Health Law Advisor

Thought Leaders On Laws And Regulations Affecting Health Care And Life Sciences

Supreme Court Lowers the Bar for Class Action Removal

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Stuart M. GersonOn December 15, 2014, the Supreme Court of the United States decided Dart Cherokee Basin Operating Co. v. Owens, a class action removal case.

In short, the Dart case is welcome news to employers. Standards for removing a case from state to federal court have been an abiding point of concern for employers faced with “home town” class actions. In more recent times, this problem has become a point of interest to employers in health care and other industries that are beset by cybersecurity and data breach cases originating in state courts but calling for the application of federal privacy standards. Dart should help them substantially.

In the Dart decision, the Supreme Court held that a defendant seeking to remove a case from state to federal court – who must file in the federal forum a notice of removal “containing a short and plain statement of the grounds for removal”  pursuant to 28 U. S. C. §1446(a) – need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. The notice need not contain evidentiary submissions. Section 1446(a) thus tracks the general pleading requirement traditionally required by the Federal Rules of Civil Procedure.

The Dart decision also resolves a longstanding split among the Circuit Courts of Appeals, adopting the view of a majority of the lower courts while categorically rejecting the Tenth Circuit’s requirement that an evidentiary submission had to accompany the notice of removal under the Class Action Fairness Act.

Perhaps even more noteworthy than its rejection of any requirement to submit evidence in support of removal is the Supreme Court’s categorical refusal to imply any presumption against removal to federal court. Parties have been attempting to rely upon such a presumption, often with success, for years. The Supreme Court, however, has now made it clear that there is no basis in law for it and for that reason, coupled with the requirement that a party do no more than plausibly allege the jurisdictional amount in controversy, has substantially eased the burden on a defendant’s removal of a state court action to federal court.

For those who think that the judicial conservatives and liberals always vote in a bloc and that the conservatives are always pro-business, one notes that this arguably pro-business decision was authored by Justice Ginsburg, who was joined by the Chief Justice and by Justices Breyer, Alito, and Sotomayor.  Justices Scalia, Kennedy, Thomas, and Kagan were all in dissent. One also notes that the 5-4 split should not be taken as a sign of potential weakness in the majority opinion.  The four dissenters did not dwell on the merits; they simply believed that, for jurisdictional reasons, the issue decided was not properly before the Court.

Deadline Extended for Comments on Proposed Changes to Home Health Conditions of Participation

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In response to multiple requests, the Centers for Medicare and Medicaid Services (“CMS”) have extended the deadline for comments on the proposed changes to the home health conditions of participation (“CoPs”).  Home health providers and other interested stakeholders now have until 5:00 p.m. EST on January 7, 2015 to submit comments to CMS.

The proposed changes to the CoPs were published on October 9, 2014[1] and represent the most significant changes to the home health CoPs in seventeen years.  According to CMS, the new CoPs are intended to better reflect modern home health practice by acknowledging the interdisciplinary view of patient care and allowing home health agencies greater flexibility in meeting quality care standards.  The proposed changes include:

  • Enhanced and expanded patient rights requirements;
  • Changes to plan of care requirements and the process for transfer and discharge of patients;
  • New requirements for the development of Quality Assessment and Performance Improvement (“QAPI”) programs; and
  • New requirements for infection prevention and control.

The 2013 Home Health Prospective Payment System final rule authorized CMS to impose intermediate sanctions on home health agencies that are found to be out of compliance with the CoPs.[2]  In addition to terminating a home health agency’s provider agreement, CMS may now impose alternative sanctions including, civil monetary penalties, suspension of payments for all new admissions, temporary management of the home health agency, directed plans of correction, and directed in-service training.[3]  In light of these potential sanctions, we urge home health agencies to closely review the proposed changes to the CoPs and consider how your organization will comply with the new requirements.  We also encourage home health agencies to respond to the various aspects of the proposed rule that CMS has specifically asked for comments on.

 


[1] 79 Fed. Reg. 61,164.

[2] 77 Fed. Reg. 67,068.

[3] 42 C.F.R. § 488.820.

Recent Legislative and Regulatory Efforts Continue to Change the Regulatory Landscape for Hospice and Home Health Providers

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Our colleaguesEmily E. Bajcsi, Clifford E. Barnes, Marshall E. Jackson Jr., and Serra J. Schlanger recently published a client alert on legislative and regulatory efforts impacting the hospice and home health industries:

  • President Obama signed the Improving Medicare Post-Acute Care Transformation Act of 2014 (“the IMPACT Act”) into law;
  • The Centers for Medicare and Medicaid (“CMS”) published the Medicare Home Health Prospective Payment System final rule for calendar year 2015 (“Final Rule”); and
  • CMS published proposed changes to the home health conditions of participation and are accepting comments through December 8, 2014.

Each of these announcements has the potential to result in substantial changes to the hospice and home health industries.  For the full client alert, please click here.

 

EBG’s Stuart M. Gerson and Christopher Farella to Speak at Essex County Bar Super CLE Event

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On Wednesday, December 10, 2014 colleague Stuart M. Gerson of Epstein Becker Green’s Litigation and Health Care and Life Sciences practices in the firm’s Washington, DC and New York offices will join a panel discussion on “The Manay Faces of the Affordable Care Act.”  Christopher Farella of Epstein Becker Green’s Litigation and Labor and Employment practices in the firm’s Newark office will serve as moderator.

Issues to be addressed include:

  • State of play with respect to various aspects of the ACA, particularly the employer mandate, including a discussion of recent case law.
  • How recent election results could impact amendments to the ACA.
  • The interplay between the ERISA settler and fiduciary functions that the ACA requires.
  • The interplay between the ACA and other employment laws.
  • Managing employee populations and the treatment of full time, part time and variable hour employees for coverage offerings.
  • The impact of the ACA insurance market reforms on the individual and small employer insurance markets in NJ.
  • The unintended consequences of the ACA for employers.

For more information, click here.

Eye on Ebola: Latest Updates from the CDC

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The 2014 outbreak of the Ebola Virus Disease (“Ebola”) is the largest in history and continues to affect multiple countries in West Africa. Although reports of new Ebola cases in the U.S. – potential or confirmed – have slowed down in recent weeks, the Centers for Disease Control and Prevention (“CDC”) and its various domestic and international partners continue their efforts to prevent further transmission of Ebola in the U.S. as well as abroad. Earlier this week, in fact, the CDC released two new pieces of guidance regarding treatment of Ebola that will be of particular interest to health care providers.

The first new CDC guidance is an official list of Ebola Treatment Centers. The current list includes 35 U.S. hospitals located in twelve states plus the District of Columbia. The CDC plans to update this list on a weekly basis as additional U.S. hospitals work with state and local health authorities and the CDC to assess their infrastructures and operational readiness to receive and provide comprehensive care to persons diagnosed with Ebola. As the CDC states in its Interim Guidance for Preparing Ebola Treatment Centers, the decision to designate a facility as an Ebola Treatment Center results from collaborative efforts between health authorities, the CDC, and hospital administration, as well as results from a CDC site visit conducted by an interdisciplinary team of experts.

The CDC also released new Interim Guidance for U.S. Hospital Preparedness for Patients with Possible or Confirmed Ebola Virus Disease: A Framework for a Tiered Approach. The CDC has developed this guidance to help state and local health departments, acute care hospitals, and other health care settings where emergency care is provided, develop appropriate preparedness plans for patients with possible or confirmed Ebola infection. The CDC developed this guidance as a means for tying together other, previously released guidance specific to Frontline Health Care Facilities (acute care facilities equipped for emergency care, not including primary care offices and other non-emergency ambulatory care facilities), Ebola Assessment Hospitals (facilities prepared to receive and isolate a patient with possible Ebola infection and to care for such patient until a diagnosis of Ebola can be confirmed or ruled out and until discharge or transfer is completed), and Ebola Treatment Centers (facilities that plan to care for and manage a patient with confirmed Ebola infection for the duration of the patient’s illness).

This latest CDC guidance is yet another reminder, even before the current Ebola epidemic is brought under control globally, that health systems worldwide must continue efforts to detect infectious disease outbreaks before they rise to crisis levels. As Dr. Thomas Frieden, Director of the CDC, recently told the Associated Press, “Ebola is a powerful reminder that a health threat anywhere can affect us.” Dr. Frieden stresses the ongoing importance, system wide, of addressing “weak links and blind spots around the world” that can lead with little warning to infectious disease outbreaks of Ebola-like proportions. Renewed global focus on these efforts has come in the form of a $600 million request from the Obama Administration for the CDC to implement its Global Health Security Agenda, through which CDC would work with an international coalition to improve disease detection in high-risk countries and guard against future infectious disease contagion.

HRSA Withdraws 340B “Mega-Reg;” Plans to Issue Guidance in 2015

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On November 13, 2014, the Health Resources and Services Administration (“HRSA”) announced its plans to abandon the much anticipated “mega-reg” amid questions concerning HRSA’s rule-making authority.  The “mega-reg” was expected to provide much needed clarity to the 340B drug discount program (the “340B Program”) by addressing, among other things, the definition of an eligible patient, compliance requirements for contract pharmacy arrangements, hospital eligibility, and criteria for hospital off-site facilities.

HRSA submitted draft regulations to OMB in April 2014, and the proposed “mega-reg” was expected to be released in June 2014.  However, several legal challenges to other 340B Program regulations undermined HRSA’s legal posture to proceed.  A federal district court ruling in May 2014 determined that HRSA did not have the statutory authority to issue regulations concerning the Orphan Drug provision of the 340B Program.[1] This decision called into question HRSA’s authority for promulgating regulations for the 340B Program, except for limited rulemaking authority granted to it under the Affordable Care Act.[2]  In response to the May 2014 decision, on July 23, 2014, HRSA released a nonbinding Interpretive Rule that set forth the same Orphan Drug policies as the challenged regulation.[3]  EBG has previously posted more in-depth detail as to the court’s decision on the PhRMA lawsuit and the Interpretative Rule here.

After release of the Interpretative Rule, PhRMA filed a motion for miscellaneous relief arguing that the challenged regulation was outside of HRSA’s rulemaking authority and incapable of surviving as an Interpretive Rule.[4]  The court decided to limit its initial decision to whether HRSA had the authority to issue the Orphan Drug rule as a legislative rule, and PhRMA filed a second lawsuit on October 9, 2014, challenging HRSA’s Interpretive Rule as violative of the plain language of the statutory Orphan Drug exclusion.[5]  Despite questions concerning its rulemaking authority, HRSA has updated its frequently asked questions asserting that the failure to comply with statutory requirements as interpreted by HRSA could be considered a violation of the Orphan Drug statute and subjects the drug manufacturer to enforcement action.[6]

Despite the withdrawal of the “mega-reg,” HRSA has stated that it will pursue proposed rules where it has clear legislative rulemaking authority.  To this end, the HRSA Office of Pharmacy Affairs website includes a statement that HRSA will issue proposed rules pertaining to civil monetary penalties for manufacturers, calculation of the 340B ceiling price, and administrative dispute resolution in 2015.[7]  In addition, the website states that HRSA will issue proposed guidance to address “key policy issues,” which are surmised to include the areas that would have been addressed by the “mega-reg.”  Historically, HRSA has not issued regulations, but has issued program guidance through a series of Notices issued through the Federal Register, as well as other sub-regulatory guidance, including FAQs on its website.

HRSA’s ability to issue and enforce guidance will likely be impacted by ongoing litigation and challenges brought forth by the drug industry.  In addition, calls from the drug industry, and a new conservative majority in the Senate, may cause the Senate to reopen the original 340B statute to address the policy debates, lack of clarity regarding the permissible interpretation of 340B Program requirements and standards and HRSA’s rulemaking authority.  Thus, even in the absence of the “mega-reg,” significant changes to the 340B Program should be expected by stakeholders in 2015.

 


[1]Pharm. Research & Mfrs. of Am. v. United States HHS, No. 13-1501, 2014 U.S. Dist. LEXIS 70894 (D.D.C. May 23, 2014).

[2]As codified in the Public Health Service Act 42 U.S.C.§ 256b(d) (administrative dispute resolution), § 256b(d)(1)(B)(i)‒(ii) (calculation of 340B ceiling price), and § 256b(d)(1)(B)(vi)(I) (civil monetary penalties).

[3] HRSA, Notice Regarding Availability of Interpretive Rule: Implementation of the Exclusion of Orphan Drugs for Certain Covered Entities Under the 340B Program, 79 Fed. Reg. 42801 (July 23, 2014).  See also HRSA Freqeuntly Asked Questions, available at http://www.hrsa.gov/opa/faqs/index.html.

[4] PhRMA Supplemental Memorandum in Support of PhRMA’s Mot. for Misc. Relief, PhRMA v. HHS, No. 13-1501, ECF No. 52.

[5] PhRMA Complaint PhRMA v. HHS, Case No. 14-1685, ECF No. 1.

[6] HRSA, Office of Pharmacy Affairs website, Freqeuntly Asked Questions, available at http://www.hrsa.gov/opa/faqs/index.html (last visited Nov. 20, 2014) (follow link to“Orphan Drugs”).

[7]HRSA Office of Pharmacy Affairs website, available at http://www.hrsa.gov/opa/index.html (last visited Nov. 20, 2014).

 

American Hospital Association Features EBG’s “Eye on Ebola” Webinar

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Epstein Becker Green’s slides from the “Eye on Ebola: A Discussion About the Health Regulatory, Risk Management, and Labor and Employment Issues Impacting Health Care Providers” webinar is featured on the American Hospital Association’s Ebola Preparedness Resourcesclick here.

 

The November 17 webinar addressed the professional and business challenges encountered by health care providers dealing with Ebola and other infectious diseases, and featured 4 fantastic speakers.

  • Bruno Petinaux, M.D., Associate Professor, Co-Chief of the Emergency Management Section, Department of Emergency Medicine, George Washington University Medical Faculty Associates offered a clinical overview as well as a review of the guidelines which offer protocols for addressing concerns over Ebola and similar diseases.
  • Amy F. Lerman, Associate, Epstein Becker Green covered the health regulatory considerations.
  • George B. Breen, Member, Epstein Becker Green, Chair, Health Care and Life Sciences Practice Steering Committee elaborated on risk management issues providers might consider in developing a response strategy.
  • Frank C. Morris, Jr., Member, Epstein Becker Green, Employment, Labor and Workforce Management Practice discussed the resulting labor and employment considerations facing health care employers.

 

The webinar slides and recording can also be found here on Epstein Becker Green’s website.

 

DC Circuit Stays Halbig Action Pending SCOTUS Review of King, Upholds Accommodation for Contraceptive Coverage

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Stuart M. GersonOnly last week, we informed you of the Supreme Court’s somewhat surprising grant of cert. in the Fourth Circuit case of King v. Burwell, in which the court of appeals had upheld the government’s view that the Affordable Care Act makes federal premium tax credits available to taxpayers in all states, even where the federal government, not the state, has set up an exchange.

The Administration has taken something of a PR buffeting in the week following, after its principal ACA technical advisor’s comments on this issue were made public.

In any event, we suggested that the scheduled DC Circuit en banc argument in Halbig v. Burwell, which raises the same issue as the King case, would never take place. We were correct. The DC Circuit yesterday stayed action in its case pending Supreme Court resolution of King. We’ll continue to follow related developments.

Speaking of the DC Circuit, a panel of its most liberal judges today upheld religious organization accommodation for contraceptive coverage under the ACA, holding under Hobby Lobby that opt-out procedure does not substantially burden employer’s religious beliefs. Priests for Life v. U.S. Dep’t of Health & Human Services. There will be similar cases brought in other federal circuits, and we’ll report on those as well.

OPM Issues Ebola Guidance to FEHBP Carriers

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As Ebola has become a worldwide threat, the U.S. Government has provided guidance to prepare numerous agencies and entities that may become involved or affected by Ebola.  On November 7, 2013, the Office of Personnel Management (OPM) issued guidance to Federal Employee Health Benefit Program (FEHBP) carriers on their responsibilities for handling members who have been exposed to or infected with the Ebola virus. FEHB Program Carrier Letter No. 2014-26 is available at http://www.opm.gov/healthcare-insurance/healthcare/carriers.

OPM instructs carriers that special consideration may need to be provided to ensure proper support to any exposed or infected members.  OPM identifies three specific areas for carriers to review and assess: use and requirements of various therapies, reimbursement for work-related exposures, and medical evacuation/patient transport.

First, carriers are reminded of prior OPM guidance regarding: determining coverage for experimental drugs when an emergency use is granted by the FDA; and not imposing additional conditions on the coverage of routine patient costs for items and services furnished due to participation in an approved clinical trial.  Additionally, on a case-by-case basis, carriers should be ready to reduce certain restrictions, such as referrals or pre-authorizations, in order to provide benefits for care at specialized centers, transportation reimbursements, or early refills of prescription medications for any displaced individuals.

Second, as federal employees are working in affected parts of the world, in the event that a work related exposure occurs, carriers are asked to provide immediate payment for exposed or infected members and to seek reimbursement from the Office of Workers’ Compensation Programs.

Finally, to accommodate the need for Ebola patients to be transported to specialized facilities throughout the country, OPM advises carriers to examine their air ambulance company contracts to determine whether resources are available to transport infectious patients.

In the event an FEHBP carrier has an exposed or infected member with Ebola and arranges care, carriers must notify their OPM contract specialists.  OPM will develop and post Frequently Asked Questions to the carrier website related to these Ebola issues as circumstances arise.

Epstein Becker & Green, P.C. will be hosting a complimentary webinar addressing the professional and business challenges encountered by health care providers dealing with Ebola and other infectious diseases on November 17, 2014.  Additional information about the webinar is available here.

 

The Cost of Ebola Treatment

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Everyone is talking about Ebola, including the risk of contracting it, treatment for those who do contract it, and protection for those who treat patients who have it.  There has been very little discussion, though, about how to pay for the costs of treating Ebola patients, including whether health insurance will cover the treatment and pay the providers.

Most health insurance coverage that complies with the ACA minimum essential coverage standards will cover the costs of medically necessary hospitalization and physician services.  However, many of those policies have significant out of pocket expenses that must be paid by the patient, including deductibles and coinsurance amounts.  There is likely to be an annual cap on the out of pocket expenses (at least in ACA compliant plans), so that may limit the overall amount the patient has to pay.  Also, many policies do not cover, or provide very limited coverage, for care provided outside the country, or for evacuation expenses if you become ill while in another country- so if you are traveling you should check with your insurer and purchase travel health insurance if those expenses would not be covered.

Additionally, given that there is no actual treatment for Ebola itself, other than addressing the symptoms by providing intravenous fluids, balancing electrolytes, and maintaining oxygen and blood pressure, insurers could take the position that the inpatient level of service is not medically necessary (although none have stated this position.)

Furthermore, most insurers  use networks of providers, and either do not cover care out of the network or cover it at a lower rate of reimbursement- and the out of pocket annual limitations are not required to apply to out of network services.  In the event the patient is sent to a non-network facility for treatment, the insurer could classify the services as out of network, and either not cover them at all, or provide coverage that is subject to significantly higher coinsurance, deductibles and potentially limits based on “usual customary and reasonable costs,”  leaving the patient with a very large bill.

Finally, for providers that participate in an insurer’s network, there is generally a contracted rate for services provided.  If a facility has set up a specialized area for treatment of Ebola patients, and needs to provide more than the usual level of staffing for safety reasons, and purchases and uses expensive safety related gear and equipment, it is not clear whether those expenses would be reimbursed by the insurer.  Similarly, the cost of safety equipment for family members would also likely not be covered.

A number of insurers have posted information on their websites about the disease itself and when to get treated.  See, for example, Aetna. Similarly, Kaiser Permanente has lots of information about Ebola and treatment, but the materials mostly address obtaining care and being treated at Kaiser facilities.

Some insurers recommend that covered persons review their policies for coverage information.  See, e.g. Cigna. This may be useful with respect to coverage overseas and for evacuation services, but the policy is not likely to address the other questions discussed above.

The Blue Cross Blue Shield Plans affiliated with Health Care Service Corporation, including Texas, Illinois, Montana, New Mexico and Oklahoma, have information on their websites about Ebola, and indicates that treatment will be covered, including the hospital stay and other treatment, although some of the other issues are not addressed.

Given the fear and concern about this very deadly disease, it would be helpful if more insurers would clearly state their position regarding coverage.