Health Law Advisor

California’s Assembly Bill 489 (“AB 489”) signals more than just a tweak to existing healthcare law—it’s a glimpse into how the next generation of regulation may shape the future of AI development and deployment in healthcare.

As large language models (LLMs) and other AI-driven health platforms accelerate in capability and adoption, lawmakers are scrutinizing where technological innovation may result in the unauthorized practice of medicine. The message is clear: the days of operating in a regulatory gray zone are numbered and the regulatory perimeter around healthcare AI is tightening such that states may begin to legislate how AI can present itself to the public, not just what it does in the background.

On July 17, 2025, the U.S. Court of Appeals for the Fourth Circuit held that a federal district court was “within bounds to order a do-over” in the case of Ron Elfenbein, a Maryland doctor who was found guilty of COVID-19-related health care fraud in 2023 in connection with upcoding and false documentation. Elfenbein was acquitted by the district court four months after his trial.

The Fourth Circuit affirmed a contingent order of the U.S. District Court for the District of Maryland granting a new trial and also reversed Elfenbein’s acquittal, rejecting the trial court’s conclusion that the jury had too little evidence to convict.

“[W]e do agree that the case was close—and we find it significant that the most damning evidence came not from the government’s witnesses but Elfenbein’s,” Judge Julius N. Richardson wrote for the appellate court.

On July 17, 2025, Oregon Governor Tina Kotek signed SB 537, which adds to Oregon’s growing set of workplace violence prevention laws relating to health care. The bill passed the state Senate with an 18-11 vote on June 23, and the House, 37-12, on June 26, during the final days of the legislative session. The new provisions add detailed requirements for health care work sites.

On July 29, 2025, Attorney General Pam Bondi issued a memorandum to all federal agencies providing guidance addressing “unlawful discrimination” on the basis of race, color, national origin, sex, religion, or other protected characteristics (the "July 29 Guidance").

According to the memorandum, the July 29 Guidance is intended to clarify “the application of federal antidiscrimination laws to programs or initiatives that may involve discriminatory practices, including those labeled [DEI] programs.”

The Expanding Enforcement Framework

Although the July 29 ...

On August 1, 2025, the U.S. Department of Health and Human Services (“HHS”) Health Resources and Services Administration (“HRSA”) issued a call for applications for a 340B Rebate Model Pilot Program (the “Pilot Program”).

The announcement of the Pilot Program signifies the intersection of several notable policy issues upon which stakeholders of the pharmaceutical supply chain have focused over the past few years, including drug manufacturer efforts to provide 340B discounts via retrospective rebates as opposed to upfront discounts, and the January 1, 2026 ...

On July 10, 2025, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule to establish the Ambulatory Specialty Model (ASM)—a mandatory value-based payment model for specialists who treat patients with heart failure or low back pain.

CMS selected heart failure and low back pain because these chronic conditions represent roughly 6% of total, annual spend for traditional Medicare. The model is scheduled to run from 2027 through 2031 and represents an expansion of CMS’s strategy to integrate specialty care into its broader efforts to manage chronic disease and control Medicare spending.

CMS is accepting public comments on the proposal through September 12, 2025, offering stakeholders an opportunity to help shape the model’s design and implementation.

On July 7, 2025, the Office of Inspector General (“OIG”) for the Department of Health and Human Services published Advisory Opinion 25-08 (“AO 25-08”), an unfavorable and strongly worded opinion interpreting the “arranging for” language in the Anti-Kickback Statute (“AKS”).

The AO involves a proposed arrangement for a medical device company (the “Requestor”) to pay a third-party vendor to access an electronic billing portal operated by the vendor that is used by some of the Requestor’s customers for certain billing operations. In issuing the unfavorable opinion, the OIG said the proposed arrangement “presents anti-competitive risks and risks of inappropriate steering” and characterized the arrangement as being “for the purpose of accessing referrals” from hospital customers that are clients of the vendor.

The Requestor in this AO is a medical device company that supplies "bill-only" products to hospitals. “Bill-only” products are items that are not part of a hospital’s regularly purchased inventory but rather are purchased in real time, such as when a surgeon is selecting the right size or component of a device to use during a surgery. According to the AO, what typically happens with “bill-only” products is that a representative of the medical device company delivers a selection of items to a hospital customer the day before or the day of a patient’s procedure so that the surgeon can select the specific items needed for that specific patient. Some of these “bill-only” items are used in procedures reimbursable by federal health care programs.

New from the Diagnosing Health Care Podcast: Can food really be the prescription for better health?

Discover how the “Food as Medicine” movement is reshaping health care and what it means for patients, providers, and the future of wellness.

On this episode, special guests Noah Voreades of OLIPOP and Ivan Wasserman of Amin Wasserman Gurnani join Epstein Becker Green attorneys Jessika Tuazon and Ada Peters to explore how food is being integrated into health care to prevent and manage chronic diseases.

On July 24, 2025, President Donald Trump issued Executive Order 14321, titled “Ending Crime and Disorder on America’s Streets” (“the E.O.”).

Although the E.O. has a number of elements, the one most notable for behavioral health stakeholders is a policy to increase use of involuntary commitment for mental health and substance use disorder treatment. The introduction proclaimed: “Shifting homeless individuals into long-term institutional settings for humane treatment through the appropriate use of civil commitment will restore public order.”

The backlash to the suggestion of a sweeping lock-up of people because of mental illness and addiction was swift and fierce. Many advocates and commenters immediately called out the E.O. as criminalizing mental illness, addiction, and homelessness. However, as a matter of federal policy, the civil commitment provision of the E.O. may have less impact than some of its other components.

On July 23, 2025, the president signed three AI-related Executive Orders (“E.O.s”) to accompany the recently released White House’s Artificial Intelligence (AI) Action Plan (“AI Action Plan”). These E.O.s seek to add clarity to, and drive forward, federal policy in the AI space.

While they all relate to AI, the E.O.s otherwise vary considerably in subject matter: “Accelerating Federal Permitting of Data Center Infrastructure”; “Promoting the Export of the American AI Technology Stack”; and “Preventing Woke AI in the Federal Government.”

As we noted in our July 24 blog, the White House is clearly determined to outpace other countries so that the U.S. benefits from any gains provided by AI through building AI infrastructure and bolstering AI-related exports. The Center for Data Innovation, from its perspective, stated in a press release that the actions pursued by the executive orders will advance U.S. goals of global AI dominance and enable the U.S. to better compete with China.