only pharmacy dispensed hydrocodone and oxycodone to individuals posing as patients for drug traffickers, using fraudulent prescriptions issued under stolen physician identities. The operation continued despite repeated warnings from the Texas State Board of Pharmacy, the Texas Department of Public Safety, and the Drug Enforcement Administration. Source: U.S. Department of Justice

Private Equity

Website Tracking

  • Four federal courts delivered mixed rulings in August on Electronic Communications Privacy Act claims against healthcare companies using website tracking technologies like Meta Pixel and Google Analytics. The decisions reveal a split among courts on invoking ECPA’s “crime-tort exception,” with Illinois courts producing contradictory outcomes—some allowing claims to proceed where plaintiffs alleged transmission of protected health information to third parties, while others dismissed cases for lack of specificity about what information was disclosed. A Washington court permitted an addiction treatment case to advance, finding that results from an online addiction survey coupled with appointment requests constituted protected health information. Courts emphasized that successful ECPA claims require plaintiffs to provide details about what health information was disclosed and how it relates to individual health status, rather than general assertions about website usage. The rulings demonstrate that the outcome of these cases depends on the specifics of alleged HIPAA violations and whether tracking data can identify individuals and relate to their health conditions. Source: Byte Back
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Health Law Highlights

Wade’s Health Law Highlights for September 23, 2025

Advertising

  • The FDA announced a crackdown on direct-to-consumer pharmaceutical advertising on September 9, following a presidential memorandum directing action against misleading advertising practices. The agency issued thousands of template letters to pharmaceutical companies warning them to remove misleading advertising and sent hundreds of cease-and-desist letters to companies violating advertising rules. FDA plans to increase enforcement actions from the current 10-20 untitled letters annually to hundreds per year, with focus on social media and digital advertising content. The agency targets violations of “fair balance” requirements between drug risks and benefits, with attention to how seniors access risk information and influencer posts that fail to follow regulations. FDA also intends to eliminate the “adequate provision” rule that currently allows drug manufacturers to avoid listing all safety risks in broadcast advertisements if they direct consumers to additional information sources. Source: Loeb & Loeb LLP

Cybersecurity

  • Healthcare organizations must understand cloud lifecycle management beyond initial migration to achieve cost optimization and security compliance. Healthcare systems have increased cloud adoption over the past five to seven years, with providers like Amazon Web Services offering compliance and security features that reduce concerns about hosting protected health information in the cloud. Organizations face challenges including stakeholder buy-in, security concerns around PHI, selecting appropriate cloud architecture, and maintaining HIPAA compliance throughout the cloud lifecycle. Cloud lifecycle management begins with planning and determining what to host in the cloud, followed by migration, operationalizing with a FinOps approach for financial responsibility, continuous workload optimization, and eventual decommissioning or modernization. Technology partners such as Mission Cloud Services can guide healthcare organizations through each stage of cloud lifecycle management, with cloud infrastructure serving as a foundation for accessing AI and machine learning tools. Source: HealthTech Magazine

Data Privacy

  • Texas mandates electronic health records must be stored within the United States starting January 1, 2026. Senate Bill 1188 requires all electronic health records under the control of covered entities to be physically maintained in the United States or U.S. territories, regardless of whether the records are stored by the covered entity or a third party. The law defines “covered entity” more broadly than HIPAA, encompassing nearly any entity that assembles, collects, analyzes, uses, evaluates, stores, or transmits protected health information, including healthcare providers, payors, schools, researchers, and business associates. Violations can result in civil penalties between $5,000 and $250,000, and regulatory agencies may revoke or suspend licenses, registrations, or certifications. The Texas Health and Human Services Commission and the Texas Attorney General are authorized to investigate and penalize non-compliance with the storage requirements. Source: Katten Muchin Rosenman LLP

Economics

  • Hospitals in economically disadvantaged areas adopt health information technologies at lower rates than those in affluent regions, according to a study of 16,646 hospital observations from 2018-2023. Hospitals in the most deprived areas were less likely to implement treatment-stage telehealth, postdischarge telehealth, electronic data query systems, and data availability functions compared to hospitals in the least deprived areas. The research found that hospital participation in accountable care organizations was associated with higher adoption rates across all technology types, with ACO-participating hospitals showing adoption probabilities 2-7 percentage points higher than non-participating facilities. Despite persistent gaps, health information technology adoption increased over time across all hospitals regardless of area deprivation level, with adoption rates rising from 2018 to 2023. Hospital characteristics including bed size, urban versus rural location, and ACO participation explained 60-104% of the observed disparities in technology adoption between advantaged and disadvantaged areas. Source: JAMA Health Forum

Fraud & Abuse

  • Healthcare whistleblowers now use AI algorithms to analyze public datasets and flag statistical anomalies that signal potential fraud. The Department of Justice recorded 979 qui tam actions in 2024, marking the second-highest number of False Claims Act cases in program history, with many initiated through mathematical outliers rather than insider tips. The Centers for Medicare & Medicaid Services pioneered this approach in 2011 with their Fraud Prevention System, which prevented or caught $820 million in inappropriate payments within three years by running predictive analytics on 100% of Medicare fee-for-service claims. Analysis of nearly 3,500 analytics-driven audits reveals an 18% error rate, roughly double what traditional probe audits detect, while traditional audits examine only 10 encounters per provider and miss over 90% of potential issues. Healthcare organizations can now use tools like VMG Health’s Compliance Risk Analyzer to identify the same billing patterns and anomalies before external investigators spot them. Source: VMG Health
  • The federal government made $162 billion in improper payments during fiscal year 2024, representing a $74 billion decrease from the $236 billion recorded in 2023. The decline occurred primarily due to the termination of pandemic-related programs, with the Department of Labor’s Pandemic Unemployment Assistance program alone accounting for a $44 billion reduction. Of the total improper payments, $135 billion (84%) were overpayments to recipients, while the remainder included underpayments, unknown payment errors, and procedural violations. Five programs concentrated 75% of all improper payments: Medicare, Medicaid, the Earned Income Tax Credit, SNAP, and the Restaurant Revitalization Fund. Since 2003, the federal government has made an estimated $2.8 trillion in improper payments across various programs and agencies. Source: U.S. GAO

IV Hydration

Litigation

  • Healthcare tech companies face mounting class action lawsuits that threaten investor confidence and stock stability. The sector has become a target for litigation due to digitization, data privacy concerns, and regulatory scrutiny, with UnitedHealth Group settling for $69 million in 2024 after accusations of prioritizing business relationships over 401(k) fund performance. Data breach lawsuits surged in 2024, with plaintiffs filing more cases than in any prior year, despite amendments to privacy laws that reduced per-scan damages. Companies that demonstrate transparency and strategic pivots during legal disputes recover faster than those with poor leadership, while servant and transformational leadership styles help mitigate risks through proactive compliance. Investors should monitor leadership actions such as cybersecurity spending increases as indicators of a company’s ability to manage legal challenges and maintain long-term stability. Source: AInvest

Medical Devices

  • The FDA has escalated enforcement against AI health apps by issuing warning letters to SeniorLife Technologies and Whoop for marketing diagnostic features without proper authorization. SeniorLife received an August 21, 2025 warning letter for its AI app that assesses mobility and cognitive health, predicts fall risk, and detects Alzheimer’s signs without premarket clearance, while also lacking basic quality system controls like complaint handling and employee training procedures. Whoop received a July 14, 2025 warning letter for its Blood Pressure Insights feature that estimates systolic and diastolic blood pressure, which FDA determined to be inherently diagnostic and tied to hypertension conditions. Both companies violated regulations by falsely claiming FDA approval in their marketing materials and failing to submit required 510(k) applications for their diagnostic software functions. The enforcement actions signal FDA’s position that AI-enabled health software performing diagnostic functions must undergo premarket review regardless of how companies frame the features as “wellness” tools. Source: Hogan Lovells
  • The Office of Inspector General approved physician ownership in a medical device company through Advisory Opinion 25-09 while maintaining scrutiny of such arrangements. The opinion involved an emergency stroke treatment device company where physician investors owned 35 percent of the company and could order or recommend the device to hospitals. OIG found no Federal Anti-Kickback Statute violation because the arrangement met all requirements of the small entity investment safe harbor, including keeping physician ownership under 40 percent and providing equal investment terms to all investors. Despite the approval, OIG reaffirmed that physician-owned medical device companies remain “inherently suspect” and warned that such arrangements can create incentives to overutilize services and distort clinical judgment. The opinion confirms that compliance pathways exist for physician investment in medical device companies when structures align with safe harbor requirements. Source: Orrick

Non-Competes

Qui Tam Actions

  • A federal judge rejected TriHealth’s constitutional challenge to the False Claims Act but certified the case for appeal to the Sixth Circuit Court. On July 28, 2025, U.S. District Judge Douglas Russell Cole stayed the False Claims Act lawsuit in United States of America et al. v. TriHealth Inc. et al. while the constitutional challenge proceeds. TriHealth argued that the FCA’s qui tam provisions violate the Constitution’s Article II Appointments and Take Care Clauses and that whistleblowers Thomas Murphy and Dr. Set Shahbabian lack standing under Article III. The court ruled that relators are not officers under the Appointments Clause and that the Executive Branch retains control over relator conduct, rejecting TriHealth’s constitutional arguments. This case represents the third federal court of appeals to examine the constitutionality of qui tam provisions, with legal experts predicting the issue will eventually reach the Supreme Court. Source: Whistleblowers Blog

Reimbursement

  • CMS is conducting more frequent and targeted RADV audits to increase oversight of risk adjustment programs. These audits pressure healthcare organizations and payers to ensure precise Hierarchical Condition Category (HCC) coding and documentation, as coding errors can trigger repayment demands and penalties. For payers, RADV audits validate risk-adjusted payments and can uncover financial discrepancies leading to recoupment of overpayments, while providers face repayment demands and penalties for documentation or coding errors. Organizations must implement internal controls, conduct regular coding validations, and invest in provider education to reduce audit exposure. Clinical documentation serves as evidence that validates diagnoses, requiring specificity, clarity, and completeness to avoid claims being flagged during audits. Source: VMG Health

Telehealth

  • Telehealth delivers financial benefits to healthcare organizations through increased revenue, reduced losses, and decreased operational costs. The technology helps prevent patient attrition by offering virtual visits and self-scheduling capabilities that meet consumer expectations for convenience and access. Healthcare organizations can avoid government penalties through remote physiological monitoring programs, with 2,499 hospitals facing Medicare readmission penalties averaging $208,000 per hospital in 2022. Telehealth reduces recruitment costs by improving clinician satisfaction and combating burnout, which decreases staff turnover rates. Organizations can also lower facility costs since telehealth work can be performed from clinicians’ homes, allowing multiple providers to share exam rooms and expanding geographic reach without additional physical space. Source: Telehealth.org
  • The telehealth obesity market has experienced explosive growth, reaching $57.75 billion in 2024 and projected to hit $392.89 billion by 2033 with a 24% compound annual growth rate. The U.S. telehealth weight-loss market saw a 300% year-over-year increase in patient consultations for GLP-1 prescriptions in 2025, with platforms like Noom and LifeMD bundling these medications with AI-driven coaching services. The FDA has issued over 100 warning letters to telehealth providers for promoting compounded GLP-1 drugs as equivalents to FDA-approved medications, creating opportunities for compliant companies like Weight Watchers (WW), which has attracted 87,000+ subscribers with its hybrid model combining FDA-approved medications and behavioral support. An estimated 40 million people will use GLP-1 medications by 2029, generating $126 billion in sales. Source: Ainvest
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Texas’s New IV Therapy Law: What Patients, Clinics, and Clinicians Need to Know

After a highly publicized death linked to an IV infusion at a Texas spa in 2023, state lawmakers moved to bring clearer rules and stronger oversight to IV services offered outside traditional medical settings. The result is House Bill 3749—formally “Jenifer’s Law”—signed by Governor Greg Abbott on June 20, 2025, and effective September 1, 2025. The law sets statewide standards for who may order and administer elective IV therapy in non-facility locations such as wellness spas, mobile IV services, and in-home settings. It also tightens how physician oversight must work when care is delegated. Here’s what the law says, why it matters, and how it will change everyday practice for patients and providers.

What the Law Covers: “Elective IV Therapy” Outside Traditional Settings

Jenifer’s Law creates a new chapter in the Texas Occupations Code devoted to “elective intravenous therapy.” The law defines this as IV treatment sought by a patient to relieve temporary discomfort or improve short-term wellness—think hydration drips, vitamin infusions, and similar services. The rules apply when the IV is provided outside of a physician’s office, a licensed health facility, a licensed mental hospital, or a state-operated hospital. In other words, the law targets non-facility locations that have fueled the growth of wellness-focused IV services.

Key Takeaway: If an IV service is offered at a spa, pop-up, mobile unit, hotel, workplace, or a client’s home, it is likely covered by the new rules.

Who Can Prescribe or Order Elective IV Therapy

Under the law, a physician is the center of care. Each elective IV session must be prescribed or ordered by a physician licensed in Texas, or delegated by a Texas physician to one of only two types of clinicians:

  • Physician assistants (PAs)
  • Advanced practice registered nurses (APRNs)

That delegation must occur under “adequate physician supervision” and via a prescriptive authority agreement between the physician and the PA or APRN.

Who Can Administer Elective IV Therapy

The law also narrows who may physically start and run the IV. A physician may delegate the act of administering elective IV therapy only to:

  • PAs
  • APRNs
  • Registered nurses (RNs)

Again, this must happen under adequate physician supervision.

What “Adequate Physician Supervision” Means in Practice

The statute uses the term “adequate physician supervision” without a highly technical definition. In practical terms, existing Texas standards and commentary make clear that:

  • Supervision must match the training and experience of the PA, APRN, or RN.
  • Physicians are expected to provide ongoing oversight, ensure protocols and emergency procedures are in place, and review care.
  • The supervising physician does not have to be physically present at all times, but must be continuously responsible for appropriate oversight.

Prescriptive Authority Agreements: Limits and Requirements

When a PA or APRN is delegated authority to prescribe or order elective IV therapy, a written prescriptive authority agreement with the physician is required. These agreements are a cornerstone of the new framework:

  • They must spell out practice locations, which drugs or devices may be used, how to consult and refer, how to handle emergencies, and how the team communicates.
  • They should include quality checks like chart reviews and periodic meetings.
  • They must be reviewed, signed, and dated annually by all parties.
  • They count toward the physician’s cap on prescriptive authority agreements—Texas generally limits a physician to seven PA/APRN agreements (combined or full-time equivalent). Importantly, the usual exception that sometimes allows exceeding that cap does not apply to elective IV therapy.
  • Agreements must be registered with the Texas Medical Board before the delegated clinician begins work.

What This Means for Medical Spas, IV Clinics, and Mobile Providers

The most immediate changes are operational:

  • Unlicensed staff may not start or administer IV drips in non-facility settings.
  • New patients need an order or prescription from a physician or a delegated PA/APRN working under a registered prescriptive authority agreement.
  • A supervising physician must be actively overseeing the care, with protocols for screening, emergencies, and communication.
  • Physicians are limited by the seven-agreement cap for PAs and APRNs engaged in elective IV therapy, which may affect staffing and growth plans.
  • Documentation should emphasize safety screening (medical history, contraindications, vital signs as appropriate) and demonstrate physician oversight.

Providers should prepare by:

  • Auditing staffing models to ensure only PAs, APRNs, or RNs administer IVs.
  • Updating intake, consent, and emergency procedures to reflect the elective nature of services and safety-focused screening.
  • Reviewing and registering prescriptive authority agreements, including updating them to specify drugs, protocols, and quality measures.
  • Training teams on escalation and emergency response, including when to call 911.
  • Monitoring guidance from the Texas Medical Board, which may clarify expectations around supervision and documentation.

Does the Law Loosen or Tighten the Industry?

There are two lenses on the law’s impact:

  • Tightening: The statute clearly limits who may order and administer elective IV therapy in non-facility settings and ties those actions to physician oversight and formal prescriptive agreements. That will prevent the unlicensed practice scenarios that contributed to the 2023 tragedy and will raise the bar on staffing, documentation, and supervision.
  • Potential flexibility: By explicitly framing these services as “elective,” some see a shift in emphasis from proving medical necessity to ensuring safety. In that view, the focus becomes careful screening for contraindications and clear consent rather than diagnosing and treating a specific medical condition. Some industry observers speculate this could support menu-style offerings, provided they are safe for the individual patient.

For now, providers should treat the law as a safety and oversight mandate and await any medical board guidance on how “elective” intersects with existing standards of care.

What Patients Can Expect

For consumers, the experience should feel more medical and more consistent:

  • You should be asked about your medical history, allergies, medications, and any conditions that could make IV therapy risky.
  • A physician will have ordered the therapy, either directly or through a PA/APRN working under a formal agreement.
  • A licensed clinician (PA, APRN, or RN) will start and manage your IV.
  • The site should have clear protocols and be prepared to respond to complications.

Bottom Line

Jenifer’s Law brings overdue clarity and safety standards to a fast-growing corner of wellness care. It ensures a physician is accountable for ordering elective IV therapy and supervising care, restricts who can administer IVs in non-facility settings to licensed clinicians, and requires formal, board-registered agreements when PAs and APRNs are involved in prescribing. Clinics will need to tighten protocols, adjust staffing, and document oversight. Patients should see better screening and more professionalized care.

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Health Law Highlights

Wade’s Health Law Highlights for September 16, 2025

OIG Advisory Opinion No. 25-10

  • The OIG issued a favorable advisory opinion for a grant-funded family-powered therapy arrangement. The Company’s mission is to provide care for individuals with a certain disorder, particularly for those individuals who lack adequate access to care. The therapy for the disorder is generally covered by insurance, including Medicare. The Company created a tax-exempt Foundation that awards monthly grants directly to families of children receiving this therapy from any provider, based on verified treatment hours, adherence, and financial need. The Foundation’s grant decisions are made under policies approved by an independent board and outside counsel, do not vary by provider choice, and require that a child already have a treatment plan in place; families may change providers and remain eligible. The OIG found low risk of overutilization or inappropriate steering because the Company’s donations are unrestricted, the Foundation operates autonomously, funds go to families (not providers), and eligibility is provider‑neutral and needs‑based. Source: OIG Advisory Opinion No. 25-10 (Sept. 8, 2025)

Antitrust

  • States are expanding antitrust oversight of healthcare transactions to target private equity and other for-profit entities in healthcare mergers and acquisitions. Washington and Colorado implemented premerger notification laws that went into effect on July 27 and August 6, 2025, while Indiana modified its transaction notice law and New Mexico enacted a permanent version of its notification law. Pennsylvania proposed H.B. 1460 to authorize the Attorney General to block healthcare transactions involving private equity companies that are “against the public interest,” while California’s A.B. 1415 would expand OHCA review requirements to include private equity companies, hedge funds, and management services organizations. Illinois introduced S.B. 1998 to require private equity and hedge funds to obtain Attorney General consent for financing healthcare transactions, and Massachusetts is considering multiple bills to strengthen its transaction review process, including requiring bonds from private equity groups and authorizing post-transaction reviews. Source: Healthcare Law Blog

Cybersecurity

  • The Department of Justice is using the False Claims Act to pursue cybersecurity violations by government contractors and healthcare companies. Two settlements demonstrate this expansion: a defense contractor and private equity firm paid $1.75 million for failing to implement NIST cybersecurity controls and control access to Controlled Unclassified Information between 2018-2020, while a biotechnology company paid $9.8 million for selling genomic sequencing systems with cybersecurity vulnerabilities to the federal government from 2016-2023. These cases mark the first FCA cybersecurity settlement involving healthcare Quality System Regulations and the first to include a private equity firm alongside a defense contractor. The DOJ launched its Civil Cyber-Fraud Initiative in 2021 and recently reformed the DOJ-HHS False Claims Act Working Group to focus on medical device investigations. FCA settlements exceeded $2.9 billion in fiscal year 2024, with per-claim penalties now exceeding $28,000. Source: Healthcare Law Blog

Data Blocking

Durable Medical Equipment

  • CMS has launched initiatives using artificial intelligence to combat fraud in the durable medical equipment industry. The agency created a competition to leverage AI and machine learning for detecting anomalies in Medicare claims data, targeting fee-for-service hospice, Part B and DME claims through a two-phase process. AI results from private payers have been mixed due to the nuances in DME claims. CMS is also implementing the Wasteful and Inappropriate Service Reduction (WISeR) model and promoting competitive bidding as fraud-reduction measures. Industry experts anticipate increased audits this year from Unified Program Integrity Contractors (UPIC), particularly targeting catheters, surgical dressings, supplies and respiratory claims. Source: HME News

Equity and Access

Food and Drug Administration

  • The FDA will now publish Complete Response Letters in real time through a centralized database, marking a shift in transparency for drug and biologic applications. The agency will post CRLs for pending New Drug Applications and Biologics License Applications shortly after transmission to sponsors, while also releasing historical letters from 2024 forward. The FDA has already published 89 archived CRLs and will continue releasing letters tied to withdrawn or abandoned applications. While confidential commercial information and trade secrets will be redacted, sponsor identities and high-level scientific and regulatory deficiencies will remain visible. The letters are searchable by product, sponsor, or therapeutic area through the openFDA database, creating new competitive intelligence opportunities and compliance challenges for pharmaceutical companies. Source: Orrick

Fraud & Abuse

  • A former laboratory CEO and nine healthcare professionals agreed to pay over $6 million to settle federal allegations of kickback schemes involving laboratory testing referrals. Christopher Grottenthaler, former CEO of True Health Diagnostics in Frisco, Texas, will pay $4.25 million to resolve claims he orchestrated kickbacks disguised as managed service organization distributions to induce doctors’ laboratory referrals to Medicare, Medicaid, and TRICARE from January 2015 to May 2018. Two physicians, Dr. Hong Davis and Dr. Elizabeth Seymour, along with seven marketers, agreed to pay an additional $1,818,462 for their participation in the scheme. The settlements are part of a broader Department of Justice effort that has recovered over $59 million in civil False Claims Act settlements for healthcare kickbacks disguised as MSO investment distributions, involving 50 physicians. The Anti-Kickback Statute prohibits offering or receiving remuneration to induce referrals of services covered by federal healthcare programs to ensure medical decisions are based on patient interests rather than financial incentives. Source: U.S. Department of Justice

Friendly PC Model

Medical Marijuana

  • Texas implemented an expanded medical marijuana program that adds chronic pain as a qualifying condition. The law signed by Gov. Greg Abbott also adds traumatic brain injury, Crohn’s disease, and other inflammatory bowel diseases to the list of qualifying conditions. A recent poll of 391 cannabis consumers found 91% believe cannabis treats chronic pain, with 65% calling it “very effective” and 26% “mildly effective.” The Department of Public Safety will issue 12 new dispensary licenses across Texas, expanding from the current three facilities, with the first nine licenses awarded December 1 from 139 applicants who applied in 2023. Federal data shows at least two million Texans use cannabis regularly. Source: Marijuana Moment

Management Services Organizations

  • Physicians entering Management Services Organization arrangements face risks that require documentation and negotiation to protect their interests. MSOs handle administrative functions like billing and compliance while allowing physicians to focus on clinical work, but disputes can emerge when these arrangements involve private equity or joint ventures. Physicians must document all compensation terms including salary, bonuses, equity rights, and expense reimbursements across multiple agreements, as verbal agreements prove difficult to enforce. Termination provisions require attention to prevent physicians from being removed without recourse, including restrictions on no-cause termination and clear definitions of termination “for cause” with cure periods. All agreements must preserve physician autonomy over medical decisions and comply with healthcare fraud and abuse laws. Source: Stevens & Lee

Medicaid

  • CMS has issued new federal payment limits for State Directed Payments in Medicaid managed care to combat fraud and preserve program integrity. The guidance implements requirements from the One Big Beautiful Bill Act, limiting SDPs for hospital and nursing facility services to 100% of Medicare rates in Medicaid expansion states and 110% in non-expansion states, effective July 4, 2025. States can qualify for a grandfathering period until January 1, 2028, for certain SDPs submitted before the deadline, followed by a phased reduction to meet the new limits. The restrictions come as SDP usage has exploded from just 2 states in 2016 to 39 states today, with CMS projecting annual spending of $124.3 billion for FY 2025 and $144.6 billion for FY 2026. States must now revise pending SDP submissions to comply with Section 71116 requirements before CMS will continue review. Source: CMS Guidance

Non-Competes

  • Healthcare employers must carefully review non-compete provisions in employment contracts as state laws vary and have recently changed. Ericka Adler, shareholder at Roetzel & Andress, advises that enforceable non-competes require three factors to be reasonable: geography should match patient location (such as 3 miles if patients come from within 3 miles), scope should limit restrictions to the employee’s role or practice functions, and duration should typically range from one to two years. Some states require notice language allowing employees to consult counsel before signing, while many states mandate consideration for non-compete agreements. Employees commonly request carve-outs that void non-competes if terminated without cause or if the employer breaches the contract. When violations occur, employers can send cease and desist letters to the employee and their new employer, along with pursuing other legal remedies to protect their practice. Source: Roetzel & Andress

Pharmaceuticals

  • The FTC and DOJ concluded three listening sessions on pharmaceutical competition as part of an effort to lower drug prices. The sessions featured panels of legal experts, patient advocates, academics, Congressional staffers, and industry representatives who discussed generic and biosimilar competition, patent issues, regulatory barriers, and pharmacy benefit managers. Panelists debated whether pharmaceutical companies misuse patents to prevent generic competition through practices like pay-for-delay agreements, patent thickets, and product-hopping, with some arguing the patent system drives innovation while others claimed it creates barriers. Key recommendations included implementing generics-first policies across federal programs, increasing transparency in pharmaceutical supply chains, and eliminating separate interchangeability designations for biosimilars. FTC Chair Andrew Ferguson stated the information will feed into a final report with recommendations to guide legislation and regulatory reform for prescription drug access. Source: Hogan Lovells

Physician Compensation

  • Hospitals face mounting financial pressures as Medicare cuts physician reimbursement while provider costs rise and workforce shortages intensify. The Centers for Medicare & Medicaid Services cut the Medicare conversion factor by 2.8% in 2025 to $32.35, marking the fifth consecutive year of reductions and bringing total cuts to over 10% since 2020. Meanwhile, 20% of practicing physicians are age 65 or older and another 22% are between 55-64, creating a projected shortage of up to 86,000 physicians by 2036. Hospital salary costs have risen 5% annually from 2018 through 2022, while 63% of medical groups planned to add advanced practice provider roles in 2024 to maintain coverage. Health systems are responding with recruitment incentives including relocation allowances (55% of positions), signing bonuses (51%), and loan forgiveness (17%), while anesthesia and radiology groups are seeking subsidies that sometimes double current agreements. Source: VMG Health

Remote Monitoring

  • The Department of Health and Human Services Office of Inspector General issued a report calling for increased oversight of remote patient monitoring Medicare billing due to concerns about fraud and abuse. Medicare payments for RPM services reached $536 million in 2024, representing a 31% increase from 2023, with nearly one million Medicare beneficiaries receiving these services. The OIG identified concerning billing patterns, including 45 medical practices that billed RPM services for patients with whom they had no prior medical relationship for over 80% of cases, and some practices billing for over 100 new enrollees monthly compared to an average of five. The report recommended that the Centers for Medicare and Medicaid Services and Medicare Advantage Organizations monitor practices that bill without established patient relationships, track treatment management billing rates, and watch for duplicate services across multiple providers. The OIG also flagged practices billing for multiple monitoring devices per patient per month when Medicare generally covers only one device monthly. Source: Health Law Diagnosis

Synthetic Data

  • Synthetic data represents algorithm-generated information that mimics real-world data while preserving privacy, and government adoption is expected to accelerate despite current resistance. This artificial data retains the statistical properties of original datasets and has been used since the early 1990s in applications ranging from census research to traffic management, with companies like Replica raising $52 million to develop these technologies. While 32 percent of government decision-makers worldwide refuse to consider synthetic data compared to 23 percent in other industries, Utah has emerged as a leader by incorporating synthetic data definitions into its Consumer Privacy Act and having officials advocate for its adoption. The U.S. Census Bureau controversially used synthetic data in the 2020 census to protect individual privacy while analyzing income and poverty trends, though critics worried about errors and manipulation. A noted research firm predicts that 75 percent of businesses will use generative AI to create synthetic data by 2026, with potential government applications including school performance analysis, agricultural research, and smart city management. Source: Government Technology

Wound Care

  • Home health agencies are transforming wound care practices as payment models shift from volume-based to outcomes-based reimbursement under value-based purchasing programs. The transition requires providers to move from frequent dressing changes to longer wear-time products that optimize healing while reducing care burden on clinicians and caregivers. Accountable care organizations now demand streamlined, evidence-based product formularies that homecare agencies must adopt to remain partners in coordinated care networks. Under CMS’s Patient Driven Groupings Model, wound care represents one of the highest-paying clinical categories, but only when documentation supports medical necessity and skilled intervention. The model places homecare agencies under pressure to demonstrate outcomes through data reporting while managing a 7.4% annual growth rate and widespread caregiver shortages affecting 59% of agencies. Source: Homecare Magazine
Categories
Health Law Highlights

Wade’s Health Law Highlights for September 2, 2025

Antitrust

  • Hospital associations challenge new merger notification rules as burdensome and unnecessary. The Federal Trade Commission under Lina Khan adopted changes to Hart-Scott-Rodino premerger notification requirements that took effect February 10, 2025, increasing information volume and preparation time by four times. On August 8, 2025, the American Hospital Association and Federation of American Hospitals filed an amicus brief supporting business groups’ lawsuit seeking injunctive relief against the changes. The hospital associations argued the FTC failed to identify any anticompetitive hospital merger that went undetected under prior reporting requirements. They contended the rule changes function as a tax on hospitals and aim to discourage mergers in an industry facing economic pressures. Source: Epstein Becker Green
  • The Trump administration’s antitrust regulators maintain focus on healthcare competition but reject the Biden era’s emphasis on private equity and corporate greed in favor of targeting regulatory barriers to market entry. The Federal Trade Commission and Department of Justice demonstrate willingness to approve mergers through consent decrees involving divestitures, as seen in the UnitedHealth Group-Amedisys deal that required selling 164 home health and hospice locations. The FTC issued a Second Request to examine Aya Healthcare’s $615 million acquisition of Cross Country Healthcare over concerns about self-preferencing in travel nurse staffing services. The DOJ launched an investigation into NewYork-Presbyterian’s contracting practices following union complaints about anti-steering provisions that prevent insurers from excluding the health system from their networks. The FTC released findings showing that 38% of physicians belonged to practices affected by mergers between 2015 and 2020, representing consolidation across approximately 2,000 transactions. Source: Goodwin

Data Privacy & Cybersecurity

  • The Office for Civil Rights published two new HIPAA Privacy Rule FAQs on August 11, 2025, clarifying PHI disclosure rules and patient access rights. The first FAQ permits healthcare providers to disclose protected health information to value-based care arrangements for treatment purposes without individual authorization, supporting payment models that tie compensation to patient outcomes. The second FAQ confirms that treatment consent forms fall within designated record sets that patients can access, removing ambiguity about these documents. The guidance aligns with the Centers for Medicare & Medicaid Services’ July 30, 2025, announcement of its Health Tech Ecosystem initiative, which over 60 organizations including Epic, Oracle Health, CVS Health, and major tech companies have pledged to adopt. OCR has announced 53 enforcement actions since launching its Right of Access Initiative in 2019, including a $200,000 penalty imposed in March 2025 against a provider that failed to provide timely patient record access. Source: Data Privacy + Cybersecurity Insider
  • Ransomware attacks on hospitals create cascading effects that overwhelm neighboring healthcare facilities and endanger patients throughout entire communities. When a hospital’s systems go offline, surrounding facilities must absorb diverted ambulances and walk-in patients, creating overcapacity situations that can lead to worse patient outcomes and potential deaths. Health-ISAC tracked 446 ransomware events in healthcare during 2024, with 281 incidents occurring in just the first half of 2025, indicating the threat continues to escalate. Rural communities face greater risks than urban areas because longer ambulance travel times to alternate facilities can delay treatment and worsen medical conditions. Both the Ascension and Change Healthcare attacks stemmed from lack of multifactor authentication for remote access, highlighting how basic security gaps enable attackers to target patient care systems for maximum leverage. Source: Dark Reading

Emerging Tech

  • Hospital executives believe in AI’s potential but lack readiness for implementation. A recent survey of 101 executives across integrated delivery networks, academic medical centers and independent hospitals, found that 83% believe AI can improve clinical decision-making and 75% think it could reduce operational costs. While 67% report current investments in AI for patient care and 66% pursue solutions for administrative operations, only 13% have a strategy for integrating AI into clinical workflows. Just 12% trust today’s AI algorithms as reliable enough for use, and only 10% report their organizations aggressively pursue AI implementation. Nearly half of respondents (49%) cite appropriate use of AI as one of their top three challenges. Source: Becker’s Hospital Review

False Claims Act

Marketing

  • Texas Senate Bill 140 takes effect September 1, 2025, expanding the state’s telemarketing regulations to cover text messages and SMS marketing. The law allows consumers to file private lawsuits against businesses for violations and removes caps on cumulative damage recoveries. Companies that send marketing texts to Texas phone numbers must register each business location with the Texas Secretary of State, pay a $200 filing fee, and post a $10,000 security bond. The Texas Attorney General can impose penalties of up to $5,000 per violation, while consumers can seek actual damages or treble damages for knowing violations. Exemptions include banks, insurance companies, nonprofits, and communications with current or former customers, though the law does not define what constitutes a “customer.” Source: Thompson Hine LLP

Medical Devices

Management Services Organizations

  • The California legislature is advancing two bills that target private equity groups, hedge funds, and management services organizations operating in the state’s healthcare industry. AB 1415 would require management services organizations to notify the Office of Health Care Affordability of asset sales and changes of control, expanding reporting obligations that currently apply only to payors, providers, and delivery systems. SB 351 would clarify where private equity groups and hedge funds may provide advisory support while ensuring physicians and dentists retain ultimate authority over clinical decisions. AB 1415 has passed the Senate Appropriations Committee and is set for a third reading by the Senate, while SB 351 has cleared the Assembly Committee on Appropriations and awaits an Assembly vote. The bills would increase compliance burdens for management services organizations and reinforce restrictions on private equity participation in healthcare. Source: Polsinelli

Patient Care

Pharmacies

  • New Medicare regulations that took effect January 1, 2025 have increased criminal prosecution risks for pharmacies facing claim reversals. The Centers for Medicare and Medicaid Services overhauled regulations under the federal Overpayment Statute, redefining when pharmacies “identify” overpayments and limiting internal investigation periods to 180 days maximum. Pharmacies can face criminal charges for violations including failure to submit “clean claims,” noncompliance with prescription rules, and billing errors involving prescription drugs. Criminal penalties include fines up to $250,000 for individuals and $500,000 for businesses, plus potential federal imprisonment up to five years under the False Claims Act. Investigations by the FBI and Department of Health and Human Services Office of Inspector General can result from claim rejections by Part D sponsors and other Medicare billing compliance failures. Source: Oberheiden P.C.
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Article

New Restrictions on Non-Compete Agreements for Physicians and Health Care Practitioners

Texas Enacts Significant New Restrictions on Non-Compete Agreements for Physicians and Health Care Practitioners

Effective September 1, 2025, Texas Senate Bill 1318 (SB 1318) will substantially alter the landscape for non-compete agreements involving physicians and other health care practitioners. This new law amends the Texas Business & Commerce Code to impose strict requirements on the enforceability of restrictive covenants in the health care sector. Employers, practice groups, and health care organizations should review and update their employment and contractor agreements to ensure compliance with these sweeping changes.

Key Provisions of SB 1318

1. Scope of Application

New and Renewed Contracts. SB 1318 applies to non-compete agreements entered into or renewed on or after September 1, 2025. This will likely mean that old provisions in contracts that auto-renew will become non-compliant when they renew.

More Health Care Providers. The law covers not only physicians licensed by the Texas Medical Board, but also extends similar restrictions to dentists, professional and vocational nurses, and physician assistants. This marks a significant expansion from prior law, which focused primarily on physicians. Interestingly, it does not apply to other providers like podiatrists, chiropractors, or mental health providers.

2. Duration and Geographic Limitations

One-Year Maximum Duration: Any non-compete agreement with a covered health care practitioner may not restrict practice for more than one year following the termination of employment or contractual relationship.

Five-Mile Geographic Restriction: The restricted area may not exceed a five-mile radius from the location where the practitioner “primarily practiced” prior to termination. For practitioners working at multiple sites, it is critical to clearly define the “primary practice location” in the agreement to avoid ambiguity and potential disputes.

3. Buyout Requirement and Cap

Mandatory Buyout Provision: All covered non-compete agreements must include a buyout clause, allowing the practitioner to be released from the restriction by paying a specified amount.

Buyout Cap: The buyout amount cannot exceed the practitioner’s total annual salary and wages as of the date of separation. This replaces the prior “reasonable price” standard and eliminates the option for arbitration to determine the buyout amount. Employers must ensure that the buyout figure is clearly stated and does not surpass this statutory cap.

4. Written Clearly and Conspicuously

The law requires that all terms and conditions of the non-compete be set forth “clearly and conspicuously” in writing. Vague or ambiguous language may render the agreement unenforceable.

5. Good Cause Required for Enforcement

If a physician is involuntarily discharged without “good cause,” any non-compete restriction is void and unenforceable. “Good cause” is defined as a reasonable basis for discharge directly related to the physician’s conduct, job performance, or employment record. Employers should maintain thorough documentation of performance and disciplinary issues to support any assertion of good cause.

6. Additional Patient Access Protections

The law preserves existing requirements that non-compete agreements must not deny physicians access to patient lists or medical records and must allow for the continuation of care for patients with acute illnesses.

7. Preemption of Other Laws

SB 1318 expressly preempts any conflicting common law or statutory provisions regarding the enforceability of non-compete agreements for covered practitioners.

Practical Implications and Recommended Actions

1. Immediate Review

We recommend clients immediately audit their current agreements, particularly focusing on contracts that auto-renew after September 1st. Agreements entered into or renewed on or after September 1, 2025, must comply with the new requirements. Non-compliant provisions will not be enforceable.

2. Define Primary Practice Location

For practitioners who work at multiple sites or remotely, it is essential to specify the “primary practice location” in the agreement to ensure the enforceability of the five-mile restriction.

3. Update Termination Protocols

Employers should establish clear protocols for documenting the reasons for any involuntary termination, particularly to demonstrate “good cause” if enforcement of a non-compete is anticipated.

4. Communicate Changes to Stakeholders

Inform current and prospective employees, as well as human resources and legal teams, about these changes to ensure consistent application and understanding across the organization.

5. Monitor Existing Agreements

While SB 1318 applies prospectively, courts may look to the new statutory standards when evaluating the reasonableness of pre-existing agreements. Employers should give careful consideration before enforcing older agreements with broader than necessary restrictions.

Consequences for Employers and Practitioners

For employers, failure to comply with SB 1318 may result in non-compete agreements being declared void and unenforceable. This means that an employer may lose the ability to restrict former employees from competing within the defined time and geographic scope, potentially impacting patient retention, business goodwill, and competitive advantage. Additionally, attempting to enforce a non-compliant agreement could expose the employer to legal challenges, increased litigation costs, and reputational harm within the health care community. Employers may also face difficulties in recruiting and retaining talent if their agreements are perceived as overly restrictive or not in line with current law.

For health care practitioners, non-compliance with the new statutory requirements may create uncertainty regarding their post-employment rights and obligations. Employers may now be motivated to allege wrongdoing by the provider to support a determination of “good cause”. Providers subject to overly broad or non-compliant provisions may feel compelled to limit their professional opportunities unnecessarily or may become involved in costly legal disputes to challenge unenforceable provisions.

Given these significant consequences, we recommend that all health care employers and practice groups act now to review and update their agreements and internal procedures. Ensuring compliance with SB 1318 will help protect your organization’s interests, minimize legal risk, and foster a fair and competitive environment for health care professionals.

Conclusion

SB 1318 represents a significant shift in Texas law, reflecting a broader national trend toward limiting restrictive covenants. Non-compliance can have immediate consequences for both employers and health care providers.

Categories
Health Law Highlights

Wade’s Health Law Highlights for August 26, 2025

Accountable Care Organizations (ACOs)

  • Hospital participation in Medicare accountable care organizations failed to reduce emergency department admission rates, length of stay, or costs for unplanned admissions, according to a new study that challenges the effectiveness of hospital-led ACO cost-saving strategies. Researchers analyzed 995 hospitals that joined Medicare ACOs between 2012 and 2017, tracking their performance for up to five years using Medicare claims data from 2008 to 2019. The findings remained consistent across different ACO programs, contract risk levels, and performance benchmarks, suggesting that hospitals did not alter their care delivery practices for unplanned hospitalizations after joining an ACO. The study indicates that physician-led ACOs outperform hospital-led models in generating cost savings, raising questions about the value of hospital participation in these programs. Researchers recommend that policymakers consider stronger financial incentives, such as global budgeting and multipayer alignment, to enhance hospital engagement in value-based care. Source: The American Journal of Managed Care

Data Breach and Ransonware

Data Privacy

  • Researchers have developed a new blockchain framework that significantly enhances security and efficiency for electronic health records while reducing storage costs. The PDA-HIHM system combines traditional blockchain technology with a hybrid hashing approach that integrates SHA-256 with entropy-based dynamic hashing and data compression techniques. Testing showed the system achieved 27% reduced storage usage and 35% faster data retrieval compared to conventional blockchain-based health record systems. The framework demonstrated a 99.8% access control success rate with zero hash collisions during security testing, while also showing improvements in patient trust metrics of 97.62% and system efficiency of 97.43%. The system employs smart contracts for role-based access control and creates immutable audit trails for all data transactions. Source: Scientific Reports
  • A study reveals that 98% of small healthcare organizations incorrectly believe they are HIPAA compliant despite using inadequate email encryption systems. The survey of 214 healthcare IT leaders at organizations with fewer than 250 employees found that most rely on Microsoft 365 or Google Workspace tools that fail to provide consistent encryption, with nearly half of healthcare email breaches stemming from Microsoft 365 alone. Common misconceptions include 83% believing patient consent eliminates encryption requirements and 20% lacking email archiving systems needed for compliance audits. Phishing attacks now account for over 70% of healthcare data breaches, with 43% of small practices experiencing such incidents in the past year while 99% have not implemented secure email transfer protocols. Recent breach penalties range from $25,000 to $9.76 million, with healthcare incidents taking an average of 308 days to detect and contain. Source: Business Wire

Emerging Tech

Fraud & Abuse

Medical Privacy

  • Texas Senate Bill No. 1188 establishes requirements for electronic health record storage, artificial intelligence disclosure, and parental access to minor medical records starting September 1, 2025. The law mandates that healthcare practitioners and covered entities maintain electronic health records within the United States or its territories, with the geographic restriction taking effect January 1, 2026. Healthcare practitioners must inform patients when artificial intelligence tools are used in diagnosis or treatment, and they must review all AI-generated records according to Texas Medical Board standards. The legislation requires covered entities to provide parents and guardians complete and unrestricted access to their minor children’s electronic health records immediately, unless restricted by state or federal law or court order. Violations carry civil penalties ranging from $5,000 to $250,000 per violation, with the Texas Attorney General authorized to seek injunctive relief and the Texas Health and Human Services Commission empowered to investigate alleged violations. Source: Hall Render
  • HIPAA compliance requirements for GPT-5 depend on who uses the AI platform and in what context. OpenAI announced GPT-5’s release last week, stating the platform should be used for healthcare navigation. HIPAA does not apply when individuals share their own health information with GPT-5, but regulations do apply when doctors use the platform to process patient data or direct patients to use it with provided access. In January, industry leaders announced Project Stargate, a $500 billion investment to build AI infrastructure focused on healthcare. While AI offers benefits like faster problem-solving and drug discovery, healthcare systems require cybersecurity built into AI platforms from the start to protect against data poisoning and other threats. Source: Mobi Health News
  • Texas enacts a law delaying electronic release of cancer test results to patients by three days to allow physicians to communicate findings first. Senate Bill 922, effective September 1, pauses the immediate release of pathology and radiology reports that may show malignancy or genetic markers, giving doctors time to review and contact patients before results appear in electronic health records. The 2025 Texas Legislature passed the law in response to federal requirements under the 21st Century Cures Act that mandated immediate release of all health information to patient portals since spring 2021. Prior to this law, patients received test results electronically before physicians could review them, causing confusion when patients could not understand the medical terminology. The law allows physicians to call patients with results at any time during the three-day period. Source: Texas Medical Association
  • The U.S. Department of Health and Human Services Office for Civil Rights issued new guidance clarifying that health care providers can share patient information with value-based care organizations for treatment purposes without obtaining patient authorization. The new FAQ specifically addresses protected health information disclosure to accountable care organizations and other value-based care arrangements under HIPAA Privacy Rule provisions. An updated FAQ also reinforces patients’ rights to access all information in their designated record sets, including clinical, billing, and other records used for decision-making about the individual. These changes align with the Centers for Medicare & Medicaid Services’ initiative to create a patient-centric, digital health care ecosystem announced on July 30, 2025. Health care providers must review their HIPAA policies, conduct internal audits, and ensure their systems can support complete responses to patient record requests within required timelines. Source: Baker Donelson

Licensure

Litigation

Mergers & Acquisitions

  • The Federal Trade Commission sued to block Edwards Lifesciences Corp.’s $945 million acquisition of JenaValve Technology, Inc. on August 6. The deal would combine the two companies competing to develop transcatheter aortic valve replacement devices to treat aortic regurgitation, a heart condition with no currently approved treatments. Edwards previously acquired JC Medical in August 2024, whose J-Valve device is undergoing clinical trials, while JenaValve’s Trilogy TAVR device awaits FDA approval. The FTC built its case on evidence of head-to-head competition rather than traditional market share analysis, arguing the merger would eliminate competition between the only two firms with active US clinical trials. The all-Republican Commission voted 3-0 to challenge the acquisition, demonstrating the Trump administration’s focus on pipeline competition and healthcare market enforcement. Source: Katten Muchin Rosenman LLP
Categories
Health Law Highlights

Wade’s Health Law Highlights for August 19, 2025

340B

  • HRSA launched a pilot program on August 1, 2025 that will change how drug manufacturers provide 340B discounts to safety net healthcare providers. Under the new rebate model, covered entities will pay full price for drugs upfront and receive rebates later, rather than receiving discounts at the time of purchase as traditionally done. The pilot program applies only to manufacturers with products on the Medicare Drug Price Negotiation Selected Drug List, which includes 23 drugs subject to pricing negotiations under the Inflation Reduction Act. Manufacturer applications are due September 15, 2025, with the program beginning January 1, 2026, and HRSA is accepting public comments through August 30, 2025. The initiative follows disputes between HRSA and manufacturers over rebate models, which resulted in multiple lawsuits after HRSA blocked manufacturer attempts to implement such systems without approval. Source: Healthcare Law Blog

Cybersecurity

Data Privacy & Breach

Emerging Tech

Employee Benefits

  • Healthcare employers face mounting regulatory compliance challenges following the 2025 Comprehensive Reform Act, which was signed into law on July 4, 2025. The Act adds complexity to existing requirements including Affordable Care Act compliance for variable-schedule employees, fiduciary oversight of retirement and health plans, and nondiscrimination testing under Code Sections 105(h) and 125. Healthcare organizations increasingly form health and welfare plan committees to manage fiduciary responsibilities and protect boards from litigation related to pharmacy benefit management agreements and excessive fees. Hospital mergers and acquisitions create additional risks when benefits integration is not properly reviewed, potentially resulting in unexpected liabilities from retiree medical plans, multiemployer pension withdrawal liability, or undocumented 403(b) plans. Employers using self-insured plans, flexible spending accounts, or health savings accounts must conduct annual nondiscrimination testing to avoid negative tax consequences for higher-earning participants. Source: Saul Ewing LLP

Fraud & Abuse

  • Texas Attorney General sued Eli Lilly, accusing the drugmaker of bribing medical providers to prescribe its medications. The lawsuit alleges the company engaged in kickback schemes to induce providers to prescribe its profitable drugs, including GLP-1 medications Mounjaro and Zepbound used for weight loss and diabetes treatment. The action follows a previous lawsuit against insulin manufacturers, including Lilly, over pricing practices with pharmacy benefit managers. Lilly denied the allegations, stating the claims stem from a corporate relator whose accusations have been dismissed by multiple courts and the federal government. Source: Reuters
  • Dr. Ajay Aggarwal agreed to pay $2,053,515 to settle allegations that he defrauded federal healthcare programs by billing for procedures he did not perform. The 63-year-old Houston anesthesiologist and pain medicine doctor allegedly billed Medicare and Workers’ Compensation programs for the surgical implantation of neurostimulator electrodes from November 2021 to March 2023. Instead of performing these invasive procedures that typically require operating rooms and pay thousands of dollars, Aggarwal allegedly provided patients with electro-acupuncture treatments that involved inserting monofilament wire a few millimeters into patients’ ears and taping neurostimulators behind the ear in his clinic. The investigation involved multiple agencies including the U.S. Postal Service Office of Inspector General, Department of Labor Office of Inspector General, and Department of Health and Human Services Office of Inspector General. The settlement resolves allegations only, with no determination of liability. Source: U.S. Attorney’s Office, Southern District of Texas

HIPAA Privacy Rule

Mergers & Acquisitions

OIG Advisory Opinion

Patient Harm

  • Hospitals failed to capture half of patient harm events that occurred among hospitalized Medicare patients, according to an Office of Inspector General review. The OIG traced harm events from a 2022 report and found that hospitals often applied narrow definitions of harm, with staff not considering many events to be harm or stating it was not standard practice to capture them. Of the harm events hospitals did capture, few were investigated and even fewer resulted in improvements for patient safety. The OIG recommends that the Agency for Healthcare Research and Quality (AHRQ) and CMS work with partners to align harm event definitions and create a patient harm taxonomy, that CMS ensure surveyors prioritize Medicare Quality Assurance and Performance Improvement requirements, and that CMS instruct Quality Improvement Organizations to help hospitals identify weaknesses in their incident reporting systems. Increased federal leadership is needed to drive progress in patient safety after nearly 20 years of high patient harm rates nationwide. Source: OIG Report

Physician Compensation

  • Physicians and hospitals are generating higher revenues by increasing workload rather than receiving better reimbursement rates. From the second quarter of 2023 to 2025, median net gain per employed physician rose 8% while median revenue per provider unit of work increased 12% for physicians, but median net patient revenue per provider work unit declined 7%. Support staffing levels dropped 13% over two years, creating potential obstacles for future growth. Hospital operating margins improved to 3% when including shared service costs and 6.6% without those allocations, driven primarily by outpatient revenue increases. The trends reflect ongoing Medicare reimbursement declines that force providers to complete more work to maintain income levels. Source: Fierce Healthcare

Telehealth

  • States are implementing permanent telehealth regulations to replace pandemic-era emergency rules as federal waivers approach expiration. The DEA and HHS extended telemedicine prescribing waivers through December 31, 2025, allowing providers to prescribe controlled substances via telehealth without prior in-person examinations. New York finalized rules in May 2025 requiring in-person medical evaluations before prescribing controlled substances through telemedicine, with exceptions for recent evaluations, temporary coverage, and emergency situations. States including California, Delaware, Florida, New Hampshire, and Texas have enacted or proposed legislation with varying approaches to telehealth prescribing requirements. The DEA proposed a special registration system in March 2023 that would establish three types of registrations for remote prescribing of controlled substances with enhanced verification and monitoring requirements. Source: Healthcare Law Blog
  • Telemedicine has become a cornerstone of mental health services, with telehealth services for mental health issues increasing 16 to 20 times during the first year of the COVID-19 pandemic according to RAND Corporation data. A nationwide poll by the American Psychiatric Association found that over half of Americans would choose telehealth for mental health needs, with more than one-third preferring it outright. AI-powered platforms from companies like Teladoc Health and IBM Corporation now enable predictive analytics for early intervention in conditions like anxiety and depression, while digital mental health counseling apps like Calm and SilverCloud Health provide 24/7 support through chatbots and virtual therapists. Pittsburgh-area clinics have reduced wait times for psychiatric evaluations by up to 40% through telemedicine implementation, though experts warn against over-reliance on virtual care for cases like schizophrenia. Federal legislation has bolstered telehealth reimbursement and cross-state licensing, but challenges remain around data privacy and equitable access for low-income populations. Source: WebProNews

Value-Based Arrangements

  • The American Medical Association has released guidance to help private practices navigate partnerships with “aggregator entities” that manage value-based care arrangements. These aggregators are specialized private companies that help physicians handle the complexities of value-based care without requiring practices to fully invest in the technical infrastructure themselves. The AMA resource addresses three core areas: evaluating aggregator business models, understanding physician considerations when working with aggregators, and planning for potential termination of these relationships. According to Dr. Alexander Sun from the AMA’s Professional Satisfaction and Practice Sustainability unit, the guidance helps practices determine whether aggregator partnerships align with their value-based care goals. The resource is part of the AMA’s broader Business of Medicine education program, which includes materials on revenue-cycle management and accountable care organizations. Source: American Medical Association