District Court Further Extends Review of CVS/Aetna Merger

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

US Supreme Court to Hear FCA Statute of Limitations Case

By Jeremy Burnette on March 12, 2019 Posted in Fraud & Abuse & False Claims Act, Healthcare Law, Healthcare Litigation

The Eleventh Circuit Court of Appeals, in its ruling in Cochise Consultancy Inc. v. U.S. ex rel. Hunt, created a 3-way circuit split regarding the determination of the applicable statute of limitations period in a False Claims Act (FCA) case. On March 19, the United States Supreme Court will hear oral argument on the matter, hopefully ending the division among the circuit courts of appeal.

Pursuant to 31 U.S.C. § 3731(b)(1)-(2), two potential statutes of limitations apply to FCA cases. A qui tam plaintiff can bring an FCA case on behalf of the Government either (1) six years after the date of the alleged FCA violation or (2) three years after the date when the responsible Government official learned or should have known of the relevant facts supporting the claim, but not more than ten years after the alleged FCA violation.

The Fourth, Fifth, and Tenth Circuit Courts have held that a whistleblower plaintiff can only use the three-year, knowledge-based statute of limitations if the Government intervenes in the FCA case, reasoning that Congress intended this limitations period to apply only to the Government because the statute’s language specifically identified the knowledge of a responsible Government official as determinative of when the statute runs. Continue Reading

Antitrust Exemption Allows Health System to Avoid All Claims for Damages in Antitrust Class Action

By James M. Burns on March 7, 2019 Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Hospitals & Health Systems

Atrium Health (formerly known as Carolinas Healthcare System) scored a big victory in its defense of an antitrust class action on March 4, when the Court ruled that the plaintiffs in Benitez v. The Charlotte-Mecklenburg Hospital Authority, d/b/a Carolinas Health System, could not seek damages in the action. In granting the defendant’s motion for judgment on the pleadings on the issue, the Court held that Atrium was a governmental entity subject to the provisions of the Local Government Antitrust Act of 1984 (the LGAA), which grants local governments statutory immunity from antitrust claims for damages.

Notably, the plaintiffs’ antitrust claims in Benitez largely tracked allegations that had been made by the DOJ Antitrust Division when they brought an antitrust action against Atrium in 2016 (United States v. The Charlotte-Mecklenburg Hospital Authority). Specifically, the plaintiffs claimed that Atrium’s contracts with insurers contained “anti-steering” provisions that limited the ability of insurers to send their insureds to hospitals other than Atrium, driving up prices for inpatient services and thus inflating the amount of co-insurance that insureds were required to pay for services at Atrium. However, while the DOJ action (which was recently settled) sought only injunctive relief that would terminate the allegedly anticompetitive contract provisions, the Benitez plaintiffs sought damages for the alleged harm that contended they suffered as a result of the provisions. Continue Reading

Multiple States Considering Possible Modification to Their “Certificate of Need” Laws

By James M. Burns on February 13, 2019 Posted in Antitrust, Government Affairs, Licensure & Regulatory, Healthcare Law, Hospitals & Health Systems

In December, the U.S. Department of Health and Human Services issued a report – “Reforming America’s Healthcare System Through Choice and Competition” – expressly calling upon the states to repeal their “Certificate of Need” (CON) laws. In the report, HHS indicated that the existence of such laws – which typically prevent healthcare providers from expanding their services/entering new markets absence their ability to demonstrate to state regulators that there is an unmet need for such services in the community – has been a significant cause of escalating healthcare costs.

Perhaps in response to this prodding, legislation has recently been introduced in several states that would modify their respective CON laws. In Georgia (HB 198), South Carolina (HB 3823), Virginia (HB1680) and Alaska (HB 17), for example, legislation has been proposed that would either reduce the scope of such laws or repeal them altogether. In contrast, in Indiana, legislation (S. 573) has been introduced that would create a new CON law, something that has not occurred in any state in quite some time. Additionally, while not yet introduced, Florida is also expected to consider changes to its CON laws this legislative session as well. Continue Reading

Year in Review/Year Ahead: Medicaid Expansion: An Unanswered Call in 2018

By Steven Grigas on January 29, 2019 Posted in Affordable Care Act and Other Healthcare Reform Legislation, Healthcare Law, Medicare & Medicaid

The Akerman Healthcare Practice Group, as part of its ongoing informational blogs and Practice Updates, will be publishing a series of articles, each outlining a significant healthcare industry issue from 2018, with an eye towards what to expect in 2019. The following is the third in our series – The Year in Review/The Year Ahead:

One of the more significant “non-events” of 2018 was Florida’s continued rejection of the call for Medicaid expansion under the Affordable Care Act – a/k/a Obamacare. Florida remains one of 17 states that has not expanded Medicaid. Last debated in 2015, the Governor and Legislature of Florida have shown little interest in pursuing Medicaid expansion over the past few years. This comes despite a significant increase in the number of uninsured in the State, and a projected loss over 10 years of approximately $66 billion dollars. A recent study by the non-partisan Urban Institute found that an expansion of Medicaid in Florida would cover an additional 650,000 lives and lower the State’s uninsured rate from 15.7% to nearly 11%. And, while a poll of Florida residents indicated that about 68% favorably support expansion of Medicaid, Republican leadership of the State seemed more focused in 2018 upon alternative measures such as block grants, and premium assistance. Continue Reading

Year in Review/Year Ahead: Vertical Mergers

By James M. Burns and Bruce D. Platt on January 23, 2019 Posted in Healthcare M&A, Joint Ventures, Transactions & Health Ventures, Uncategorized

The Akerman LLP Healthcare Practice Group, as part of its ongoing informational blogs and Practice Updates, will be publishing a series of articles, each outlining a significant healthcare industry issue from 2018, with an eye towards what to expect in 2019. The following is the second in our series – The Year in Review/The Year Ahead:

In 2018, there were a number of large mergers in the healthcare industry that have the potential to significantly alter the ways in which healthcare is delivered in the United States. Several of the largest announced mergers were “vertical mergers” – mergers in which the merging parties are not current competitors, and are instead operating at different levels of the healthcare distribution chain. Two of the biggest such mergers – but certainly not the only ones – were the merger between Cigna and Express Scripts and CVS and Aetna. Each of these mergers paired a “top five” national health insurer with a “top five” pharmacy benefit manager.

Year in Review/Year Ahead: The Eliminating Kickbacks in Recovery Act of 2018-The New All-Payor Anti-Kickback Statute

By William J. Spratt, Jr. on January 22, 2019 Posted in Fraud & Abuse & False Claims Act, Health Insurers & Managed Care Organizations, Healthcare Law

The Akerman Healthcare Practice Group, as part of its ongoing informational blogs and Practice Updates, will be publishing a series of articles, each outlining a significant healthcare industry issue from 2018, with an eye towards what to expect in 2019. The following is the first in our series – The Year in Review/The Year Ahead:

The enactment, on October 24, 2018, of a federal law with a far too complicated name, i.e. the “Substance Use–Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act” or the “SUPPORT for Patients and Communities Act”, created an all-payor anti-kickback statute aimed at prohibiting certain marketing practices of the substance abuse treatment community. Specifically, within the Act is the Eliminating Kickbacks in Recovery Act of 2018 (‘EKRA”), which charts new ground for permissible ways to compensate employees and contractors engaged by “recovery homes,” “clinical treatment facilities,” and “laboratories.”