The passage of the 21st Century Cures Act (“Cures Act”) and revisions to the Common Rule (45 CFR Part 46) (“Common Rule”) in the last year mandated significant changes to informed consent laws.  As a result of these changes, sponsors of research (“Sponsors”), institutions conducting research (“Institutions”), and the institutional review boards (“IRBs”) approving research will need to review policies and practices involving informed consent.  As explained below, a recently published FDA guidance document makes a first step toward implementing some of these changes by permitting waiver of certain consent requirements for low risk research involving human subjects. Additionally, a recent ruling by the Pennsylvania Supreme Court discussed below reminds investigators, Institutions, and Sponsors performing clinical research in Pennsylvania that state informed consent laws and common law must also be considered before conducting clinical research involving human subjects.  The following brief discussion provides some insight into how Sponsors, Institutions, and IRBs should take into account varying sources of law when determining when to require consent for research involving human subjects.

FDA Guidance on Waivers of Consent

On July 13, the United States Food and Drug Administration (“FDA”) issued a guidance document titled “IRB Waiver on Alteration of Informed Consent for Clinical Investigations Involving No More Than Minimal Risk to Human Subjects” (“Consent Guidance”).  The Consent Guidance states that “FDA does not intend to object to a sponsor initiating, or an investigator conducting, a minimal risk clinical investigation for which an IRB waives or alters the informed consent requirements” to the extent that the IRB documents that: the research “involves no more than minimal risk;” the waiver “will not adversely affect the rights and welfare of the subjects;” the research “could not practicably be carried out without the waiver;” and “subjects will be provided with additional pertinent information after participation,” if appropriate.  The Consent Guidance is an initial step toward implementing Section 3024 of the Cures Act, which amended the Food, Drugs, and Cosmetic Act to provide FDA with the authority to exempt certain research of drugs or medical devices from informed consent requirements if the research poses “no more than minimal risk” to human subjects and includes “appropriate safeguards to protect the rights, safety, and welfare” for participating subjects.  However, current FDA regulations do not provide IRBs with the power to waive consent except in certain circumstances involving an emergency or a life-threatening situation.  While FDA’s guidance documents contain disclaimers that the documents, themselves, lack any authority and cannot be relied upon, Sponsors, Institutions, and IRBs should be confident moving forward under the Consent Guidance as it stems directly from authority granted to FDA under the Cures Act and is consistent with the approach taken by the revised Common Rule.  The FDA is expected to provide updates to its own human research subject protection regulations in 21 CFR Parts 50 and 56, which based on the Consent Guidance will include “minimal research” provisions similar to the Consent Guidance and the revised Common Rule.  These rules will also address new provisions regarding identifiable biospecimens, which are not addressed under the Consent Guidance.  Once these new rules are established, FDA has stated that it will withdraw the Consent Guidance.

Recent Case Law

While Federal laws and regulations shape many aspects of informed consent, state laws may impose additional nuances that providers must understand. For example, a recent decision by the Pennsylvania Supreme Court will impact the manner in which informed consent must be obtained by physicians practicing in the state of Pennsylvania.  In Shinal v. Toms, M.D., 162 A.3d 429 (2017), Court held that physicians may no longer rely upon information provided by non-physicians to satisfy physician obligations under the MCARE Act, 40 Pa.  Stat. § 1303, et seq, which imposes a duty on physicians to obtain informed consent before performing certain procedures.  The specific law at issue was Section 504 of the MCARE Act, which creates a duty for a physician “to a patient to obtain the informed consent of the patient” before performing surgery, administering radiation or chemotherapy, administering a blood transfusion, inserting a surgical device, or “administering an experimental medication, using an experimental device or using an approved medication or device in an experimental manner.”  In Shinal v. Toms, M.D., 162 A.3d 429 (2017), the plaintiff asserted that Section 504 required Dr. Toms, the plaintiff’s surgeon, to provide all information and receive a patient’s informed consent personally in order to fulfill the physician’s duty for obtaining informed consent under the statute.  After an initial discussion with Dr. Toms regarding certain surgical options, the plaintiff later called to ask additional questions regarding different surgical procedures and was directed to a nurse to have her questions answered.  The plaintiff argued that her consent for the surgery was not sufficiently informed because the information provided to her about her surgical options should have been provided by Dr. Toms.  The Court agreed, and its 4-3 decision held that physicians in Pennsylvania must directly “disclose the information required to obtain informed consent.”

While Shinal involved consent for a surgical procedure, Section 504 of the MCARE Act also requires physicians to obtain informed consent  before administering an experimental drug or device.  This ruling will undoubtedly require many Institutions in Pennsylvania to change how informed consent is obtained from potential subjects in clinical trials, as it is common practice within the industry for physician investigators to delegate the informed consent process, or at least certain portions of the consent discussion with potential research subjects, to members of the Institution’s study staff.  Sponsors will likewise want to investigate the consent processes of Institutions conducting research on their behalf in Pennsylvania and review informed consent templates used by these Institutions to ensure they reflect the holding in Shinal.

The position expressed by the Shinal Court that only information provided by a licensed physician may be considered in determining whether the physician fulfilled his or her duty to provide informed consent appears to be unique among the states.  Nevertheless, it demonstrates to Sponsors, Institutions, and IRBs the importance of looking beyond FDA regulations and the Common Rule when developing and maintaining standard operating procedures and templates for obtaining informed consent.  Even if certain research may meet “minimal risk” rules at a federal level, Institutions must still abide by applicable state laws with regard to the requisite consent required before treating patients within the study.

The Federal Trade Commission (“FTC”) and the Antitrust Division of the Department of Justice (“Antitrust Division”) released their respective year-end reviews highlighted by aggressive enforcement in the health care industry. The FTC, in particular, indicated that 47% of its enforcement actions during calendar year 2016 took place in the health care industry (including pharmaceuticals and medical devices). Of note were successful challenges to hospital mergers in Pennsylvania (Penn State Hershey Medical Center and Pinnacle Health System), and Illinois (Advocate Health Care Network and North Shore University Health System). In both actions, the FTC was able to convince the court that the merger would likely substantially lessen competition for the provision of general acute-care hospital services in relevant areas in violation of section 7 of the Clayton Act. See FTC v. Penn State Hershey Med. Center, 838 F. 3d 327 (3d Cir. 2016); and FTC v. Advocate Health Care Network et al No. 1:15-cv-11473, 2017 U. S. Dist. LEXIS 37707 (N.D. Ill.Mar. 16, 2017)

The Antitrust Division, in similar fashion, touted its actions to block the mergers of Aetna and Humana, and Anthem and Cigna. Complaints against both mergers were filed simultaneously in July of 2016, and tried before different judges in the Federal District Court for the District of Columbia. After extensive trials, Judge Bates blocked the Aetna/Humana deal, and Judge Amy Berman Jackson blocked the Anthem/Cigna transaction. United States v. Aetna Inc., No. 1:16-cv-1494, 2017 U.S. Dist. LEXIS 8490 (D.D.C. Jan 23, 2017) and United States v. Anthem Inc., No. 1:16-cv-01493, 2017 U.S. Dist. LEXIS 23614 (D.D.C. Feb8, 2017).

In addition to their enforcement activities, the agencies promoted jointly issued policy guidelines, including their “Antitrust Guidance for Human Resources Professionals.” Although not specific to any industry, this guidance has particular relevance to the health care industry. Among other things, this guidance makes clear that naked wage-fixing (such as the wave of wage fixing claims relating to nurses) and no-poaching agreements (that would include agreements not to hire competing physicians) are not only per se illegal, but also subject to criminal prosecution.

While a marginal enforcement shift may be in store as a result of the change in administration, most signs point to a continued focus on the health care industry. Maureen K. Ohlhausen, appointed by President Trump as acting Chair of the FTC, reiterated in a speech recently delivered at the spring meeting of the American Bar Association’s antitrust section, that “[i]t’s extremely important we continue our enforcement in the health care space.” Likewise the Acting Director of the FTC’s Bureau of Competition – Abbott (Tad) Lipsky, appointed by Chairman Ohlhausen, applauded the FTC’s success in challenging the Advocate/Northshore Hospital merger noting, in a related FTC press release, that the “merger would likely have reduced the quality, and increased the cost, of health care for residents of the North Shore area of Chicago.”

Makan Delrahim, President Trump’s selection (awaiting confirmation) to head the Antitrust Division, recently lobbied on behalf of Anthem and its efforts to acquire Cigna, and has openly stated with respect to certain announced mergers, that size alone does not create an antitrust problem. Nevertheless, given the political climate and overall impact the health care industry has on the U.S. economy, the Antitrust Division’s efforts to open markets in the health care sector, particularly to generics and new medical technologies by challenging pay for delay deals and scrutinizing unnecessarily restrictive agreements among medical device manufacturers is likely to continue.

A wild card affecting future antitrust enforcement is increasing possibility of passage of the Standard Merger and Acquisitions Review Through Equal Rights Act of 2017 (H.R. 659 a/k/a the “SMARTER ACT”). This bill, recently approved by the House Judiciary Committee, would eliminate the FTC’s administrative adjudication process as it relates to merger enforcement, forcing the FTC to bring all such actions in court. In addition, it would align current preliminary injunction standards such that both the FTC and DOJ would face the same thresholds required of the Clayton Act rather than the more lenient standard under the FTC Act. A similar bill passed the House in 2016, but was not taken up by the Senate.

On March 15, 2017, the United States District Court for the Western District of Pennsylvania issued an opinion that sheds insight on how courts view the “writing” requirement of various exceptions under the federal physician self-referral law (or “Stark Law”). The ruling involved the FCA qui tam case, United States ex rel. Emanuele v. Medicor Assocs., No. 1:10-cv-245, 2017 U.S. Dist. LEXIS 36593 (W.D. Pa. Mar. 15, 2017), involving a cardiology practice (Medicor Associates, Inc.) and the Hamot Medical Center. The Court’s detailed discussion of the Stark Law in its summary judgment opinion provides guidance as to what may or may not constitute a “collection of documents” for purposes of satisfying a Stark Law exception.

This opinion is of particular note because it marks the first time that a physician arrangement has been analyzed since the Stark Law was most recently amended in November 2015, at which time the Centers for Medicare and Medicaid Services (“CMS”) clarified and codified its longstanding interpretation of when the writing requirement is satisfied under various exceptions.

Arrangements Established by a “Collection of Documents”

Both the “professional services arrangement” and “fair market value” exceptions were potentially applicable, and require that the arrangement be “in writing” and signed. However, two of the medical directorships were not reduced to a formal written agreement. The Defendants identified the following collection of documents as evidence that the writing requirement was satisfied:

  • Emails regarding a general initiative between Hamot and Medicor for cardiac services, but without any specific information regarding directorship positions, duties or compensation.
  • Letter correspondence between Hamot and Medicor discussing the potential establishment of a director position for the women’s cardiac program.
  • Internal summary that identified a Medicor physician as the director of the women’s cardiac program.
  • Unsigned draft Agreement for Medical Supervision and Direction of the Women’s Cardiac Services Program.
  • A one page letter appointing a Medicor physician as the CV Chair and identifying a three-year term that expired June 30, 2008.

The Court said that although “these kinds of documents may generally be considered in determining whether the writing requirement is satisfied, it is essential that the documents outline, at an absolute minimum, identifiable services, a timeframe, and a rate of compensation.” (emphasis added). In addition, the Court noted that CMS requires that at least one of the documents in the collection be signed by each party. After confirming that these “critical” terms were missing from the documents described above, the Court concluded that no reasonable jury could find that either arrangement was set forth in writing in order to satisfy Stark’s fair market value exception or personal service arrangement exception.

Expired Arrangements

Other directorships were initially memorialized in signed, formal written contracts, but they all terminated pursuant to their terms on December 31, 2006 and were not formally extended or renewed in writing on or prior to their termination. Thereafter, Medicor continued to provide services and Hamot continued to make payments under the agreements. The parties eventually executed a series of “addendums” to extend the term of each arrangement, although these addenda had a prior effective date. During the timeframe between when the agreements expired and when the addenda were executed, invoices were continuously submitted and paid.

Plaintiff argued that the failure to execute timely written extensions in advance of renewals resulted in a failure of all six arrangements to meet the “writing” requirement under a relevant Stark Law exception. The Court disagreed, explaining that there is no requirement that the “writing” be a single formal agreement and CMS has provided guidance as to the type of collection of documents that could be considered when determining if the writing requirement is met at the time of the physician referral. In this case, the Defendants specifically relied upon the invoices from Medicor to Hamot and the checks that were sent in payment thereof.

In deciding that a reasonable jury could find that there was a sufficient collection of documents, the Court denied Plaintiff/Relator’s motion for summary judgment with respect to these six ‘expiring” directorships, and the case will proceed to trial on these claims.

Hospitals should carefully consider this opinion when auditing Stark Law compliance of their physician arrangements. A more detailed article analyzing this case will be published in the July edition of Compliance Today.