Category: Health Law Highlights

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Health Law Highlights

FTC Rule Addressing Noncompete Covenants: Impact of Senior Executive Exception on Health Care Entities

Summary of article from ArentFox Schiff, by Douglas a. Grimm, Moyosore O. Koya:

The new Rule, effective September 4, introduces potential confusion and regulatory risks for health care providers, especially concerning noncompete covenants for senior executives. Defined as individuals earning at least $151,164 annually and holding policy-making positions, the implementation of this Rule is complicated by legal challenges and ambiguities around what constitutes policy-making authority. For multi-provider systems, determining whether C-suite members or subsidiary leaders qualify as senior executives is particularly complex. Health care organizations must carefully review job descriptions and responsibilities to ensure compliance and consider executing or renewing noncompete agreements before the Rule’s effective date. Continuous monitoring and analysis by legal experts are advised to navigate these changes effectively.

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Health Law Highlights

Chevron’s End Means Uncertainty and Opportunity for the Healthcare Industry

Summary of article from Schwabe, Williamson & Wyatt PC, by Gary Bruce, Jon French:

The U.S. Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled the Chevron Doctrine, will significantly affect the healthcare industry by allowing courts to independently interpret statutory ambiguities rather than deferring to administrative agencies. This shift is expected to increase legal challenges to federal health agencies’ regulations and actions, leading to greater unpredictability and slower rulemaking processes. Healthcare providers may face more litigation, particularly concerning reimbursement rates and enforcement of fraud, abuse, and privacy laws. Consequently, healthcare organizations should anticipate ongoing disruption, stay informed on legal developments, and be prepared to adjust their policies and procedures swiftly.

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Health Law Highlights

Chevron Runs Out of Gas: The Bumpy Road Ahead for Health Regulations After Loper Bright

Summary of article from Akin Gump Strauss Hauer & Feld LLP, by Anna Abram, Sudhana Bajracharya, Jenna Becker, Craig Bleifer, Nathan Brown, Kelly Cleary:

The Supreme Court’s decision in Loper Bright Enterprises v. Raimondo overturns the Chevron doctrine, which previously allowed federal agencies to interpret ambiguous statutes with judicial deference. This change raises the bar for agencies like CMS and FDA, requiring them to provide the “best reading” of statutory gaps rather than a “permissible” one. The ruling will significantly impact lower courts, which have continued to apply Chevron, and could lead to increased litigation challenging longstanding regulations. Additionally, the Corner Post decision extends the timeframe for challenging agency regulations under the APA, further exposing agencies to potential lawsuits. These developments will necessitate more precise statutory language from Congress and could constrain agency policy changes across administrations.

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Health Law Highlights

‘Data Is the Differentiator’: How an Integrated Data Strategy Supports Healthcare AI Success

Summary of article from HealthTech Magazine, by Jordan Scott:

At the AWS Summit in Washington, D.C., Dr. Naqi Khan emphasized the critical role of high-quality data in the successful implementation of generative AI in healthcare. He highlighted that while healthcare generates vast amounts of data, much of it remains unstructured and unused. A robust integrated data strategy is essential for leveraging AI to improve clinician workflows, patient experiences, and health outcomes. Dr. Khan also stressed the importance of data privacy and the need for federated data approaches to reduce bias and enhance data sharing. AWS offers several services, including HealthLake, HealthImaging, and SageMaker, to support healthcare organizations in achieving these goals.

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Health Law Highlights

Healthcare Groups Say Cyber Rule Should Explicitly Name Insurers, Vendors

Summary of article from Healthcare Dive, by Emily Olsen:

Healthcare and hospital groups are urging the Cybersecurity and Infrastructure Security Agency (CISA) to explicitly include insurers and third-party vendors in its proposed cybersecurity reporting rule, citing the interconnected nature of the healthcare sector and the potential widespread impact of cyber incidents. The rule, which mandates reporting of cyber incidents within 72 hours and ransom payments within 24 hours, currently does not specify sector-specific criteria for these entities. Industry groups argue that the exclusion could leave significant vulnerabilities unaddressed, as demonstrated by the recent cyberattack on Change Healthcare. They also express concerns over the stringent reporting timelines and the additional burdens they could impose, particularly on under-resourced hospitals. These groups are calling for more flexibility, financial support, and technical assistance to ensure effective incident management without compromising patient care.

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Health Law Highlights

Fifth Circuit Grants Motion Relating to New CMA Compensation Rule

Summary of article from Troutman Amin, LLP, by John H. Henson:

On July 3, 2024, the US District Court of Northern Texas issued a Memorandum Opinion and Order in the combined cases challenging new CMS rules regarding compensation for Medicare Advantage and Part D plans. The court found the compensation changes to be arbitrary and capricious, granting a partial stay on these rules but allowing the consent requirement for sharing beneficiary data to proceed. The decision highlights the court’s scrutiny of the CMS rulemaking process and indicates a substantial likelihood of the plaintiffs’ success on the merits. However, the consent requirement remains in effect, necessitating prior express written consent for data sharing between third-party marketing organizations. This ruling does not impact the FCC’s 1:1 consent requirement, which remains distinct and unaffected.

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Health Law Highlights

Whether “Willful” Under the Anti-Kickback Statute Requires Knowledge that the Conduct is Unlawful

Summary of article from Mintz, by Laurence J. Freedman, Laura E. Martin:

The Supreme Court has the opportunity to clarify the definition of “willfulness” under the Anti-Kickback Statute (AKS) in a case involving McKesson Corporation. The Second Circuit upheld the dismissal of a False Claims Act (FCA) case, ruling that “willfulness” under the AKS requires the defendant to know their conduct is unlawful. The petitioner, Adam Hart, argues that this interpretation is too stringent and seeks Supreme Court review to resolve a circuit split on the issue. The outcome could significantly impact the Department of Justice and relators’ ability to prove AKS violations as predicates for FCA claims. The case has attracted significant interest from various industry and legal groups, anticipating potential Supreme Court involvement.

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Health Law Highlights

Judge Temporarily Blocks Biden Administration’s Restoration of Transgender Health Protections

Summary of article from AP News, by Devna Bose:

A federal district court judge has temporarily blocked parts of a Biden administration rule that would prevent insurers and medical professionals from denying hormone therapy and gender transition surgeries for transgender individuals. Judge Louis Guirola Jr. ruled in favor of 15 states, arguing that the 1972 Title IX nondiscrimination law pertains to biological sex rather than gender identity. This nationwide injunction affects the Affordable Care Act rule, which was set to take effect soon. The decision marks another setback for the Biden administration’s efforts to expand anti-discrimination protections, following recent judicial blocks on rules aimed at protecting LGBTQ+ students under Title IX. The ruling has prompted mixed responses, with some states arguing financial and ideological burdens.

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Health Law Highlights

FTC Seeks to Secure First Disgorgement in Nearly a Decade

Summary of article by Womble Bond Dickinson (US) LLP:

The FTC announced that Cardinal Health, Inc. has agreed to pay $26.8 million to settle allegations of anticompetitive behavior, marking the agency’s first disgorgement in a competition case in nearly a decade. The Complaint, filed in the Southern District of New York, accuses Cardinal of monopolizing the radiopharmaceuticals market by securing exclusive distribution rights to essential heart perfusion agents from Bristol-Myers Squibb and General Electric, thus impeding competition in 25 geographic markets. The Commission’s decision to pursue disgorgement was narrowly approved by a 3-to-2 vote, with dissenting Commissioners arguing insufficient evidence of antitrust violations and lack of clear guidance on disgorgement policies. Traditionally reserved for severe antitrust breaches like price fixing, this use of disgorgement could signal a shift in enforcement strategies, though it may also be specific to the unique circumstances of this case. The settlement awaits federal court approval.

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Health Law Highlights

Healthcare Execs Face Federal Drug Charges in Landmark Telehealth Case

Summary of article from Bradley Arant Boult Cummings LLP, by Jonathan Ferry, Stephen Moulton, Virginia Wright:

Federal prosecutors have charged two healthcare executives of Done Global Inc. and Done Health P.C., with unlawfully distributing controlled substances like Adderall via a telehealth platform. This unprecedented case highlights the Department of Justice’s focus on enforcing controlled substances laws within the digital health sector, particularly post-pandemic. The indictment alleges that Done exploited COVID-era regulatory waivers to facilitate easy access to ADHD medications without proper medical oversight, resulting in the unlawful distribution of over 40 million stimulant pills. This prosecution underscores the growing scrutiny of online prescription services and may set a precedent for future telehealth-related legal actions. The case raises critical issues regarding the balance between expanding access to mental health treatments and preventing prescription drug abuse.