Categories
Health Law Highlights

Wade’s Health Law Highlights for April 28, 2026

Fraud, Abuse & Government Enforcement

  • The HHS Office of Inspector General will not impose sanctions on a Medicare Advantage organization that proposes to share a percentage of its savings with employer groups through its Employer Group Waiver Plans. The arrangement would involve the MA organization making “Gainshare Payments” to groups such as employers, trusts, and unions when a negotiated medical expense ratio falls below an agreed-upon target, with payments typically issued in the third quarter of the following year. OIG concluded that the arrangement would generate prohibited remuneration under the Federal anti-kickback statute if the requisite intent were present, and no safe harbor applies. OIG nonetheless found the fraud and abuse risk sufficiently low because the Gainshare Payment is not guaranteed, does not affect amounts CMS pays to the MA organization, and each group must contractually use any payment to benefit enrollees. The opinion applies only to the requesting entity and could be modified or terminated if CMS rules governing EGWP operation or payment materially change. Source: OIG Advisory Opinion No. 26-07
  • IBM agreed to pay more than $17 million to settle allegations it violated the False Claims Act by failing to comply with Title VII anti-discrimination requirements while holding federal contracts. The government alleged IBM tied bonus compensation to diversity targets, used diverse interview slates in hiring decisions, set race and sex demographic goals for business units, and restricted training programs based on race, color, national origin, or sex. IBM denies the allegations but received cooperation credit under DOJ guidelines, though the damages multiplier exceeded 2x. The settlement follows prior legal challenges, including a June 2024 lawsuit by Missouri claiming IBM gave hiring preference to certain races and an August 2024 suit by a white former employee alleging termination based on racial quotas. IBM disbanded its DEI department in April 2025, and Deputy Attorney General Todd Blanche issued a memo in May 2025 instructing DOJ attorneys to use the False Claims Act against recipients of federal funds that promote DEI policies the Administration deems unlawful. Source: ArentFox Schiff
  • The Department of Health and Human Services Office of Inspector General issued Advisory Opinion 25-11 establishing guidance for pharmaceutical and medical device manufacturers on discount and rebate arrangements under the Federal Anti-Kickback Statute. The opinion addresses four discount structures: upfront discounts, upfront discounts with purchase requirements, bundled upfront discounts with purchase requirements, and bundled rebates. OIG permits arrangements outside the Discount Safe Harbor when they use objective, transparent metrics and do not emphasize exclusivity, impede competitor sales, or require customers to switch from competing products. Manufacturers must clearly disclose discounts and rebates in invoices and documentation to enable customers to determine and report net prices for payer program purposes. When safe harbor compliance is not feasible, manufacturers must conduct and document risk assessments that evaluate transparency, absence of intent to induce inappropriate utilization, preservation of clinical judgment, commercial reasonableness, and absence of steering federal program business. Source: Gardner Law
  • The HHS Office of Inspector General added two FAQs warning that compliance with Stark law exceptions and fair market value alone do not protect healthcare arrangements from Anti-Kickback Statute violations. FAQ #4 clarifies that financial arrangements satisfying Stark exceptions can still violate AKS because Stark is a strict liability statute where intent is irrelevant, while AKS requires knowing and willful intent to induce referrals. OIG provided an example where hospitals or laboratories offer sporting event tickets to referring physicians, which might satisfy the Stark exception for nonmonetary compensation under 42 C.F.R. § 411.357(k) but would be unlikely to receive AKS safe harbor protection. FAQ #17 states that fair market value is only one element of safe harbor compliance and OIG rejects the position that FMV eliminates unlawful remuneration. OIG characterizes this guidance as consistent with statutory text, regulatory safe harbors, and decades of OIG guidance. Source: Health Law Diagnosis
  • Texas Attorney General opened investigations into dozens of Medicaid providers using federal claims data released by DOGE earlier this year. The investigations target home health providers, occupational therapy providers, and entities that may have submitted fraudulent claims related to COVID-19 treatments. The AG’s office plans to combine the federal data with internal claims data and civil investigative demands in anticipation of litigation, and has recovered more than $1 billion from Medicaid fraud since 2020. Recent enforcement actions include a February lawsuit over improper Medicaid billing related to care for minors and a $41.5 million settlement involving adulterated drugs provided to children. The state’s use of federal data aligns with a Trump administration executive order establishing a task force to coordinate anti-fraud efforts across federal benefits programs, which may condition federal funding on states adopting enhanced safeguards. Source: Polsinelli
  • The DOJ’s Corporate Enforcement and Voluntary Self-Disclosure Policy requires healthcare organizations to navigate four distinct and overlapping disclosure frameworks, each carrying different legal consequences. Under the DOJ policy, companies that voluntarily self-disclose, fully cooperate, and remediate will receive a declination of prosecution absent aggravating circumstances, but disclosure must occur before any imminent government investigation and within 120 days of an internal report to preserve eligibility. Separately, CMS requires Medicare providers to report and return overpayments within 60 days of identification under a six-year lookback period, with retention beyond that deadline creating False Claims Act liability; Stark Law violations are handled through CMS’s Self-Referral Disclosure Protocol; and Anti-Kickback Statute exposure is addressed through the OIG’s Provider Self-Disclosure Protocol, which typically requires settlement at a multiplier of at least 1.5 times damages. These pathways intersect — a billing issue can escalate from an overpayment matter to False Claims Act exposure, and a Stark issue can implicate the Anti-Kickback Statute depending on intent — meaning disclosure to CMS or OIG does not automatically preserve DOJ self-disclosure benefits. Organizations lose leverage not at the moment of disclosure but before it, when delays, miscalculation of exposure type, or failure to recognize escalating risk foreclose the option of a declination or reduced penalty. Source: Clark Hill PLC

Medicare & Reimbursement

Privacy & Data Security

Workforce & Non-Competes

  • Multiple states enacted laws in Q1 2026 restricting or banning non-compete agreements for health care workers and other employees. Washington passed H.B. 1155 on March 23, 2026, which bans all non-compete agreements with workers and businesses effective June 30, 2027, and requires employers to notify current and former employees that existing non-competes are void by October 1, 2027. Utah prohibited non-compete agreements with health care workers effective May 6, 2026, and Montana expanded its ban to include all physicians effective January 1, 2026. Virginia enacted a law barring enforcement of non-competes against employees terminated without cause unless the employer provides severance, effective July 1, 2026, and passed separate legislation prohibiting non-competes with health care professionals licensed by the Boards of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work, which awaits the Governor’s proposed amendment when the legislature reconvenes. California banned contractual clauses prohibiting providers from competing with medical or dental practices in contracts involving private equity groups or hedge funds, effective January 1, 2026. Source: Seyfarth Shaw Trading Secrets
  • The FTC has committed to prosecuting noncompete agreements it views as anticompetitive, pursuing enforcement on a case-by-case basis rather than through a nationwide ban. Chairman Ferguson stated that many noncompetes likely violate antitrust laws, and that enforceable agreements must advance a procompetitive employer interest and be narrowly tailored to achieve it. Commissioner Meador identified four evaluation factors: the wage and skill level of covered employees, the reasonableness of the agreement’s scope and duration (with durations beyond one to two years viewed as suspect), the employer’s degree of market dominance, and evidence of industrywide economic harm. Employers in health care, veterinary, and beauty industries face heightened scrutiny. Employers should consider alternatives such as nonsolicitation and nondisclosure agreements, document the business interests any noncompete is designed to protect, and limit noncompetes for low-wage or low-skill workers. Source: Troutman Pepper Locke

Corporate Practice & Healthcare Transactions

  • Ambulatory surgery centers trade at 7–8x EBITDA, with top-tier centers reaching double-digit multiples, driven by revenue cycle performance, physician alignment, and leadership infrastructure.** Buyers are applying greater diligence to CMS certification status, life-safety systems, and physical plant conditions, with compliance gaps serving as leverage in price negotiations or deal-killers outright. Revenue cycle management is the primary financial variable under scrutiny, as inconsistent collections, denial rates, and accounts receivable backlogs directly reduce EBITDA and can trigger valuation adjustments. Centers with case volume concentrated among a small number of physicians, or those dependent on a single founder for operations, face scalability concerns that reduce buyer confidence. Orthopedics, gastroenterology, and retina remain the most active specialties, while cardiology is drawing attention as procedural volume in ASC settings grows. Source: VMG Health
  • Physician organizations face regulatory and transaction risk not from single decisions, but from patterns of undocumented decisions, unmanaged conflicts, and informal governance that cannot withstand scrutiny. Board minutes should capture the business rationale for compensation changes, the alternatives considered, and any conflicts disclosed, while joint venture files should document ownership structure, expected returns, and the basis for satisfying applicable safe harbors. Performance tracking should measure group-level operational metrics and physician productivity tied to personally performed services — not referral patterns or site-of-service data that could imply compensation rewards referrals. Conflicts of interest require disclosure at inception, annually, and before any related decision, with records showing whether the conflicted party recused and how disinterested parties evaluated the arrangement. Organizations that maintain these practices enter due diligence and regulatory investigations with files that respond to document requests without reconstruction, align witness accounts, and allow buyers to price deals on operational performance rather than regulatory risk. Source: Healthcare Law Insights
  • Succession agreements in California MSO-PC structures are under direct legal threat after the CA Attorney General filed an amicus brief arguing that any MSO contract granting the right to replace a physician-owner constitutes impermissible corporate practice of medicine (CPOM). The brief arose from Art Center Holdings, Inc. v. WCE CA Art, LLC, in which a 2024 Los Angeles Superior Court ruling found that defendants unlawfully controlled a medical practice through a succession agreement giving them discretion to swap out a physician-owner at will. The AG’s position is categorical: where a contract lets a corporation replace the physician-owner, the corporation “effectively owns and controls all aspects of the practice,” and it is “difficult to imagine any circumstance” in which such a right would not produce undue influence. The California Medical Association filed its own amicus brief pushing back on a categorical rule and urging courts to apply a fact-specific analysis that considers the formation, function, and purpose of each structure, warning that a blanket prohibition could disrupt capital formation and destabilize physician alignment models across the state. California has not banned MSO-PC structures or private equity investment in MSOs, but the AG’s brief signals that succession agreements — including those triggered only by defined events such as loss of licensure — now carry material enforcement risk and require restructuring. Source: Ropes & Gray LLP

FDA & Drug Regulation

  • The FDA is narrowing the regulatory pathway for compounding peptides, restricting access to substances that lack FDA approval, USP or NF monographs, or inclusion on bulk substances lists. Peptides fuel a $740B longevity market and are accessed through compounding under Sections 503A and 503B of the Federal Food, Drug, and Cosmetic Act, but compounded drugs do not undergo the same premarket review for safety, effectiveness, or manufacturing quality as approved drugs. The FDA prohibits compounders from replicating commercially available drugs and evaluates intended use based on marketing, distribution, and real-world context rather than labeling alone, making “research use only” disclaimers ineffective where facts point to human use. Enforcement tools include warning letters, import alerts, and seizures, with potential exposure extending beyond manufacturers to clinics, telehealth platforms, and other intermediaries. Many peptides lack clinical data, standardized dosing protocols, and well-characterized safety profiles, limiting companies’ ability to support therapeutic or performance-based claims. Source: Gardner Law
  • The DOJ and DEA moved FDA-approved marijuana products and state-licensed medical marijuana products from Schedule I to Schedule III of the Controlled Substances Act, effective immediately. Acting Attorney General issued the order under his authority to reschedule drugs in compliance with U.S. obligations under the Single Convention on Narcotic Drugs, acting pursuant to President Trump’s December 18, 2025, Executive Order on Increasing Medical Marijuana and Cannabidiol Research. The DEA withdrew the prior administration’s August 29, 2024, notice of hearing and terminated those proceedings, replacing them with a new administrative hearing set to begin June 29, 2026, to consider broader rescheduling of marijuana from Schedule I to Schedule III. The new process includes firm deadlines intended to accelerate the rulemaking. Federal controls against illicit drug trafficking remain in place. Source: U.S. Department of Justice

Technology & AI

  • States, not Congress, are setting the rules for AI in healthcare— and the resulting patchwork of laws poses a compliance risk for health systems operating across state lines. In 2025, more than 250 AI-related healthcare bills were introduced in state legislatures, covering patient disclosure, bias prevention, clinician accountability, and insurer restrictions on AI use in coverage determinations. The Trump Administration released a National Policy Framework for Artificial Intelligence on March 20, 2026, calling on Congress to establish a single federal regulatory approach with guardrails on child safety, free speech, intellectual property, workforce impacts, and national security, though a December 2025 executive order seeking to preempt state AI laws lacks the legal force to override state statutes. Federal agencies — FDA, CMS, CDC, and NIST — are advancing AI policy through guidance, payment pilots, and voluntary standards rather than new rulemaking, with CMS testing AI-assisted prior authorization under the WISeR model and the FDA moving toward lifecycle oversight requirements for adaptive algorithms. Across HHS, common compliance priorities include auditability of AI outputs, traceability of training data, human oversight in clinical contexts, and ongoing performance monitoring as models evolve. Source: Holland & Knight