Tag: Federal Trade Commission

Categories
Health Law Highlights

What the FTC’s Rule Banning Non-Competes Means for Healthcare

Summary of article from Nelson Mullins Riley & Scarborough LLP, by Candace Friel, Denise Gunter, Carrie Hanger:

The Federal Trade Commission (FTC) has finalized a rule banning most non-compete agreements, with the rule set to take effect 120 days after its publication in the Federal Register. The rule applies to all workers, regardless of title, job function, or compensation, excluding “Senior Executives” as per a narrowly defined term. Non-profit organizations are exempt from the rule. The rule is expected to significantly impact industries such as healthcare where non-compete agreements are common. Legal challenges to the rule have already been initiated, with the U.S. Chamber of Commerce announcing its intention to sue the FTC and a lawsuit filed on April 23, 2024.

Categories
Alert

Feds Launch Website for Reporting of Health Care Anticompetitive Practices

On April 18, 2024, the Federal Trade Commission (FTC), U.S. Department of Justice (DOJ), and U.S. Department of Health and Human Services (HHS) launched a public web portal for reporting anticompetitive practices in the health care sector. The portal, www.healthycompetition.gov, allows anyone to submit complaints about potential anticompetitive conduct in the healthcare industry. The portal provides information about federal laws ensuring healthy competition and examples of conduct that can harm competition in healthcare. The agencies have not limited the sources of reports, implying a wide scope for potential informants, from the general public to industry insiders. The launch of this portal necessitates increased vigilance from healthcare entities, as any information could potentially trigger an investigation by the FTC or DOJ.

Categories
Health Law Highlights

FTC Bans Noncompete Clauses, Declares Vast Majority Unenforceable

Summary of article from Ars Technica, by Jon Brodkin:

The Federal Trade Commission (FTC) has issued a final rule banning noncompete clauses, rendering most existing clauses unenforceable, citing that they are an unfair method of competition and a violation of Section 5 of the FTC Act. The rule will take effect 120 days after its publication in the Federal Register, affecting approximately 30 million US workers currently bound by such clauses. The rule will not apply to senior executives, defined as those earning more than $151,164 annually and in policy-making positions. The FTC argues that noncompete clauses suppress wages, innovation, and economic dynamism, and believes businesses can protect trade secrets through other means like nondisclosure agreements. The US Chamber of Commerce intends to sue the FTC, claiming the rule undermines the competitiveness of American businesses.

Categories
Alert

Proposed FTC Order will Prohibit Telehealth Firm Cerebral from Using or Disclosing Sensitive Data for Advertising Purposes, and Require it to Pay $7 Million

Cerebral, Inc., a telehealth company, has agreed to settle Federal Trade Commission (FTC) charges over its failure to secure and protect sensitive consumer health data. The settlement includes a $7 million fine for disclosing consumers’ personal health information to third parties for advertising purposes and failing to uphold its cancellation policies. The FTC claimed that Cerebral violated privacy rights by revealing sensitive mental health conditions across the internet and in the mail. The proposed order will restrict Cerebral’s use and disclosure of sensitive consumer data and require the company to implement a comprehensive privacy and data security program. The order, which must be approved by a court, also mandates that Cerebral provide an easy way for consumers to cancel services.

Categories
Alert

Consumer Health Information: Handle With (Extreme) Care

From the Federal Trade Commission, Business Blog, by Lesley Fair:

The Federal Trade Commission (FTC) has taken action against online healthcare providers Cerebral and Monument, Inc. for allegedly violating consumer privacy rights. Both companies were accused of sharing sensitive health data with third-party advertising platforms without consumer consent. Cerebral was also charged with misleading cancellation practices, while Monument was accused of falsely claiming HIPAA compliance.

The FTC’s lawsuit against Cerebral resulted in a settlement that included a $5.1 million judgment for consumer refunds, a $10 million civil penalty (suspended after a $2 million payment due to the company’s inability to pay the full amount), and injunctive provisions to change the company’s business practices, including a ban on using or disclosing consumers’ personal and health information to third parties for most marketing or advertising purposes.

The proposed order against Monument includes a ban on sharing data with third parties for advertising and a $2.5 million civil penalty (suspended due to the company’s inability to pay).

Businesses, especially those in the health sector, must substantiate any privacy or security representations they make and integrate privacy and data security into their operations. The FTC also insists that companies must provide simple mechanisms for consumers to cancel services and stop recurring charges.

Categories
Health Law Highlights

How Hospitals Are Fighting to Keep Their Former Doctors From Seeing Patients

From NBC News, by Shannon Pettypiece:

Noncompete agreements, which prevent doctors from seeing patients for one to two years within a geographic region if they leave their job, have become increasingly common in the healthcare industry.

Critics, including the American Medical Association and the American College of Physicians, argue that noncompete agreements contribute to physician shortages, sever doctor-patient relationships, and deter doctors from speaking out for fear of being fired and unable to work elsewhere in the community.

The American Hospital Association opposes the proposed ban on noncompete agreements by the Biden administration, arguing that they are necessary to protect the financial investment hospitals make in recruiting, relocating, marketing, and training their doctors.

Some doctors have successfully challenged noncompete agreements in court, but it remains a relatively rare occurrence due to the potential financial and reputational consequences. Instead, many doctors choose to move to a new city if they want to leave their job or are fired, avoiding the risk of a lawsuit but uprooting their families and leaving their patients behind.

Categories
Health Law Highlights

The Most Critical Elements of the FTC’s Health Breach Rulemaking

From Lawfare, by Justin Sherman and Devan Desai,

  • The Federal Trade Commission (FTC) is considering modifications to its Health Breach Notification Rule (HBNR), which governs how non-HIPAA-covered entities handle health data breaches. The proposed changes aim to keep up with technological advancements and trends in the health tech and data landscapes.
  • The FTC’s proposal comes amid a greater focus on health data privacy, following enforcement actions against prescription drug provider GoodRx and fertility tracking app Premom, both of which allegedly violated the HBNR by sharing sensitive health data without proper disclosures.
  • The proposed changes aim to expand federal health data breach regulations to reflect the evolving role of health tech apps, telehealth services, data brokers, and digital advertisers in collecting, aggregating, identifying, sharing, and selling Americans’ health information.
  • The FTC is looking to expand and clarify the definition of personal health record identifiable information, formally expand the definition of a breach to include unauthorized data disclosures, and clarify how the HBNR applies to mobile apps and health tech companies.
  • While the proposed changes largely serve to clarify existing policies and practices, they are viewed as crucial in improving privacy regulation, aligning with state-level health data regulations, and addressing harmful practices such as selling sensitive health data without consumers’ consent.
Categories
Alert

FTC sues to block $350 million sale of 2 Tenet Healthcare-owned hospitals in Memphis area

The Federal Trade Commission is suing to block Farmers Branch-based Tenet Healthcare’s $350 million sale of two hospitals in the Memphis area to another healthcare system.

I don’t know the specifics of the transaction, but the FTC likely objected after the parties filed a “Hart-Scott-Rodino Premerger Notification,” or just “Hart-Scott filing.” These filings, which must take place a certain amount of time prior to the closing of the transaction, give the FTC time to object.

Often, the FTC will object and also file an injunction in Federal Court to prohibit the transaction. The practical effect is that the preliminary injunction hearing becomes the “trial” for whether the transaction will be allowed. If the FTC is successful with the injunction, the deal is usually scuttled.

Source: FTC sues to block $350 million sale of 2 Tenet Healthcare-owned hospitals in Memphis area – Dallas Morning News