U.S. DOJ Closes Gun Show Loophole; Judge Kacsmaryk (Of Course) Blocks Rule (Of Course) in 4 States

As I have noted before, firearm violence is a public-health disaster. The Justice Department has taken a major step in the effort to keep firearms out of the hands of high-risk individuals. As reported by the Washington Post and Kaiser Family Foundation (emphasis added):

In a move that officials touted as the most significant increase in American gun regulation in decades, the Justice Department has finalized rules to close a loophole that allowed people to sell firearms online, at gun shows and at other informal venues without conducting background checks on those who purchase them. Vice President Harris and U.S. Attorney General Merrick Garland celebrated the rules and said they would keep firearms out of the hands of potentially violent people who are not legally allowed to own guns. (Stein, 4/11)

I'm a little late to the party on this development, but this is a big enough deal to warrant paying some attention.

That's the good news. 

Then there's the bad news (from The Hill (6/12/24):

A federal judge in Texas blocked the Biden administration’s attempt to close the so-called gun show loophole on Wednesday, expanding a prior temporary ruling to impact Texas, Louisiana, Utah and Mississippi.

Judge Matthew Kacsmaryk ruled last month that the requirement to run a background check before purchasing a firearm could not go into effect in Texas. His final ruling Wednesday expands that injunction to the three other states.

The judge is the ever-ready, go-to federal jurist in Amarillo for conservative litigants from around the country who are keen to block the Biden Administration's reforms. (Bloomberg Law, May 9, 2024)

Members of Congress have expressed concern about the steady stream of anti-Administration rulings coming out of Amarillo in favor of far-flung litigants, usually with the flimsiest of connections to the Northern District of Texas. But so far, the Northern District judges have rebuffed suggestions to reform their procedures for assigning cases.

Health Care Fraud & Abuse: The Week in Review

It's been a busy week-and-a-half on the health-fraud enforcement front. I like posting these DOJ/Office of Inspector General updates for a number of reasons. [1] The scope and variety of the fraud schemes is truly impressive, exceeded only by [2] the brazenness of the fraudsters and [3] the success rate of the state and federal enforcement offices.

THE WEEK IN REVIEW

• United States Files False Claims Act Complaint Against Erlanger Health System -- July 26, 2024: This qui tam action is for alleged violations of the Stark Law in the form of "compensation Erlanger paid to [employee] physicians [that] was well above fair market value." 
  
  
• Precision Lens Agrees To Pay $12 Million To The United States For Kickbacks To Doctors In Violation Of The False Claims Act -- July 25, 2024: From the announcement -- 

"Precision Lens provided kickbacks to [ophthalmic surgeons] in the form of travel and entertainment, including high-end ski trips, fishing, golfing, hunting, sporting, and entertainment vacations, often at exclusive destinations. For many of the trips, physicians were transported to luxury vacation destinations on private jets, including trips to New York City to see a Broadway musical, the College Football National Championship Game in Miami, Florida, and the Masters Tournament in Augusta, Georgia. Precision Lens sold frequent flyer miles to its physician customers at a significant discount, enabling the physicians to take personal and business trips at well below fair market value.

 

"The jury found that Precision Lens’s conduct resulted in $43,694,641.71 in fraudulent claims submitted to Medicare. By operation of the statute, the court entered a $487,048,705.13 judgment against the company and its owner, which included treble damages and civil penalties under the False Claims Act. Following post-trial motions, the court reduced the judgment to $216,675,248.55. After the United States conducted a review of the defendants’ financial position and ability to satisfy the judgment, the parties entered into a settlement agreement which requires Precision Lens and the estate [of the deceased owner of Precision Lens] to immediately pay $12 million to resolve the United States’s claims." [emphasis added]

• Substance Use Disorder Treatment Clinics To Pay More Than $850,000 To Resolve Allegations They Knowingly Overbilled Medicaid For Office Visits -- July 25, 2024: This is a standard-issue "upcoding" case. From the announcement -- The U.S. and Virginia "contended that, from 2016 through mid-2023, the clinics submitted claims to Virginia Medicaid containing code 99215, which signifies a meeting with a patient involving at least two of the following three components: a comprehensive medical history, a comprehensive medical examination, and medical decision making of high complexity. However, the clinics knew the meetings were regular check-ins during substance use disorder treatment and did not meet those criteria."
  
  
• United States Obtains $26M In False Claims Act Judgments Against Laboratory Companies And Their Owner -- July 25, 2024: This is a default judgment (i.e., for failure to defend the government's allegations), which (based upon memory alone) seem pretty rare. The allegations were that the defendants 

"sought to profit from the unfolding COVID-19 pandemic by offering COVID-19 tests to nursing homes as a way to bill Medicare for a wide array of medically unnecessary respiratory pathogen panel (RPP) tests. The complaint alleged that these RPP tests were not medically necessary because the beneficiaries had no symptoms of a respiratory illness and because the tests were for uncommon respiratory pathogens.

 

"The complaint also alleged that Britton-Harr and Provista Health submitted claims for RPP tests that were never ordered by physicians and sometimes for RPP tests that were never performed, including over 300 claims that stated that the nasal swab test sample was supposedly collected from the beneficiary on a date after the beneficiary had died."

COVID-19 fraud and elder fraud. Despicable. 

• Santa Paula Doctor Pleads Guilty To Health Care Fraud For Role In Hospice Scam That Bilked Medicare Out Of $3.2 Million -- July 24, 2024: False certification of terminal condition --> submission of fraudulent claims of hospice eligibility.
  
  
• Riverside County Chiropractor Agrees to Pay $180,000 to Resolve Allegations of Health Care Fraud -- July 24, 2024: Another upcoding case? Medicare was billed for surgically implanted neurostimulators when the defendant actually "taped a disposable 'electroacupuncture' device called 'Stivax' to their patients’ ears. Stivax devices do not require surgical implantation and are not reimbursable by Medicare."
  
  
• Mental Health Services Providers Pay Over A Million To Settle False Claims Liability -- July 24, 2024: Defendants billed various government health care programs for physician services that were actually performed by nonphysicians who were not directly supervised by a physician. 'Some services occurred on dates when the physicians were traveling outside of the United States and thus unable to provide the services. Others allegedly occurred at times when it was not logistically possible for the physicians to have rendered them or directly supervised the services themselves due to the sheer volume of patients at multiple office locations located in and around the Houston area."
  
  
• Admera Health Agrees To Pay Over $5M To Settle False Claims Act Allegations Of Kickbacks To Third Party Marketers -- July 24, 2024: Classic.
  

• Doctor Convicted For Illegally Distributing Over 1.8M Doses Of Opioids And $5M Health Care Fraud Scheme -- July 23, 2024: Physician convicted of "conspiring to illegally distribute over 1.8 million doses of Schedule II controlled substances, including oxycodone and morphine, to drug-seeking individuals and drug abusers and for defrauding health care benefit programs of more than $5.4 million."
  
  
• Two Individuals Indicted For Stealing More Than $150,000 From MassHealth Program -- July 23, 2024: A Massachusetts Medicaid member is alleged to have falsely submitted timesheets  attesting to personal-care assistant (PCA) services that were never rendered. because the PCA was incarcerated during the time periods in question. 
  
  
• Topeka Man Charged With Embezzlement -- July 22, 2024:  Program manager and director of the Prairie Band Potawatomi Nation’s Diabetes Prevention Program is accused of embezzling $5,000 or more in federal grant money. 
  
  
• Owner Of Home Health Care Company Convicted Of Multimillion Dollar Heath Care Fraud Scheme -- July 22, 2024: For years, defendant's company billed the Massachusetts Medicaid program for home health services it did not provide, were not authorized, or were not medically necessary. The company also paid kickbacks and laundered illegal proceeds. The fraudulent billings amount to "at least" $100 million. The owner of the company used the proceeds "to treat herself to million-dollar cash bonuses, a lavish house, and a Maserati." Crime pays . . . until it doesn't.
  
  
• Attorney General Bonta Secures Sentencing of Southern California Dentist for Medi-Cal Fraud -- July 22, 2024: Defendant owned dental practice where she served as a dentist and carried out the fraudulent billing scheme. Under defendant's contract with a Federally Qualified Health Center that participates in Medi-Cal, she received reimbursement for each day of service billed rather than for the individual services provided to the patient. However, her dental practice fraudulently split its services over multiple days on its claims for reimbursement in order to maximize reimbursement from Medi-Cal. 

SCOTUS and Health Agencies (Part 2)

The totally excellent health-policy journal, Health Affairs, posted an analysis of the likely impact of the death of the Chevron doctrine on some hotly (or at least frequently) litigated federal health-law issues: "Supreme Court Overrules Chevron Doctrine: Ripple Effects Across Health Care," by Zachary Baron et al. (I have no idea if this article is available only to subscribers (like me) or is free to the public. The latter, I hope.)

The authors start with Chevron itself, a useful three-paragraph introduction especially for anyone -- lawyers and non-lawyers alike -- with limited or no familiarity with Chevron deference.

After that, the authors focus on six areas of possible impact as a result of the Court's decision in the Loper Bright Enterprises case (discussed by this blog on July 7):

1. Nondiscrimination Protections. This includes "the battle over the meaning of 'sex' under Section 1557 [of the Affordable Care Act], which prohibits discrimination in health care on the basis of race, color, national origin, disability, age, and sex."
2. Medicare Reimbursement. An early test might be a case currently pending before the Supreme Court for its 2024 Term: Advocate Christ Medical Center v. Becerra. As the authors point out, there are few statutes that rival the Medicare statute in complexity, and lower courts often decide these reimbursement disputes by relying on Chevron: If the statutory provision is unclear (which is often the case), the courts defer to any reasonable interpretation by HHS/CMS. That was the case in Advocate Christ Medical Center. If I had to guess, this case might be remanded for reconsideration in light of Loper Bright, but there will be others!
3. Medicare Advantage. Noting that "federal agencies often face hurdles to accomplishing their regulatory goals separate and aside from Chevron, . . . the path forward for litigation over the MA program following Chevron being overruled is not clear." Not necessarily good news for "more than half, or 51 percent, of the eligible Medicare population."
4. Medicare Drug Negotiation. BigPharma has been fighting this program since before its enactment, bringing "a slew of constitutional, statutory, and agency authority claims against the negotiation program, [and] industry has lost on the substance of all their legal arguments." Will Loper Bright help the drug makers in future court challenges to the program. The authors think not.
5. Private Health Insurance. In the more than 2,000 legal challenges to the Affordable Care Act and its volumes of regulations, Chevron has played a role in the final rulings of many cases but far from all. The authors look at a couple of cases involving the No Surprises Act that are currently pending before the Fifth Circuit. The authors conclude: "Now, the Administration and health care providers are sparring about the fallout from the Loper Bright decision and how it will impact the pending Fifth Circuit decisions. Yet with the current Fifth Circuit taking such a strict approach to statutory interpretation even when Chevron remained on the books, the Administration faces a challenging environment there."
6. FDA. Chevron deference has been "critical to allow FDA to use its expertise to administer very complex and technical programs that widely touch industry and health care consumers alike. . . . Overturning Chevron could open the floodgates to challenges of a wide variety of FDA regulations." 

The authors conclude:

This revised legal regulatory landscape opens up new opportunities to challenge regulations and other agency actions by future administrations. These challenges may affect the implementation of agency regulations addressing consumer protections, access to health care services, women’s rights, and other measures that impact health care costs. . . . The level of disruption remains uncertain, and may be felt unevenly, but the trend line remains clear: Courts more than ever will have the final say on complex policy decisions that affect the health of millions of Americans."

Oh, happy day. {sigh} 

SCOTUS and Health Agencies

The New England Journal of Medicine today posted a Perspective piece (apparently free, at least for now) by Rachel Sachs and Erin Fuse Brown: "Supreme Power — The Loss of Judicial Deference to Health Agencies." I won't go into the details of the recent Supreme Court opinions, but I discussed them in an earlier post here. The cause for concern is the Court's overruling of the 40-year-old Chevron case, which obligated federal courts to defer to reasonable agency interpretations of federal statutes that were silent or ambiguous with respect to the issue in question. 

The Court was vague about how lower courts should decide such cases in the future. "Deference" is out; apparently "respect" -- at least when Congress has delegated interpretive authority to the agency -- is in, but what does "respect" mean? Without guidance from the Court, "the implications . . . are highly uncertain and potentially vast. The decision could open the door to more, and broader, challenges to actions taken by health agencies, such as the Centers for Medicare and Medicaid Services (CMS) and the Food and Drug Administration (FDA)."

If this sounds like a mess, it is exactly that. Eliminating a deferential standard of review will encourage litigation by opponents of the health-related decisions of agencies such as CMS (which runs Medicare and Medicaid) and the FDA (and EPA, the Public Health Service, NIH, etc.). And the final word on often technical scientific public-health issues will be decided by generalist judges. I hesitate to quote myself, but I'll make an exeption:

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.

The Cruelty of Texas's Abortion Ban (SB 8)

A recent MSNBC News report (posted July 11, 2024, 4:19 PM CDT) illustrates the casual cruelty of Texas Senate Bill 8, which bans abortions after a fetal heartbeat is detectable except when continuing the pregnancy presents a threat to the life or major bodily function of the pregnant person.

When Samantha Casiano of East Texas found out she was pregnant with her fifth child, she was ecstatic. But at a 20-week ultrasound, she received shocking news. Her baby was diagnosed with anencephaly, a rare and fatal condition that prevents the skull and brain from fully forming. . . .

“I was told that it meant that my daughter was incompatible with life. And I wouldn’t be adding another little human to our family. It was really hard to hear that. It felt like it was a dream -- a really, really bad dream, Casiano, 30, recounted. . . . 

“Just imagine yourself waking up every morning, knowing that your daughter was going to die. You can feel her kick and move, but she’s going to die. So you have to plan her funeral while she’s inside of you,” said Casiano. “And that’s probably the hardest thing any mother has to go through…It was traumatizing and hard.. Just thinking about it now is just me makes my stomach hurt. And I was forced to go through it. It was torture.”

Torture. C'mon, Legislature. Think about it.

Texas is not alone in its lack of humanity. According to the authoritative Guttmacher Institute, only D.C. and 9 states do not restrict abortion based on gestational duration. The remaining 41 states either ban abortions with very limited exceptions (14 states) or impose a gestational ban of varying lengths:

• 6 weeks (3 states)
• 12 weeks (2 states)
• 15 weeks (1 state)
• 18-23 weeks (5 states)
• 24-26 weeks (16 states)

And as the Institute says about these gestational bans: "Anyone denied abortion access in their state must either overcome the logistical and financial hurdles of traveling out of state, navigate a self-managed abortion or carry an unwanted pregnancy to term."

The Casiano case is an example: "Casiano said she was unable to travel outside of the state for an abortion due to financial and logistical constraints. So, she was forced to go to term with her baby." 

Torture. C'mon, Texas Voters. Think about it.

Controversial Donor-Organ Retrieval Technology Highlighted on NPR

It's called normothermic regional perfusion ("NRP") and was the subject of a useful story on National Public Radio ("NPR") this morning.

There are two ways to be dead in this country: dead according to neurological criteria ("brain death" -- an increasingly controversial concept) and dead according to cardio-pulmonary criteria. According to the latter, death occurs when there is an irreversible cessation of all cardiac and pulmonary function. This is the standard adopted in the Uniform Determination of Death Act and adopted by statute, regulation, or judicial decision in all 50 states and the District of Columbia. Pulselessness and lack of spontaneous respiration: They have signalled death for eons. 

The development of CPR sharpened the concept of cardiopulmonary death. If CPR (or, in a clinical setting, Advanced Cardiac Life Support) fails to reëstablish a pulse, irreversibility is established and death can be declared.

A procedure known as circulatory determination of death ("DCD") allows this sequence of events to occur in an operating room. It begins when ventilator support is withdrawn from a prospective organ donor. The surgical team waits for up to 90 minutes (times may vary by institution) for the cessation of cardiac and pulmonary function. If that occurs, the clock starts clicking (typically for 5 minutes, longer at some institutions) to see if the patient experiences autoresuscitation. If not, irreversibility is deemed to be established, the patient can be declared dead, and the organ retrieval may begin.

DCD organ donations were originally controversial -- including a Cleveland prosecutor's 1997 assertion that DCD may be tantamount to killing patients for their organs (NY Times; may be behind paywall) -- and are still opposed by a minority of experts. On the other hand, DCD is actively promoted by UNOS and is supported by a majority of ethics commentators.

NRP takes DCD one step further and arguably pushes beyond the outer limits of irreversibility. There are various forms of NRP, but most appear to involve cutting off any possible blood flow to the brain and reestablishing circulation by connecting the donor to ECMO (Extra-Corporeal Membrane Oxygenation). At least one version of this process may result in restarting the donor's heart. You can see the possible conflict with the requirement of irreversibility. 

The NPR story is a good introduction to the controversy. For a deeper dive, the American Journal of Bioethics ("AJOB") devoted an entire issue to NRP. (This, too, may be behind a paywall.) If AJOB is unavailable, run this search in NIH's PubMed service. Today it pulled up 69 articles, including some that are available for free.

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!
____________________________

*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.