SCOTUS Kneecaps the Fourth Branch; Effect on Healthcare Regulations Is Uncertain

In the final ten days of the just-concluded Supreme Court Term, SCOTUS delivered two gut punches and an upper-cut amounting to at least a TKO to federal administrative agencies. Sometimes it's only the independent agencies that are called the "fourth branch of government," and other times the term refers to all federal agencies. The underlying rationale for the term is that most agencies exercise power closely resembling the powers under Articles I (rule-making), II (enforcement), and III (adjudication) of the U.S. Constitution. This concentration of power in the hands of unelected government officials has been a matter of concern for many observers and for others a welcome innovation to meet the evolving needs -- technical, scientific, economic, and political -- of our society. (Count me as having a foot planted in both camps.)

In an email message to subscribers, WaPo editor and columnist Ruth Marcus had this to say about the three decisions:

Lost in the immunity news was the last step in this term's anti-regulatory trifecta. First, the court made enforcement harder, ruling that agencies seeking civil fines can't use in-house judges but have to go to federal court for jury trials.[1] Next, the court made regulation harder, overturning the doctrine of Chevron deference.[2] Monday, the court junked the usual six-year deadline and said regulations can be challenged at any time by someone newly affected.[3] Taken together, as Justice Jackson noted, this means "chaos."

My annotations:

[1] Securities and Exchange Commission v. Jarkesy, No. 22-859 [Opinion: Roberts, C.J.; decided 6.27.2024; 6-3] 
Held: "When the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial rather than adjudication by an administrative law judge."

From Justice Sotomayor's dissent:

Throughout our Nation’s history, Congress has authorized agency adjudicators to find violations of statutory obligations and award civil penalties to the Government as an injured sovereign. The Constitution, this Court has said, does not require these civil-penalty claims belonging to the Government to be tried before a jury in federal district court. Congress can instead assign them to an agency for initial adjudication, subject to judicial review.  This Court has blessed that practice repeatedly, declaring it “the ‘settled judicial construction’” all along; indeed, “‘from the beginning.’”  Atlas Roofing Co. v. Occupational Safety and Health Review Comm’n, 430 U. S. 442, 460 (1977).  Unsurprisingly, Congress has taken this Court’s word at face value. It has enacted more than 200 statutes authorizing dozens of agencies to impose civil penalties for violations of statutory obligations.  Congress had no reason to anticipate the chaos today’s majority would unleash after all these years. (emphasis added) 

Today, for the very first time, this Court holds that Congress violated the Constitution by authorizing a federal agency to adjudicate a statutory right that inheres in the Government in its sovereign capacity, also known as a public right. According to the majority, the Constitution requires the Government to seek civil penalties for federalsecurities fraud before a jury in federal court.  The nature of the remedy is, in the majority’s view, virtually dispositive. That is plainly wrong. This Court has held, without exception, that Congress has broad latitude to create statutory obligations that entitle the Government to civil penalties, and then to assign their enforcement outside the regular courts of law where there are no juries. 

[2] Loper Bright Enterprises v. Raimondo, No. 22-451 [Opinion: Roberts, C.J.; decided 6.28.2024; 6-3]
Held: "The Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law simply because a statute is ambiguous; Chevron is overruled." Notice: Another opinion by the Chief Justice that overrules a sturdy precedent that has long been vilified by conservatives.

Chevron U.S.A. v. Natural Res. Def. Council is was a 40-year-old mainstay of federal administrative law. It recognized that statutes may contain silences or ambiguities, whether intentionally or not, that need to be resolved by agencies as part of their enforcement duties. Chevron stated that in such cases, if the agency interpretation is reasonable, federal courts should defer to the agency, even if the court would not have adopted the agency's reasonable interpretation if it were writing on a clean slate.

In Loper Bright, the Court ruled that such deference violates § 706 of the federal Administrative Procedure Act (and intimated that it was unconstitutional as either a violation of separation of powers or a violation of the nondelegation doctrine). Section 706 provides that a "reviewing court shall decide all relevant questions of law." It doesn't say how a reviewing should go about this task, and (imho) it takes a singular lack of imagination to conclude that deferring to a reasonable interpretation by an expert agency isn't a a way of deciding relevant questions of law. At the same time, it take an audacious imagination to conclude, as the majority does, that affected parties and federal judges will know the difference between "respect" for agency interpretations (which is okay) and deference to agency interpretations (which is not).

The result of the Court's overruling of Chevron is that federal judges at the trial, appeals, and Supreme Court level, are now free to substitute their preferred interpretation of Congressional silence or ambiguity in place of an agency's interpretation. 

Consider for a moment that many of these disagreements will concern technical, scientific, or policy expertise that agencies typically have in abundance and that courts usually lack. Justice Gorsuch illustrated just such a contrast in an opinion in the past two weeks in which he confused nitrogen oxide (a pollutant that was the subject of EPA regulation at issue in Ohio v. Environmental Protection Agency, No. 23A349 [Opinion: Gorsuch; decided 6.27.2024]) with nitrous oxide ("laughing gas"). Unfortunately, this is no laughing matter.

Just a comment -- for the time being -- on the implications for healthcare regulations. This industry may be the most regulated in the country. The Department of Health and Human Services -- along with its "subsidiary" agencies: the Food and Drug Administration, Center for Medicare and Medicaid Services,  Center for Disease Control and Prevention, Public Health Service, Indian Health Service, Office of Civil Rights, National Institutes of Health, etc. -- issues tons of regulations, opinions, and guidance documents each year. The statutes it enforces are among the most complex ever conceived by Congress, and they are replete with ambiguities and critical gaps, all of which require the HHS agencies in the first instance to interpret and enforce. If reasonable agency interpretations are subject to second-guessing by generalist judges -- not to mention politically-partial generalist judges -- expect a lot of chaos.

[3] Corner Post, Inc. v. Board of Governors of the Federal Reserve System, No. 22-1008 [Opinion: Barrett, .J.; decided 7.1.2024; 6-3]
Held: "An Administrative Procedures Act claim does not accrue for purposes of 28 U.S.C. § 2401(a) — the default 6-year statute of limitations applicable to suits against the United States — until the plaintiff is injured by final agency action."

The majority opinion disagrees with the decisions of eight circuit courts of appeals (a majority). The lower courts ruled that an agency's promulgation of a final rule constitutes "final agency action," which starts the six-year clock running for facial challenges to the rule. After that, only litigants who can show that they were injured in some specific way as a result of the application of an agency's rule can challenge the rule "as applied" to them.

The majority's position on when a cause of action "accrues" under the APA may be the most radical of the three decisions Ruth Marcus identified above. As Justice Jackson wrote in her dissenting opinion:

The Court’s baseless conclusion means that there is effectively no longer any limitations period for lawsuits that challenge agency regulations on their face. Allowing every new commercial entity to bring fresh facial challenges to long-existing regulations is profoundly destabilizing for both Government and businesses.  It also allows well-heeled litigants to game the system by creating new entities or finding new plaintiffs whenever they blow past the statutory deadline. 

The majority refuses to accept the straightforward, commonsense, and singularly plausible reading of the limitations statute that Congress wrote. . . .

Justice Jackson concludes with an apt epitaph that applies to all three of these administrative-procedure cases -- 

Federal Judge (in the Northern District of Texas, Of Course) Enjoins FTC from Enforcing Its Ban on Non-Competes

U.S. District Judge Ada Brown (N.D. Tex) today entered an order against the Federal Trade Commission that puts on indefinite hold the agency's controversial rule barring most non-compete clauses (previously discussed here). The opinion can be found at Law360 (behind a paywall). Once the opinion is available for free, I'll add a link to this post. 

Before a preliminary injunction can be issued, the moving party must satisfy a number of requirements. On the important issue of "likelihood of prevailing on the merits," the challengers (the Chamber of Commerce and others) persuaded Judge Brown that "the text, structure, and history of the FTC Act reveal that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition under Section 6(g)" (opinion at p.1). Beyond that, Judge Brown ruled that the FTC's rule is "arbitrary and capricious," because:

On this record, the evidence put forth by the Commission does not warrant the NonCompete Rule’s expansive ban. In enacting the Rule, the Commission relied on a handful of studies that examined the economic effects of various state policies toward non-competes. . . . However, no state has ever enacted a non-compete rule as broad as the FTC’s NonCompete Rule. Further, the FTC’s evidence compares different states’ approaches to enforcing non-competes on based on the specific factual situation—completely inapposite from the FTC imposing a categorical ban. . . . As to this latter point, the FTC provides no evidence or reasoned basis. The Commission’s lack of evidence as to why they chose to impose such a sweeping prohibition—that prohibits entering or enforcing virtually all non-competes— instead of targeting specific, harmful non-competes, renders the Rule arbitrary and capricious. (opinion at pp. 21-22)

In addition:

the FTC insufficiently addressed alternatives to issuing the Rule. “The role of this court is to determine whether the [FTC] provides a sufficient explanation of the alternatives to permit a reasoned choice among the different courses of action.” Sierra Club v. Fed. Highway Admin., 715 F. Supp. 2d 721, 734 (S.D. Tex. 2010), aff’d, 435 F. App’x 368 (5th Cir. 2011). However, on this record, the FTC did not sufficiently consider alternatives. (See generally ECF No. 149). While considering less disruptive alternatives, the FTC “was required to assess whether there were reliance interests, determine whether they were significant, and weigh any such interests against competing policy concerns.” Wages & White Lion, 16 F.4th at 1139 (quoting Regents, 591 U.S. at 33, 140 S. Ct. at 1915)). The record shows the Commission did not conduct such analysis, instead offering the conclusion that “case-by-case adjudication of the enforceability of noncompetes has an in terrorem10 effect that would significantly undermine the Commission’s objective to address non-competes’ tendency to negatively affect competitive conditions in a final rule.” (record citations omitted) (opinion at p. 22)

The original effective date was September 4, and Judge Brown has promised a determination on the merits of the challengers' arguments no later than August 30. Expect one or more trips to the Fifth Circuit by the FTC to get their rule back on track.  

Settlement Off in Bankruptcy Case Involving Purdue

Let's set the stage with the first paragraph from Thursday's majority opinion in the Purdue Pharma bankruptcy case:

The opioid epidemic represents “one of the largest public health crises in this nation’s history.” In re Purdue Pharma L. P., 69 F. 4th 45, 56 (CA2 2023).  Between 1999 and 2019, approximately 247,000 people in the United States died from prescription-opioid overdoses. In re Purdue Pharma L. P., 635 B. R. 26, 44 (SDNY 2021).  The U. S. Department of Health and Human Services estimates that the opioid epidemic has cost the country between $53 and $72 billion annually. Ibid. 

The history in this case is a little complicated, but the Syllabus's description can be boiled down to this:

Owned and controlled by the Sackler family, Purdue began marketing OxyContin, an opioid prescription pain reliever, in the mid-1990s.  After Purdue earned billions of dollars in sales on the drug, . . .thousands of lawsuits followed.  Fearful that the litigation would eventually impact them directly, the Sacklers initiated a “milking program,” withdrawing from Purdue approximately $11 billion—roughly 75% of the firm’s total assets—over the next decade. Those withdrawals left Purdue in a significantly weakened financial state.  And in 2019, Purdue filed for Chapter 11 bankruptcy.  

During that process, the Sacklers proposed to return approximately $4.3 billion to Purdue’s bankruptcy estate.  In exchange, the Sacklers sought a judicial order releasing the family from all opioid-related claims and enjoining victims from bringing such claims against them in the future.  The bankruptcy court approved Purdue’s proposed reorganization plan, including its provisions concerning the Sackler discharge.

The Court held (5-4) "that the bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor without the consent of affected claimants." Meaning? 

1. The Sackler family's assets aren't protected, which seems only fair since they were plundered from Purdue in the first place. That's the good news. 

2. But that's the only good news, and it's not really good news at all, not if you were one of the claimants who stood to receive compensation pursuant to the settlement agreement. The truly awful news is that the settlement agreement, which was going to pay out billions to the claimants, is now kaput. This is the opening paragraph of Justice Kavanaugh's dissenting opinion:

Today’s decision is wrong on the law and devastating for more than 100,000 opioid victims and their families.  The Court’s decision rewrites the text of the U. S. Bankruptcy Code and restricts the long-established authority of bankruptcy courts to fashion fair and equitable relief for mass-tort victims.  As a result, opioid victims are now deprived of the substantial monetary recovery that they long fought for and finally secured after years of litigation.

Texas Medical Center Hospitals & Surgery Group Paid $15 Million to Settle Concurrent Surgery Violations

Press release from the U.S. Attorney's Office for the Southern District (June 24):

Baylor St. Luke’s Medical Center (BSLMC), Baylor College of Medicine (BCM) and Surgical Associates of Texas P.A. (SAT) have jointly agreed to pay $15 million to resolve claims they billed for concurrent heart surgeries in violation of Medicare teaching physician and informed consent regulations . . . .

The investigation began Aug. 7, 2019, upon the filing of a sealed qui tam lawsuit aka whistleblower complaint. The whistleblower alleged Coselli, Lamelas and Ott - three heart surgeons who performed at St. Luke’s - engaged in a regular practice of running two operating rooms at once and delegating key aspects of extremely complicated and risky heart surgeries to unqualified medical residents. The heart surgeries at issue are some of the most complicated operations performed at any hospital including coronary artery bypass grafts, valve repairs and aortic repair procedures. These surgeries typically involve opening a patients’ chest and placing the patient on the bypass machine for some portion of time.  

Medicare regulations dictate when teaching physicians can leave the operating room for any operation, no matter how complex. 

The settlement resolves allegations that from June 3, 2013, to Dec. 21, 2020, Ott, Coselli and Lamelas violated these rules in various respects. Surgeons often ran two operating rooms at once and failed to attend the surgical “timeout”— a critical moment where the entire team would pause and identify key risks to prevent surgical errors, according to the allegations.

Additionally, surgeons would allegedly enter a second or occasionally a third operation without designating a backup surgeon. At times, the surgeons allegedly hid these activities by falsely attesting on medical records they were physically present for the “entire” operation. In addition, medical staff did not inform patients the surgeon would be leaving the room to perform another operation. 

Scary? Yes, but this is not an isolated incident. There have been a number of such enforcement actions for concurrent surgeries around the country, often involving top hospitals that also run training programs (like the hospitals in this enforcement action) with (I am guessing) "star" surgeons who are in high demand.

Joanna Borman, an associate in the D.C. office of Dentons, has written an excellent analysis of some of the more notorious cases, along with her recommendations for hospitals that allow concurrent surgeries to be performed:

To ensure compliance with the Medicare rules for overlapping surgeries, providers should consider:

• updating informed procedural consent forms to clearly notify patients that their surgeon may be absent for portions of their surgery, but will be present during critical portions of the surgical procedure;
• developing institutional guidelines on “critical” or “key” portions of surgeries to ensure that all surgeons understand the requirements for overlapping surgeries;
• exploring checks and balances in surgery scheduling platforms, including the use of controls to limit or monitor surgical scheduling; and
• reviewing a medical record sample to ensure documentation of the teaching physician’s presence and the designation of any required backup surgeons is adequate to meet Medicare billing guidelines.

Ms. Borman's analysis is short, easy to read, and highly recommended. (See also, Petrie-Flom Center, "Concurrent Surgeries: Medical, Legal, and Ethical Issues" (2016, link); Washington Medical Commission, "Overlapping and Simultaneous Elective Surgeries" (2018, link); Jenn Abelson, et al., "Concurrent surgeries come under new scrutiny," Boston Globe, Dec. 19, 2015; link (possible paywall).)

Infant Mortality in Texas -- Already High -- Increased After SB 8 and Dobbs

A new study in JAMA Pediatrics (June 24, 2024) (abstract here, apparently free, at least for a while) finds that infant and neonatal deaths in Texas increased 12.9% after Texas banned nearly all abortions after an embryonic heartbeat could be detected (usually around the sixth week of gestation). The Texas law in question is Senate Bill 8, passed in 2021, and its restrictions are legally unassailable after SCOTUS's 2022 decision in Dobbs to wipe Roe v. Wade off the books, which eliminated federal constitutional protection for the right to choose to and a pregnancy. 

Before SB 8 was enacted, Texas accounted for slightly more than 10% of all neonatal and infant deaths in the United States, about 15% more than Texas's 8.7% percent of the total U.S, population. Significantly, the study observes that "[d]escriptive statistics by cause of death showed that infant deaths attributable to congenital anomalies in 2022 increased more for Texas (22.9% increase) but not the rest of the US (3.1% decrease)."

The study cites the increase in infant and neonatal mortality as one of the "unintended consequences" of SB 8, which is debatable if you believe that persons (including members of a legislative body) presumably intend the reasonably foreseeable consequences of their actions. Banning abortions for all intents and purposes guaranteed an increase in the number of fetuses with fatal anomalies and other conditions incompatible with life that would be carried to viability and then die. Anyone in the Texas legislature who didn't see this coming doesn't belong in public office. The same goes for any legislator who saw this coming and voted for SB 8 anyway.

The results of Texas's cruel abortion law -- cited as "important unintended consequences" by the authors of the study -- include "trauma to families and medical cost as a result of increases in infant mortality." Trauma to literally hundreds of families who have been harmed in this particular manner by SB 8. The impact on foster care has been significant. The economic burden for many families produces additional trauma. The cascade of effects of our laws is, in a word, ghastly.

Does EMTALA Require Medically-Appropriate Abortion Even in the Absence of a State Exception for Emergency Medical Conditions? [Updated June 27]

One of the most eagerly awaited opinions yet to be released by SCOTUS is -- or was (see below) -- Moyle v. United States, Docket No. 23-726. The question presented is "Whether the Supreme Court should stay the order by the U.S. District Court for the District of Idaho enjoining the enforcement of Idaho’s Defense of Life Act, which prohibits abortions unless necessary to save the life of the mother, on the ground that the Emergency Medical Treatment and Labor Act preempts it."

The federal district court for Idaho ruled that EMTALA pre-empts state law and requires hospitals to provide stabilizing medical care for emergency conditions, which federal law defines more broadly than life-threatening conditions.The U.S. Court of Appeals for the Ninth Circuit declined to stay the lower-court injunction against enforcement of Idaho's law pending appeal from the district court's ruling. 

This set up the appeal to SCOTUS. Merits briefs were filed and the case was argued in April. With the Supreme Court's term winding down, Moyle was one of the most anticipated cases left on the Court's docket, especially after a Fifth Circuit decision that rejected the EMTALA pre-emption argument (Texas v, Becerra, No. 23-10246, 5th Cir., Jan. 2, 2024).

SCOTUSBlog (free access) reports that Bloomberg (possible paywall) reports that earlier today, inadvertently and only briefly, SCOTUS posted an opinion in Moyle that dismisses the case on the ground that review was improvidently granted. Assuming no change after the premature release, this will keep the 9th Circuit's refusal to stay the district court's injunction pending appeal. 

Update: On Thursday, June 27, SCOTUS released the official order and concurring and dissenting opinions:

A. The effect of this order is to allow the district court's injunction against enforcement of the restrictive Idaho law, which means doctors and hospitals may provide EMTALA-mandated stabilizing treatment -- including abortions, as needed -- when continuing the pregnancy represents a threat to the pregnant person's health. Eventually the 9th Circuit will decide this case on the merits (assuming there's no problem with standing), the losing party will ask SCOTUS to review, and SCOTUS will decide in its discretion whether to grant the request.

B. A majority of the Court is unlikely to say this, but it's obvious that they view the Court's January actions to be a mistake. Which actions? All of them:

• Entering a stay that had the effect of negating EMTALA and allowing the restrictive Idaho law to be enforced;
• Skipping over the usual order of things, which would typically allow the Court of Appeals to rule on the merits before deciding whether to grant review; and
• Treating the petitioner's request for a stay as the equivalent of a petition for certiorari and then granting the "petition."

C. Some of the Justices weren't shy about calling out other Justices, either for entering a stay in the first place or for now changing their minds about the stay. There were lots of opinions, and they don't conform to the usual 6-3 lineup along party lines:

1. Opinion per curiam. 
2. Kagan, J., filed a concurring opinion, in which Sotomayor, J., joined, and in which Jackson, J., joined as to Part II. 
3. Barrett, J., filed a concurring opinion, in which Roberts, C. J., and Kavanaugh, J., joined. 
4. Jackson, J., filed an opinion concurring in part and dissenting in part. 
5. Alito, J., filed a dissenting opinion, in which Thomas, J., joined, and Gorsuch, J., joined as to Parts I and II.

Friday's Firearms Decision from SCOTUS: A Few Thoughts

Following up on my two Father's Day posts (here and here) despairing the Supreme Court's tendency to favor gun ownership over gun registration. In their 6-3 Bruen decision two years ago, the Justices struck down a New York firearm regulation. The test, in a majority opinion by Justice Thomas, held:

that when the Second Amendment’s plain text covers an individual’s conduct, the Constitution presumptively protects that conduct.  To justify its regulation, the government may not simply posit that the regulation promotes an important interest. Rather, the government must demonstrate that the regulation is consistent with this Nation’s historical tradition of firearm regulation. Only if a firearm regulation is consistent with this Nation’s historical tradition may a court conclude that the individual’s conduct falls outside the Second Amendment’s “unqualified command.” (emphasis added)

Lower courts since 2022 have struggled to apply the Bruen test. Part of the confusion arises from the fact that generalist judges aren't necessarily good historians. Beyond that, the historical record is often unclear, especially when it is over 300 years old, and many histories across many disciplines illustrate that there is often for debate about mean even among trained historians. Finally, and perhaps most fundamentally, the Bruen majority didn't explain what justifies making this nation's historical tradition the ultimate test of constitutionality in Second Amendment cases. What's wrong with strict scrutiny and a compelling-state-interest test? 

Last Friday the Court handed down its opinion in the Rahimi case, upholding 18 U.S.C. § 922(g)(8), the federal statute that prohibits gun possession by anyone who is subject to a domestic violence restraining order and as to whom "the order . . . either contain[s] a finding that the defendant 'represents a credible threat to the physical safety' of his intimate partner or his or his partner’s child, or 'by its terms explicitly prohibit[s] the use,' attempted use, or threatened use of 'physical force' against those individuals. (citations omitted). 

A few things to note:

1. Liberal and conservative justices alike joined the majority opinion, 8-1.
2. The majority's test for constitutionality was a watered-down version of Bruen. Unfortunately, this nation's history and tradition are still the defining inquiry, but an analogous law or policy will suffice. The majority rejected the idea that there must be an historical "twin" in order for the government to prevail.
3. The lone dissenter was Justice Thomas, the author of Bruen. If you want to know how cock-eyed the Bruen test is, his dissenting opinion in Rahimi is a good place to start. A legal test that forbids states or the federal government to keep firearms out of the hands of a person who is an on-going threat to the physical safety of his intimate partner or to a child of either of them -- a policy that is so sensible that it hardly needs to be litigated -- is a deeply flawed legal test.

SCOTUS Grants Review in Transgender-Care Case for OT 2024

Amy Howe at SCOTUSBlog summarized the Court's action succinctly:

The justices on Monday agreed to take up a challenge to a Tennessee law that bans gender-affirming care for transgender minors. The law bars treatments such as puberty blockers and hormone therapy for transgender patients under 18. The court will hear arguments in the case in the fall, with a decision likely by next summer.

This will be all over the news tonight and in tomorrow's morning papers, so I will keep this post brief. I'm sure there will be more posts to follow over the next twelve  months. As pointed out in the Solicitor General's petition for review, "Although [transgender] care has been provided to adolescents for decades, in the last three years eighteen other States have adopted categorical bans like Tennessee’s. . . . Two additional States have adopted bans with very limited exceptions." (Petition at p. 3, text and n.1) Beyond the sheer numbers, limitations and prohibitions on transgender care has become a flashpoint in the current culture wars in this country.  

1. The case: United States v. Skrmetti, Docket No. 23-477 (order list for June 24, 2024)
• The decision below: L.W. v. Skrmetti, 83 F.4th 460 (6th Cir., Sept. 28, 2023) (PDF) -- reversing preliminary injunctions in two cases -- one from Kentucky and the other from Tennessee; the constitutionality of only the Tennessee statute is before the Supreme Court)
• Question presented: "Whether Tennessee Senate Bill 1 (SB1), which prohibits all medical treatments intended to allow “a minor to identify with, or live as, a purported identity inconsistent with the minor’s sex” or to treat “purported discomfort or distress from a discordance between the  minor’s sex and asserted identity,” Tenn. Code Ann.  § 68-33-103(a)(1), violates the Equal Protection Clause of the Fourteenth Amendment."
2. The statute:
• The Tennessee statute: “Prohibition on Medical Procedures Performed on Minors Related to Sexual Identity," (codified at Tenn. Code Ann. § 68-33-101 et seq.)
• The Kentucky statute (not included in the issue presented (and accepted) for review): "An Act Relating to Children," 2023 Ky. Acts 775 (codified at Ky. Rev. Stat. Ann. § 311.372)

Texas Medical Board Punts (Again) on Emergency Exception to Abortion Ban

This past Friday, June 21, the TMB issued a final rule "[that amends] 22 TAC 165 by adding . . . section[s] 165.7-165.9 concerning Exceptions to the Abortion Ban." 

Previous posts to this blog have commented on the vague and generally unhelpful nature of the rule as it was proposed by the TMB (here and here). After receiving what the TMB president describes as "hundreds of comments from private citizens, physicians, professional associations and private organizations," the Board's efforts have produced a final rule that is virtually identical to the proposed rule.

Doctors are left to determine what constitutes an "emergency condition" based upon reasonable medical judgment. Considering the criminal penalties for violating the abortion ban (a massive fine and up to life in prison), as well as the possibility that two (or more) doctors will disagree about diagnoses and treatments, this standard will predictably cause physicians in a number of situations to be overly cautious about performing an abortion.

Here's one of those situations: A pregnant woman is determined to have a medical condition that does not yet threaten her life or an injury to a major bodily function. But, if the pregnancy isn't terminated, the condition will predictably worsen and the woman will eventually be on death's doorstep. Does it make sense to wait until the last possible moment to intervene? But would the earlier version of this condition constitute a "medical emergency"? 

In the Cox case earlier this year, the Texas Supreme Court rejected a trial court's order prohibiting the Attorney General from enforcing the abortion ban against Kate Cox and her physician. The trial court's order was based upon the attending physician's "good faith belief [that] continuing the pregnancy puts her at high risk for severe complications threatening her life and future fertility, including uterine rupture and hysterectomy." The court faulted (implicitly) plaintiff's counsel for not eliciting a statement from the physician that her opinion was based upon reasonable medical judgment. Despite this narrow reading of the law, the court did offer some reasonably helpful commentary for future cases:

• Waiting until death is imminent: "[T]he statute does not require “imminence” or, as Ms. Cox’s lawyer characterized the State’s position, that a patient be “about to die before a doctor can rely on the exception.”  The exception does not hold a doctor to medical certainty, nor does it cover only adverse results that will happen immediately absent an abortion, nor does it ask the doctor to wait until the mother is within an inch of death or her bodily impairment is fully manifest or practically irreversible. (emphasis added) 
• Risk of liability based on a different physician's contrary opinion: "The exception does not mandate that a doctor in a true emergency await consultation with other doctors who may not be available.  Rather, the exception is predicated on a doctor’s acting within the zone of reasonable medical judgment, which is what doctors do every day.  An exercise of reasonable medical judgment does not mean that every doctor would reach the same conclusion. (emphasis added)   

One mystery is why the medical board didn't put these two issues to rest once and for all by explicitly including the Supreme Court's language. Instead, the new rule ends with a Delphic comment promising not to discipline a physician who exercises reasonable medical judgment, followed by a cross-reference to § 74.552 of the Texas Civil Practice and Remedies Code, which adds absolutely nothing to our understanding of that outcome-determinative phrase.

This is really the best the Texas Medical Board can do?

Mark Hall on HCA's Acquisition of Tax-Exempt Health System

Wake Forest law professor Mark Hall has released the latest chapter in his exhaustive preliminary report on the 2019 acquisition of Asheville, North Carolina's tax-exempt Mission Health System. As he writes in this new chapter: "As a result, Mission’s flagship facility became the fifth largest for-profit hospital in the country. Prior to HCA’s purchase, Mission had been operated as a nonprofit “charitable” organization ever since its founding in 1885." Prof. Hall's goal is to describe in as much detail as possible the decision-making process that led to the acquisition, how Mission Health performed before the acquisition, and how the system has performed over the next 5 years. (McKenzie Wicker wrote a comprehensive piece for the Asheville Citizen Times in 2020. Mission Health has been a major news story for the five years since the acquisition. See also NBC News, Nov. 13, 2023 and related stories.)

 

The hospital world is divided into three types of entity: public hospitals, private for-profit hospitals, and private nonprofit (and almost always tax-exempt) hospitals. For-profits are expected to generate net revenues that may be put to various uses but are also expected to be distributed to investors (increased share values, dividends, etc.). Nonprofits are also expected to generate net revenues, but are barred from benefitting private interests by state and federal laws (including § 501(c)(3) of the Internal Revenue Code, which is applicable to most nonprofit hospitals). A major question that garners the attention of state courts and legislatures as well as members of Congress from time to time is whether the tax subsidies that flow to tax-exempt hospitals are justified by a corresponding benefit to the public (principally but not exclusively improved access to care, higher quality of care, lower prices for that care, medical education, medical research, and charity care). Across the country, the answer appears to be mixed: sometimes yes, sometimes no.

These three categories are not impermeable spheres. Various combinations are permitted and mostly take the form of joint ventures, mergers, or acquisitions. These different arrangements raise all sorts of legal and public-policy issues. To perform any sort of useful analysis, however, we need facts. 

With mergers and joint ventures, policy-makers tend to be most concerned with making sure the nonprofit/tax-exempt entity doesn't become a profit-making (and profit-distributing) arm of its for-profit partner. 

With outright acquisitions, the issues are different because the acquired tax-exempt entity will be operated as a for-profit business. Prof. Hall is analyzing each one in a separate release. As described by the Nonprofit Law Blog (as of May 30, 2024), the entries so far are these:

• Mission Hospital’s Financial Performance Under HCA. Working Draft (2024).
by Professor Mark Hall
• Mission Hospital’s Quality Ratings Following HCA’s Acquisition. Working Draft (2024).
by Professor Mark Hall
• Mission Hospital Charity Care Following HCA’s Acquisition. Working Draft (2024).
by Professor Mark Hall
• Private Equity and the Corporatization of Health Care (abstract). Stanford Law Review (2024).
by Professors Erin Brown and Mark Hall ("These investors seek to earn handsome profits by rapidly increasing revenues before selling off the investment. Private equity’s incursion into health care is especially concerning. The drive for quick revenue generation threatens to increase costs, lower health care quality, and contribute to physician burnout and moral distress. These harms stem from market consolidation, overutilization and up-coding, constraints on physicians’ clinical autonomy, and compromises in patient care."). My recent blog post on this topic is here.
• Rediscovering the Importance of Free and Charitable Clinics. New England Journal of Medicine (202[3]; abstract).
by Professor Mark Hall

To this list we can now add Thursday's entry, Mission Hospital’s Decision to Sell to HCA. Working Draft (2024). by Professor Mark Hall.

HIPAA Violation Alleged Against Texas Physician

We all know HIPAA, the Health Insurance Portability and Accountability Act of 1996 (Public Law 104-191), because seemingly every visit to every doctor starts with an HIPAA authorization form that allows patients to designate persons with whom personal health information (PHI) can be shared. The statute is pretty bare-bones, but it authorizes HHS to issue rules, which it did from 2000 to 2013 (summarized at the bottom of this post*). 

The cardinal rule for health care professionals is pretty simple: Don't access or spread the PHI of patients unless there's a need to know (with respect to the person accessing the PHI and the person on the receiving end). There are a gazillion technical aspects to the rule, but my version will cover the vast majority of situations in which a person who is covered by the rule (including health care professionals) seeks access to PHI.

A violator of HIPAA faces civil and criminal prosecution that may result in fines or even jail time. A medical resident at Baylor College of Medicine has been indicted for alleged HIPAA violations and if convicted faces the possibility of a $250,000 penalty and up to ten years in prison. Here's DOJ's summary of the case:

A Houston doctor has been indicted for obtaining protected individual health information for patients that were not under his care and without authorization, announced Alamdar S. Hamdani.

The four-count indictment alleges [Ethan] Haim[, Dallas,] obtained personal information including patient names, treatment codes and the attending physician from Texas Children’s Hospital’s (TCH) electronic system without authorization. He allegedly obtained this information under false pretenses and with intent to cause malicious harm to TCH.

 According to the indictment, Haim was a resident at Baylor College of Medicine and had previous rotations at TCH as part of his residency.

In April 2023, Haim allegedly requested to re-activate his login access at TCH to access pediatric patients not under his care. The indictment alleges he obtained unauthorized access to personal information of pediatric patients under false pretenses and later disclosed it to a media contact.

According to Becker's Hospital Review (June 17),  

[Haim] is accused of violating HIPAA by leaking internal documents from Houston-based Texas Children's Hospital concerning gender-affirming services. . . . 

This unauthorized access allegedly allowed him to obtain patients' personal health information, including names, treatment codes and details of the attending physicians. . . . 

In May 2023, Dr. Haim shared these internal documents with Christopher Rufo, a senior fellow at the Manhattan Institute in New York City. . . .

Although a HIPAA violation is a violation, not all violations are created equal. Inadvertence, carelessness, a desire to be helpful -- none of these excuses a violation of HIPAA, but the key to this case is likely to be the apparently political nature of Dr. Haim's alleged breach and this sentence in the DOJ press releasee: "He allegedly obtained this information under false pretenses and with intent to cause malicious harm to TCH." If true, not a good way to start a career in medicine!
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*HHS's HIPAA rules (source):

• HHS published a final Privacy Rule in December 2000, which was later modified in August 2002. This Rule set national standards for the protection of individually identifiable health information by three types of covered entities: health plans, health care clearinghouses, and health care providers who conduct the standard health care transactions electronically.  Compliance with the Privacy Rule was required as of April 14, 2003 (April 14, 2004, for small health plans).
• HHS published a final Security Rule in February 2003. This Rule sets national standards for protecting the confidentiality, integrity, and availability of electronic protected health information. Compliance with the Security Rule was required as of April 20, 2005 (April 20, 2006 for small health plans).
• The Enforcement Rule provides standards for the enforcement of all the Administrative Simplification Rules.
• HHS enacted a final Omnibus rule that implements a number of provisions of the HITECH Act to strengthen the privacy and security protections for health information established under HIPAA, finalizing the Breach Notification Rule.
• View the Combined Regulation Text - PDF (as of March 2013). This is an unofficial version that presents all the HIPAA regulatory standards in one document. The official version of all federal regulations is published in the Code of Federal Regulations (CFR). View the official versions at 45 C.F.R. Part 160 - PDF, Part 162 - PDF, and Part 164 - PDF.

COVID-19 Vaccine Fraud: The Worst of the Worst?

Here's the case summary from USDOJ (Office of Public Affairs, June 17, 2024):

A New York woman pleaded guilty today to fraudulently destroying over 2,600 COVID-19 vaccines and issuing a corresponding number of fraudulent COVID-19 vaccination record cards.

According to court documents, Kathleen Breault, 66, of Cambridge, a midwife at Sage-Femme Midwifery PLLC (Safe-Femme), an authorized COVID-19 vaccine administration site in Albany, New York, conspired to obstruct the government’s distribution of COVID-19 vaccines by providing COVID-19 vaccination record cards to individuals who were not vaccinated, including to minors who were at the time ineligible to be vaccinated and to Canadian citizens who were not present in the United States when they were purportedly vaccinated. In addition to destroying COVID-19 vaccines and issuing fraudulent vaccination record cards, Breault and her co-conspirators made over 2,600 false entries into a New York State database that tracked COVID-19 vaccine distribution. Breault agreed to pay more than $37,000 in restitution for the destroyed vaccines.    

Breault pleaded guilty to conspiring to defraud the United States and its departments and agencies. She is scheduled to be sentenced on Sept. 18 and faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

The worst of the worst? It's up there. 

Most health care fraud is about money -- ill-gotten gains obtained by billing for services that were never rendered or that were not medically necessary and appropriate. Individual patients are sometimes harmed in these schemes (denied care they actually needed or exposed to treatment risks that were unnecessary), and then there are the addiction cases that -- in addition to the risk of death or serious injury -- often harm not only individuals but also families and contribute to the harm to whole communities. Even "pure financial fraud" harms insurance programs by taking away funds that could otherwise pay for the provision of medical care to patients in need of it.

This case adds another dimension to fraud-based community harms: public health and safety. Falsely documenting vaccinations and diverting thousands of doses of vaccine to the trash is doubly harmful. It allows unvaccinated individuals to work and play within communities that depended on the widest possible rate of vaccination. And many communities at times throughout the worst of the pandemic experienced vaccine shortages. This case isn't only about money. It's about a kind of depraved indifference to communal well-being that is hard to fathom.

The Bump Stock Case: Is SCOTUS a Public Health Menace (Part II)?

The latest blockbuster decision from SCOTUS is "the bump stock case," Garland v. Cargill, U.S. No. 22-976 (June 14). There isn't much to add to the voluminous media coverage of this case, in which the six conservatives on the Court struck down a 2018 BATF regulation that banned bump stocks because they turned semiautomatic rifles into machineguns, which Congress severely restricted in 1934 (see definition of machinegun in National Firearms Act of 1934, 26 U. S. C. §5845(b)). The majority (in a highly technical and narrow decision by Justice Thomas*) disagreed with BATF and held that bump-stock-equipped rifles are not machineguns. To be fair, the Obama administration came to the same conclusion when it decided against a regulation that would have classified bump-stock-equipped rifles as machineguns. 

Writing for the three liberal justices in dissent, Justice Sotomayor wrote:

A machinegun does not fire itself.  The important question under the statute is how a person can fire it.  A weapon is a “machinegun” when a shooter can (1) “by a single function of the trigger,” (2) shoot “automatically more than one shot, without manually reloading.”  26 U. S. C. §5845(b).  The plain language of that definition refers most obviously to a rifle like an M16, where a single pull of the trigger provides continuous fire as long as the shooter maintains backward pressure on the trigger.  The definition of “machinegun” also includes “any part designed and intended . . . for use in converting a weapon into a machinegun.”  Ibid.  That language naturally covers devices like bump stocks, which “conver[t]” semiautomatic rifles so that a single pull of the trigger provides continuous fire as long as the shooter maintains forward pressure on the gun. 

This is not a hard case.  All of the textual evidence points to the same interpretation.  A bump-stock-equipped semiautomatic rifle is a machinegun because (1) with a single pull of the trigger, a shooter can (2) fire continuous shots without any human input beyond maintaining forward pressure.  The majority looks to the internal mechanism that initiates fire, rather than the human act of the shooter’s initial pull, to hold that a “single function of the trigger” means a reset of the trigger mechanism.  Its interpretation requires six diagrams and an animation to decipher the meaning of the statutory text.  Then, shifting focus from the internal mechanism of the gun to the perspective of the shooter, the majority holds that continuous forward pressure is too much human input for bump-stock-enabled continuous fire to be “automatic.” [emphasis added]

Justice Sotomayor rejects the majority's technical analysis with her customary flair:

Today, the Court puts bump stocks back in civilian hands.  To do so, it casts aside Congress’s definition of “machinegun” and seizes upon one that is inconsistent with the ordinary meaning of the statutory text and unsupported by context or purpose.  When I see a bird that walks like a duck, swims like a duck, and quacks like a duck, I call that bird a duck.  A bump-stock-equipped semiautomatic rifle fires “automatically more than one shot, without manual reloading, by a single function of the trigger.”  §5845(b).  Because I, like Congress, call that a machinegun, I respectfully dissent. 

At a minimum, doesn't the 6-3 split in this case suggest that it's plausible -- even reasonable --  to define bump-stock-enhanced rifles as machineguns, even if there is a plausible -- even reasonable -- contrary argument? Given the room for argument, isn't this just the sort of case in which generalist judges, with or without technical drawings and a video, should defer to the expertise of the agency (with or without Chevron)?

Last Father's Day, I posted about the Supreme Court's obstinate Second Amendment jurisprudence ("2nd Amendment thoughts -- The Constitution is not a suicide pact (or is it?)" (June 18, 2023).) Breaking no new ground whatsoever, I wrote that gun violence is not only a criminal-justice matter, it's also a matter of public health law. The statistics are stunning. So far this year, there have been 225 mass shootings in this country. Granted, few if any involved a bump-stock-equipped rifle, but the 2017 shooting at a Las Vegas music festival (in which 58 people were killed and over 500 injured by a shooter using weapons enhanced by bump stocks) demonstrates the lethality of bump stocks. And with over 700,000 of these things already in circulation (ABC News (June 14, 2024)), to build on Justice Sotomayor's analogy, we are all sitting ducks. 

So this Father's Day, I revisit the issue of gun violence and ask last year's question one more time: Don't we owe more to our children (and their children) than a world in which assault rifles are legal in 40 states and anyone with a driver's license can turn their assault rifle into a machinegun?

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* There is a random connection between machineguns (especially the Thompson machinegun) and Dallas. The father of the late Cary Maguire -- Dallas oilman and philanthropist par excellence -- supplied Allied forces with the Tommy gun during WWII:

NY Times, Nov. 11, 1966 (obituary, J. Russell Maguire, (behind a paywall)).

NEWS FLASH: Telehealth Fraud is Health Fraud. Full Stop.

Here's the headline from DOJ, along with excepts from the news release announcing the arraignment of two principals of a telehealth company in California:

Founder/CEO and Clinical President of Digital Health Company Arrested
for $100M Adderall Distribution and Health Care Fraud Scheme

The founder and CEO (He) of a California-based digital health company and its clinical president (Brody) were arrested today in connection with their alleged participation in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice. . . .

“The individuals charged today allegedly disregarded the first rule of medical care—do no harm—in order to maximize profits, and there is no place for such fraud in our healthcare system,” said Secretary of Homeland Security Alejandro N. Mayorkas. . . . 

“As alleged in the indictment, the defendants provided easy access to Adderall and other stimulants by exploiting telemedicine and spending millions on deceptive advertisements on social media. They generated over $100 million in revenue by arranging for the prescription of over 40 million pills,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “These charges are the Justice Department’s first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company. As these charges make clear, corporate executives who put profit over the health and safety of patients—including by using technological innovation—will be held to account.”

According to court documents, He and Brody allegedly conspired with others to provide easy access to  Adderall and other stimulants in exchange for payment of a monthly subscription fee. The indictment alleges that the conspiracy’s purpose was for the defendants to unlawfully enrich themselves by, among other things, by increasing monthly subscription revenue and thus increasing the value of the company. Done allegedly arranged for the prescription of over 40 million pills of Adderall and other stimulants, and obtained over $100 million in revenue. 

He and Brody allegedly obtained subscribers by targeting drug seekers and spending tens of millions of dollars on deceptive advertisements on social media networks. They also allegedly intentionally structured the Done platform to facilitate access to Adderall and other stimulants, including by limiting the information available to Done prescribers, instructing Done prescribers to prescribe Adderall and other stimulants even if the Done member did not qualify, and mandating that initial encounters would be under 30 minutes. To maximize profits, He allegedly put in a place an “auto-refill” function that allowed Done subscribers to elect to have a message requesting a refill be auto-generated every month. He wrote that Done sought to “use the comp structure to dis-encourage follow-up” medical care by refusing to pay Done prescribers for any medical visits, telemedicine consultation, or time spent caring for patients after an initial consultation, and instead paying solely based on the number of patients who received prescriptions.

“The defendants in this case operated Done Global Inc., an online telehealth website that prescribed Adderall and other highly addictive medications to patients who bought a monthly subscription. The defendants allegedly preyed on Americans and put profits over patients by exploiting telemedicine rules that facilitated access to medications during the unprecedented COVID-19 public health emergency,” said DEA Administrator Anne Milgram. “Instead of properly addressing medical needs, the defendants allegedly made millions of dollars by pushing addictive medications. In many cases, Done Global prescribed ADHD medications when they were not medically necessary. In 2022 the FDA issued a notice of shortages in prescription stimulants, including Adderall. Any diversion of Adderall and other prescription stimulant pills to persons who have no medical need only exacerbates this shortage and hurts any American with a legitimate medical need for these drugs. The DEA will continue to hold accountable anyone, including company executives, that uses telehealth platforms to put profit above patient safety”. . . .

He and Brody allegedly persisted in the conspiracy even after being made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, and that Done members had overdosed and died. They also allegedly concealed and disguised the conspiracy by making fraudulent representations to media outlets to forestall government investigations and action and induce third parties to continue doing business with Done. . . .

This isn't just about money. It's about enabling addiction and about killing patients. I am amazed at the sociopathic conduct alleged here, and even more amazed that a digital company thought it could (allegedly) engage in massive on-line health fraud without leaving a digital trail  that would lead directly back to the company and its leaders. Hubris? Stupidity? Both?

SCOTUS: Mifepristone Remains Available Despite 5th Circuit Ruling

A unanimous Supreme Court today reversed a Fifth Circuit opinion that held that various actions taken by the FDA with respect to its regulation of mifepristone were arbitrary and capricious.

The court's opinion -- which all nine justices joined -- found that the plaintiffs lacked Article III standing to press their claim that the FDA acted unlawfully when it approved, and then loosened, restrictions on the way the abortion drug may be prescribed. I usually feel that the Court uses (and misuses) standing doctrine to avoid deciding questions it would rather not decide. In this case, though, the plaintiffs' standing theories were pretty farfetched and the Court wasn't buying any of them.

The basic problem with this case was that the doctors couldn't point to any harm, injury, or hardship the FDA's approval imposed on them:

[T]he plaintiffs do not prescribe or use mifepristone. And FDA is not requiring them to do or refrain from doing anything. Rather, the plaintiffs want FDA to make mifepristone more difficult for other doctors to prescribe and for pregnant women to obtain.  Under Article III of the Constitution, a plaintiff ’s desire to make a drug less available for others does not establish standing to sue. [emphasis in original]

On the merits (which the Court did not address), I think the FDA's handling of the demonstrably safe and effective mifepristone was unassailable, but a win is a win.

The next question is: If these plaintiffs don't have standing to challenge the FDA's actions, who does? The answer might well be noöne:

For starters, it is not clear that no one else would have standing to challenge FDA’s relaxed regulation of mifepristone.  But even if no one would have standing, this Court has long rejected that kind of “if not us, who?” argument as a basis for standing. The “assumption” that if these plaintiffs lack “standing to sue, no one would have standing, is not a reason to find standing.” Rather, some issues may be left to the political and democratic processes: The Framers of the Constitution did not “set up something in the nature of an Athenian democracy or a New England town meeting to oversee the conduct of the National Government by means of lawsuits in federal courts.” [citations omitted]

That said, three states have intervened in this case, which is pending in federal district court in Amarillo. Why Amarillo? Because conservative plaintiffs know they have a judge there who will lend a sympathetic ear to their cause. See Texas Tribune, April 11, 2024. 

As reported by Bloomberg News:

Missouri, Idaho, and Kansas have already intervened in the case before the district court, alleging their own unique harms. The states claim their residents are suffering serious medical complications that require emergency care after taking mifepristone that they’ve obtained through the mail and the states are having to pay for much of that care through Medicaid.

Stay tuned . . . .

"Private Equity and the Practice of Medicine"

Harvard Magazine has published a useful summary of the quality issues that appear to arise when private equity firms invest in health care facilities:

According to associate professor of health care policy and medicine Zirui Song and other Harvard researchers, patients in hospitals owned by private equity firms suffered significantly more hospital-acquired adverse events than those being cared for in similar hospitals with no such investor participation. [Song] analyzed more than 4.8 million Medicare claims tied to hospital stays between 2009 and 2019. Patients in the hospitals acquired by private equity firms experienced 25.4 percent more hospital-acquired conditions. Underlying that alarming overall difference was a 37.7 percent increase in central-line associated bloodstream infections and a 27.3 percent increase in falls, compared to peer hospitals with no private equity involvement.

The problem is particularly acute when the private equity firm employs a leveraged buy-out to acquire the facility. The investor funds the acquisition with debt that goes onto the facility's books. The equity partners typically do quite well with their investment, but servicing that debt often requires cuts in services and staff. And some facilities don't survive, removing a health care provider from the community. The closures haven't discouraged private equity investors from seeking profits from health care providers, with "investors taking a $1-trillion stake during the past decade in everything from nursing homes and rehabilitation facilities to physicians’ practices and hospitals. According to the nonprofit Private Equity Stakeholder Project, approximately 460 U.S. hospitals are currently owned by private equity firms, representing eight percent of all private hospitals and 22 percent of all proprietary for-profit hospitals."

Song and his colleagues have a few suggestions for reform:

• "[S]tates could better enforce existing regulations designed to prevent commercial exploitation of physicians, though most states have broad exceptions to these “corporate practice of medicine” laws."
• "States might also grant their attorneys general more authority to block private equity healthcare deals they deem harmful to patients or to competition. Federal policymakers and legal scholars have put forth similar views."
• "Critics also suggest lowering the threshold for mandatory reporting of private equity deals to the Securities and Exchange Commission, established by the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Currently, that ceiling, which changes yearly, stands at $119.5 million. Song notes, 'Most private equity acquisitions, especially of physician practices, are well below that threshold, so they never get reported."

A similar concern with quality after private equity comes on the scene was expressed by Edward P. Hoffer, "Private Equity and Medicine: A Marriage Made in Hell," 137 Am. J. Med. 5 (Jan. 2024) (may be behind a paywall).

Health Care Fraud: The Beat Goes On (and On and On)

 

More enforcement news from the HHS Office of Inspector General:

• Queens And Brooklyn-Based Eye Doctor Settles Health Care Fraud Claims For More Than $2.4 Million (June 6, 2024; U.S. Attorney's Office, Eastern District of New York)
• Five Individuals Arrested For Defrauding Medicare Of Over $15M Through Sham Hospices And Money Laundering (June 7, 2024; US DOJ)
• Former Fresno Sleep Clinic Owner Sentenced To 46 Months In Prison For Submitting Over $1.5 Million In Fraudulent Claims For Sleep Studies To Medicare And Medi-Cal (June 6, 2024; U.S. Attorney's Office, Eastern District of California)
• Chronic Disease Health Care Provider To Pay Florida Medicaid Nearly $600,000 For False Claims Act Violations (June 5, 2024; State of Florida)

These aren't huge amounts of money, as far as health care fraud goes in this country. What impresses (and depresses) me is the steady drumbeat of criminal activity in this sector. With all the money sloshing around in the industry that counts for the largest percentage of our GDP, the lure of easy money is apparently irresistible. 

SCOTUS (5-4) Rules in Favor of Indian Nations in Health Care Funding Dispute

Feb 28, 2023Feb 28, 2023 

The Supreme Court today decided a statutory interpretation case in which millions of dollars were at stake. Without getting too far into the weeds, the issue was whether the federal government is obligated to pay the costs incurred by Indian tribes to administer health programs funded by Medicare, Medicaid, and private insurers. The majority ruled that the statute in question -- the  Indian Self-Determination and Education Assistance Act ("ISEA"), 25 U. S. C. §5301 et seq. -- requires (unambiguously, apparently) the U.S. to reimburse the tribes for those administrative costs.

The Court's analysis (written by Chief Justice Roberts) invoked the text of the statute, the policy Congress sought to further when it passed the ISEA, and the history of the statutory provisions in question. The analysis is pretty mainstream for the Court, although originalists often abjure policy and legislative history as too squishy to be relied upon.

As the Court's opinion points out, there is an interpretive tool called "the Indian canon," which calls for statutory language that is ambiguous to be construed in favor of Indian tribes. One of the courts of appeals relied on the Indian canon to rule against the federal government. The other lower court produced three opinions in which one of the judges in the majority found the statute to be ambiguous and subject to the Indian canon, while the other judge in the majority thought the provision unambiguously supported the tribe. 

The SCOTUS majority, after mentioning the Indian canon in its description of the rulings below, never went back to it. Maybe the Court found the statute's meaning to be unambiguous. And maybe the Chief decided to skip the canon in order to keep Justice Kavanaugh as the all-important fifth vote. 

Canons of statutory interpretation are getting increased scrutiny at the Court, as evidenced by a recent concurring opinion by Justice Kavanaugh (Rudisill v. Secretary, Dep't of Veterans Affairs, April 16, 2024; see also Daniel Harawa, Justices lean toward narrow reading of aggravated identity theft, SCOTUSBlog, Feb 28, 2023 ("In many ways, Monday’s oral argument in Dubin v. United States felt like a legislation class in law school, with various canons of statutory construction being bandied about"; the defendant prevailed in this identity-fraud case in a 9-0 opinion by Justice Sotomayor that Professor Harawa described as "a tutorial in statutory interpretation"). 

Is a free-for-all over competing interpretive canons evidence that canons are alive and well? Or that interpretive canons are seen as makeweights with little more than rhetorical value?

More Healthcare Fraud Enforcement Actions: The Beat Goes On

  It's hard to know who is winning the battle against healthcare fraud -- the fraudsters or the enforcers. The list of enforcement outcomes (charges, verdicts, sentencing) is pretty darned impressive, both for the brazenness of the crimes and the success of the prosecutors. 

The HHS Office of Inspector General has a useful website that list 9,232 enforcement actions over the past decade. For my purposes, it's over-inclusive, because it lists "[c]riminal, civil or administrative legal actions relating to fraud and other alleged violations of law, initiated or investigated by OIG and its law enforcement partners" -- in other words, way more than only criminal prosecutions for health care fraud. The site does have some filters, but none are specific to health care. The listings for the past week alone, however, show the heavy concentration of health care fraud and the use of the criminal-justice system to punish wrongdoers:

• Florida Felon Sentenced to Prison for Role in Multi-Million Dollar Health Care Kickback Scheme After Pleading Guilty to COVID-19 Fraud and Unlawfully Possessing Firearm (May 30, 2024)
• Attorney General Ken Paxton Secures 84-Month Prison Sentence for Clinic Owner in $15 Million Medicare Fraud Scheme (May 30, 2024) (Note: Paxton's a terrible model of a public servant, but his fraud task force has done admirable work over the years going after healthcare fraudsters)
• Medical Device Manufacturer Innovasis Inc. and Two Top Executives Agree to Pay $12M to Settle Allegations of Improper Payments to Physicians (May 29, 2024) 
• Wisconsin Attorney Sentenced To Five And A Half Years In Federal Prison For $2.3 Million Fraud And Tax Evasion Schemes (May 28, 2024) 
• Penn Highlands Healthcare To Pay $735,000 To Settle False Claims Act Allegations (May 28, 2024) 
• Doctor Convicted Of $70M Medicare Fraud Scheme (May 24, 2024)
• Florida Businessman Daniel Hurt To Pay Over $27 Million For Medicare Fraud In Connection With Cancer Genomic Tests (May 24, 2024) 

Is it characteristic of fraudsters that, in their heart of hearts, they really believe they won't be found out by the authorities? Of do they take a (misguided) risk/reward calculation?