FTC Prevails in Physician Merger Case Before the 8th Circuit

The 8^th Circuit Court of Appeals recently handed the Federal Trade Commission another appellate victory in its efforts to curtail anticompetitive mergers in the healthcare industry, affirming the FTC’s earlier District Court victory in Federal Trade Commission v. Sanford Health. The decision follows a number of other recent FTC appellate victories in healthcare merger cases – in the Third, Seventh and Ninth Circuits – over the last several years.

In the Sanford Health case, the FTC (joined by the State of North Dakota), alleged that Sanford Health’s proposed acquisition of a large multi-specialty physician group in Bismarck, North Dakota – Mid Dakota Clinic, P.C. – would have anticompetitive effects. In support of the claim, the FTC alleged that, post-merger, Sanford Health would have a 99.8% market share in the general surgeon services market in the Bismarck-Mandan region, a 98.6% share in pediatric services, an 85.7% share with respect to adult primary care services; and an 84.6% share of the OB/GYN physician services market. Each of these market shares, and the increase in these shares caused by the proposed merger, create presumptions under the FTC/DOJ Horizontal Merger Guidelines that the proposed transaction would have anticompetitive effects. Continue Reading

Supreme Court Resolves Statute of Limitation Circuit Split in False Claims Act Cases

By Ayman Rizkalla on June 10, 2019 Posted in Fraud & Abuse & False Claims Act, Healthcare Law, Healthcare Litigation

Last month, in a unanimous decision, the U.S. Supreme Court ruled that the analysis of the applicable statute of limitations under the False Claims Act (FCA) as set forth in 31 U.S.C. § 3731 is the same regardless of whether the government intervenes in the action or not. While the decision is not likely to affect either the government or relator conduct, it will encourage defendants to expand the scope of discovery to better gauge whether the action may be time barred.

Under the FCA, an action must be brought within: (1) six years of the date on which the violation was committed [31 U.S.C. § 3731(b)(1)]; or (2) three years of the date on which “the facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last.” Continue Reading

Georgia Leads the Way with Enactment of Pharmacy Anti-Steering Law

By Amy Jeon McCullough on May 29, 2019 Posted in Fraud & Abuse & False Claims Act, Healthcare Law, Pharmacy, Drugs, Medical Devices & Equipment

With an overwhelming amount of bi-partisan support, on May 7, 2019, Georgia enacted the Pharmacy Anti-Steering and Transparency Act, O.C.G.A. §26-4-119 (the GA Act). The GA Act goes into effect as of January 1, 2020.

As healthcare providers are well aware, prohibitions against self-referrals are not new – federal and state laws prohibiting self-referrals by physicians and other healthcare providers have been in place for decades (e.g., federal Stark Law; Anti-Kickback Statute). However, many pharmacy benefit managers (PBMs) and insurers have leveraged their affiliations with pharmacies to steer patients to their affiliated pharmacies without much regulatory oversight or transparency resulting in increased profits for the PBMs and insurers and negatively impacting patient choice and quality of care. The GA Act seeks to address these issues by imposing self-referral and anti-steering prohibitions against pharmacies affiliated with PBMs and insurers. Continue Reading

Caution: Curb Your Enthusiasm for the Reduced HIPAA Annual Limits

By Amy Jeon McCullough on May 22, 2019 Posted in Healthcare Law, HIPAA, Privacy, and Data Security

Until recently, the annual limit for civil monetary penalties (CMP) that could be levied against covered entities and business associates in violation of the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and their implementing regulations, as amended from time to time (collectively, HIPAA) was $1,500,000. On April 30, 2019, the U.S. Department of Health and Human Services (HHS) released a notice of enforcement discretion lowering the annual CMP caps for certain types of penalties imposed for violating HIPAA. Given 2018 was HHS’ all-time record year for HIPAA enforcement ($28.7 million in penalties collected), the new annual caps seemingly appear to provide relief to covered entities and business associates. The reduced annual caps certainly lower the financial risks for covered entities and business associates that have taken steps to meet HIPAA’s requirements.

However, covered entities and business associates should not get too excited because the reduction in the annual CMP caps are limited in many ways, including, as follows: Continue Reading

2019 Legislative Session – The Passage of Telehealth (HB 23)

By Steven Grigas and Bruce D. Platt on May 9, 2019 Posted in Government Affairs, Licensure & Regulatory, Health Insurers & Managed Care Organizations, Healthcare Law, Medicare & Medicaid

In the closing days of this year’s legislative session, the Florida House and Senate came to agreement on statutory language that adopts the parameters for telehealth for Florida. HB 23, sponsored by Representative Clay Yarborough, establishes a statutory basis for telehealth services, provides meaningful definitions of the terms telehealth and telehealth provider, and creates Section 456.47 Florida Statutes which provides the standards of practice under which all telehealth providers must operate. HB 23 further creates Sections 627.42396 and 641.31 relating to certain reimbursement requirements for contracts between health insurers, health maintenance organizations, and telehealth providers. Notably absent from this bill is earlier language that provided for a tax credit and a requirement of payment parity for out-of-state and in -state services. Continue Reading

Florida Legislature Repeals its “Certificate of Need” Law

By James M. Burns on April 30, 2019 Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Hospitals & Health Systems

In a somewhat surprising move, on April 29, 2019 the Florida Legislature passed legislation (HB 21) that repeals the state’s “Certificate of Need” (CON) laws with respect to general hospitals and tertiary services. Such laws, which are in place in many states, typically prohibit a healthcare provider from expanding its services and from entering new markets absent its ability to demonstrate to state regulators that there is an unmet need for such services in the target community. The Legislature’s action comes during the last week of the legislative session, and after numerous unsuccessful efforts to pass such legislation over the last several years. HB 21 now goes to Governor DeSantis for approval, and if signed, general hospitals and providers of tertiary services will be free of this requirement beginning in July (the legislation also provides that specialty hospitals will no longer be subject to the CON law starting in 2021; at least for now, nursing homes and hospices would still be subject to the CON regulations). Continue Reading

District Court Further Extends Review of CVS/Aetna Merger

By James M. Burns on April 10, 2019 Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Healthcare M&A, Joint Ventures, Transactions & Health Ventures

The District of Columbia District Court has again deferred its decision regarding whether to approve the merger between CVS Health and Aetna, a $69 billion transaction that was first announced back in December 2017. Notably, while the parties closed the transaction back in November of 2018, after reaching a proposed settlement with the US Department of Justice (DOJ) Antitrust Division that required CVS to divest its Part D Medicare business to WellCare, final approval of the deal has stalled as the Court continues to assess whether the proposed settlement adequately addresses the competitive harms addressed in the DOJ’s complaint that originally sought to derail the merger (as required by the Tunney Act). Pending a decision by the Court, CVS has voluntarily agreed not to integrate Aetna’s operations into CVS.

Since the November settlement was reached, the DOJ has received over 170 comments on the proposed settlement, many of which expressed concerns about whether it adequately addressed all of the potential competitive harms associated with the merger. Continue Reading

Tread Carefully – DC Federal Judge Weakens Association Health Plan Regulation

By Erin M. O'Neal and Christopher John Shin on April 4, 2019 Posted in Healthcare Law

A recent ruling by the United States District Court for the District of Columbia calls into question the recently expanded regulations allowing small employers to band together to establish Association Health Plans. This development should be monitored closely by employers and employer organizations currently sponsoring, or considering sponsoring, these plans.

Background

A group of unrelated employers wishing to establish an Association Health Plan (AHP) must satisfy a bona fide association test, as defined by regulations issued by the U.S. Department of Labor (DOL) interpreting the definition of employer under ERISA. Through advisory opinions issued to groups of employers wishing to establish an AHP, the DOL explained that satisfying the bona fide association test requires, among other things, that a commonality of interest be established among the employers. On June 21, 2018, the DOL published final regulations relaxing the long-standing factors required to establish a commonality of interest under the bona fide association test (the Final Rule). Additionally, the Final Rule expanded the scope of prior AHP guidance to allow working owners (i.e., self-employed individuals) to participate in an AHP. In doing so, the DOL made it easier for groups of small employers and sole proprietors to band together to form an AHP in order to avoid some of the more onerous requirements that apply to the small and individual group markets, including community rating. Continue Reading

Possible Changes to Stark Law in 2019

By Marcy Hahn-Saperstein on March 27, 2019 Posted in Healthcare Law, Medicare & Medicaid, Physicians

Last summer The Centers for Medicare and Medicaid Services (CMS) solicited input on potential amendments to the federal Physician Self-Referral Law (the Stark Law). CMS intends the amendments to eliminate obstacles to its stated goal of enhancing coordinated care and transitioning from volume-based to value-based payment systems. By the end of last summer, almost 400 stakeholders had provided feedback, including various physician and hospital associations. Many stakeholders advocated for new “value-based” exceptions to the Stark Law that would permit physicians to be compensated based on the “value or volume” of referred DHS but in the context of alternative payment models that would provide appropriate incentives that involve shared risks or shared savings. Many stakeholders urged CMS to revise the definition of commercial reasonableness to permit arrangements that are simply “useful” in the purchaser’s business and based on terms that are “typical” of such arrangements in order to allow for greater clinical integration. Some stakeholders advocated for the modification of the definition of fair market value so that physicians can be rewarded for value-based care without violating the “volume and value” provision of the Stark Law. Finally, stakeholders also urged CMS to clarify the “volume or value standard” itself with a variety of suggestions. Continue Reading

Proposed Florida House Legislation Advances, Requiring Reporting to the State Proposed Hospital and Group Practice Acquisitions

By James M. Burns on March 21, 2019 Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law

A bill recently introduced in the Florida legislature (HB 1243) requires Florida hospitals and group physician practices contemplating mergers or acquisitions to provide advance notice of such transactions to the Florida Attorney General’s Office. The bill has been reported favorably out of the Florida Health Market Reform Subcommittee. Currently, while the Florida Attorney General’s Office is authorized to, and frequently does, investigate such transactions for potential antitrust concerns, no obligation exists under Florida law for the merging parties to provide advance notice of such transactions to the State.

HB 1243 requires that whenever a Florida hospital or group physician practice of at least 4 physicians intends to engage in a merger or acquisition, information must be provided to the State that includes, among other things, a description of the proposed transaction, the primary service area served by the parties, and a description of how that service area would be impacted by the transaction. The legislation states this proposed submission by parties to the transaction is intended to assist the State in assessing whether further investigation as to the potential competitive implications of the proposed transaction is warranted.

The notice would be required to be submitted at least 90 days prior to consummation of the proposed transaction. This deadline is somewhat different than that under the federal Hart-Scott-Rodino Act (HSR Act), which also imposes a reporting obligation on merging parties (in healthcare and all other industries) in transactions above a certain dollar threshold (recently increased to $90 million). Under the HSR Act, merging parties can provide notice to the FTC/DOJ Antitrust Division of reportable deals at any time, but are required to await approval from federal regulators prior to consummating the transaction. Many such deals are approved within an initial 30 day “waiting period,” particularly where the federal regulators conclude that the deal does not raise competitive concerns. In other cases, the review can take up to several months, or longer, depending upon the circumstances. Continue Reading