Track 1 - Session 1
Health Law Update
About the Presenters...
Guy DuBeau is a partner with Axley Brynelson, LLP and Chair of the firm’s Litigation Practice Group. His
practice centers on serving health care professionals both in defense of alleged medical negligence claims
and in more traditional aspects of health care law. As a medical malpractice litigator, he has tried
approximately 50 cases to verdict in counties throughout the state. Mr. DuBeau also advises health care
clients on matters not involving litigation, including HIPAA and HITECH compliance, EMTALA, Stark and
anti-kickback regulations, records compliance, peer review, medical staffing issues and patient care
issues.
Tyler Wilkinson is an associate with Axley Brynelson, LLP. Mr. Wilkinson frequently advises health care
professionals in litigation and risk management matters and represents health care providers before
licensing boards. Mr. Wilkinson also provides business and legal advice to start-up and mature
companies, primarily in the health care space. Prior to becoming an attorney, Mr. Wilkinson was a special
education teacher.
Health Law Update
Guy DuBeau and Tyler Wilkinson
Axley Brynelson, LLP
1. United States Supreme Court Update
a. King v. Burwell – The Supreme Court addressed the viability of tax credits for
participants in federally-run insurance exchanges; rules 6-3 to uphold current
practice.
i. Issue Presented: Are the tax credit subsidies for the purchase of health
insurance available to only those taxpayers enrolled in exchanges operated
by their respective states, but not those enrolled in exchanges established
by the federal government?
ii. Decision and Rationale: No. Tax credits are available to participants in
both state and federal exchanges.
1. Not an issue of agency interpretation as some had thought.
2. Purpose of the law is to stabilize insurance market and provisions,
even if unartfully drafted, must be read to effectuate that purpose.
iii. Result: All major aspects of the Affordable Care Act remain on track.
b. North Carolina Board of Dental Examiners v. FTC – The Supreme Court
addressed the scope of antitrust immunity for regulatory boards; rules 6-3 that
Board’s conduct violated antitrust laws.
i. Issue Presented: What is the scope of antitrust immunity under the Parker
doctrine for state regulatory boards staffed by market participants?
ii. Decision and rationale: Regulatory boards staffed by market participants
do not have unlimited Parker immunity.
1. When board decision makers are active market participants, there
is antitrust immunity only if the challenged restraint is clearly
articulated and affirmatively expressed state policy and is subject
to active supervision by the state.
2. Ethical standards can intersect with private anticompetitive
motives in a way that is difficult for even conscientious market
participants to discern.
iii. Potential result: Wisconsin’s health care regulatory boards operate under
a structure very similar to that employed in North Carolina. Both the
boards and the practitioners who deal with them regularly should
anticipate greater scrutiny of decisions that have an economic impact on
distinct constituencies.
2. Cybersecurity
a. 2015 was the year of the data breach. The data breaches and resulting fall-out
means that Cybersecurity, or acts to protect against the criminal or unauthorized
use of electronic data, will be incredibly important in 2016 and beyond.
1 – DuBeau, Wilkinson
b. Health Care Data Breaches in 2015:
i. Community Health System – 4.5 million patients affected
ii. Premera Blue Cross Insurance – 11 million patients affected
iii. Anthem Insurance – 78.8 million patients affected
iv. UCLA Health System – 4.5 million patients affected
v. CareFirst BlueCross BlueShield – 1.1 million patients affected
c. Class Action Lawsuits
i. Each of the health insurers or providers listed above is already the subject
of one or more class action lawsuits for injuries caused by the data breach;
ii. The class actions typically allege the following claims:
1. Negligence – often uses state and federal privacy laws to establish
and define duty of care;
2. Breach of contract – uses insurer’s or provider’s privacy policies to
establish duties and breach;
3. Violations of state notification or privacy laws.
iii. It is questionable whether these plaintiffs have suffered any actual injury
as a result of the data breach. Nonetheless, the Seventh Circuit recently
held that data breach plaintiffs have standing to sue because there is an
“objectively reasonable likelihood” that they will be injured by the data
breach. Remijas v. Neiman Marcus Group, LLC, No. 14-3122 (7th Cir.,
July 20, 2015) (“the risk that Plaintiffs’ personal data will be misused by
the hackers who breached [the] network is immediate and very real”).
d. Administrative Action
i. The federal Office of Civil Rights is investigating these data breaches, but
has become more aggressive in pursuing covered entities who do not
comply with HIPAA and/or HITECH.
ii. New York and Presbyterian Hospital and Columbia University recently
agreed to settle charges that they potentially violated the HIPAA Privacy
and Security Rules by failing to secure thousands of patients’ electronic
protected health information held on their network. They agreed to pay
$4.8 million to settle these charges.
iii. No public word on how OCR will handle or approach these large data
breaches.
iv. Federal Trade Commission also taking an active role in policing data
breaches. In FTC v. Wyndham Worldwide Corp., the Third Circuit Court
of Appeals is considering whether a company’s failure to protect security
of consumer data can constitute an unfair act or practice under Section 5
of the Federal Trade Commission Act.
e. Cybersecurity for the rest of your clients.
i. Every business that holds or uses customer data should consider
purchasing cyber liability insurance. Traditional commercial general
liability policies (“CGL”) are not a good fit for cyber liability issues.
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ii. Recall Total Information Management, Inc. v. Federal Ins. Co. – court
concludes no insurance coverage under CGL policy for loss of electronic
employee data and resulting mitigation efforts. 83 A.3d 664 (Conn. Ct.
App. 2014)
iii. Travelers Prop. Cas. Co. v. Federal Recovery Services, Inc. – court
concludes that insurance company has no duty to defend on allegations of
intentional misuse of data under CyberFirst Policy. Case No. 14-cv-170-ts
(D. Utah, May 11, 2015).
3. Telehealth
a. Telehealth continues to grow in patient, provider and payor acceptance and use.
We expect this trend to continue in 2016 and beyond. New market research
indicates that the global market for telemedicine is expected to be worth more
than $34 billion by the end of 2020.
b. Recent Legislation
i. Medicare Telehealth Parity Act of 2015 – federal Act proposed changes to
Medicare telehealth payment methodologies and expands coverage to both
urban and rural areas (introduced in Congress on July 7, 2015)
ii. 29 states and the District of Columbia have enacted telemedicine
commercial reimbursement statutes that require health insurers to cover
services provided via telemedicine to the same extent those services are
covered through in-person visits.
c. Planned Parenthood of the Heartland, Inc. v. Iowa Board of Medicine, No. 141415 (Iowa Supreme Court, June 19, 2015) – Iowa Supreme Court unanimously
rules that administrative rule that prohibited telemedicine abortions was
unconstitutional.
d. Interstate Physician Licensure Compact – proposed bills to create an alternative,
voluntary and expedited path for physicians with medical licenses in good
standing to obtain a medical license in each state that adopts the Compact Bill.
(15SB 196; 15-AB-253) Advocates indicate that this proposed law will accelerate
use of telemedicine.
4. Medical Apps
a. FDA has indicated that it does not intend to exercise regulatory oversight over
large segments of the medical and mobile applications fields.
i. FDA Guidance on Mobile Medical Applications issued February 9, 2015
indicates that it intends to only exercise regulatory oversight over mobile
apps that meet the statutory definition of a device and are intended
1. To be used as an accessory to a regulated medical device; or
2. To transform a mobile platform into a regulated medical device.
ii. FDA intends to exercise enforcement discretion over certain mobile apps
that pose low risks to the public, such as mobile apps that help patients
maintain positive behaviors, that use GPS location to alert patients to
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environmental conditions, that use video games to motivate patients to
exercise and apps that track asthmatic attacks.
iii. FDA has issued draft guidance on January 20, 2015 on low risk products
that promote a healthy lifestyle and indicated that it does not intend to
examine low risk general wellness products to determine whether they are
“devices” subject to regulation.
b. Medical app developers must be mindful of privacy laws, especially state privacy
laws. For example, California amended its Confidentiality of Medical
Information Act to apply to health app developers and require them to comply
with HIPAA/HITECH standards.
5. Right to Try Legislation
a. Since 2014, more than 20 states have introduced “Right-to-Try” bills which may
allow terminally ill patients to access experimental treatments that do not yet have
FDA clearance.
b. Bills are based on “compassionate use” exemptions, which allow the FDA to
permit companies to broaden access to investigational products while they are
undergoing clinical trials.
c. Wisconsin introduced a “Right-to-Try” bill, 15-SB 125/15 AB-179, which
provides that manufacturers may make an investigational drug available to an
eligible patient. The bill provides a limitation of liability under state law for
persons involved in the treatment.
6. Right to Die Legislation
a. There is a renewed push for “Right-to-Die” legislation across the nation. In all,
25 states and the District of Columbia considered “Right-to-Die” legislation in
2015.
b. Legislation introduced in Wisconsin, 15-SB-28/15-AB-67. This is the 7th time
such a proposal has been introduced in the past 20 years. In previous 6 attempts
the bill was not heard by either chamber. Though the legislators aren't confident
the bill will pass this session, the bill’s sponsors believe "it's a conversation
lawmakers ought to have."
4 – DuBeau, Wilkinson
Health Law Update
Guy DuBeau and Tyler Wilkinson
Attorney Brynelson, LLP
Agenda
•
Supreme Court Update
•
Cybersecurity
•
Consumer-Focused Health Care
o Telehealth
o Medical Apps
o Right to Try Legislation
o Right to Die Legislation
Supreme Court Update
The Potentially Important One
&
The Other One
The Other One …
• King v. Burwell, 576 U.S. _____
• 6-3 Opinion – Authored by C.J. Roberts
• At issue:
– Viability of federally run insurance exchanges
– Law requires people to buy insurance and then
makes the purchase possible by providing tax credits
to certain individuals
King v. Burwell
• Act allows creation of exchanges by states but requires
that the federal government establish exchange if state
does not
• The tax credits shall be allowed for any taxpayer, but
only if they have enrolled in a plan through “an Exchange
established by the State”
King v. Burwell
Specifically: Sec. 36B or the I.R.C.
In the case of an applicable taxpayer, there shall be allowed as
a credit against the tax imposed by this subtitle for any taxable year an
amount equal to the premium assistance credit amount of the taxpayer
for the taxable year …
(2)(a) the monthly premium for such month for 1 or more
qualified health plans offered in the individual market within a State
which covers the taxpayer, the taxpayer’s spouse, or any dependent
(as defined by section 152) of the taxpayer and which were enrolled in
through an Exchange established by the State under 1311 of the
Patient Protection and Affordable Care Act.
King v. Burwell
• Competitive Enterprise Institute caught wind and argued:
– This clearly means that if your state established an
exchange – you get subsidies
– If your state did not establish its own exchange, then
Congress did not intend for you to get subsidies
King v. Burwell
• Anyone who had followed the debate leading to passage:
nonsense
• Anyone who litigated a lot and often relied on concepts of statutory
instruction: pretty clean argument
• Congress, which had already fought 100 ACA battles: not touching
this one
• Politicians who had blocked exchanges in their states and were now
looking at thousands of voters who for the first time had gotten
insurance and liked it: Uh-oh
King v. Burwell
• No need to fear: Chief Justice Roberts rides to the
rescue a second time to save the ACA
• One interesting aspect from a legal perspective: move
away from Chevron deference.
– IRS had provided interpretation of the language at issue
– Lower courts analyzed issue based on that doctrine that gave
deference to agency interpretation
– Roberts rejected approached, found statute ambiguous and
interpreted consistent with legislative intent
So What Does It All Mean?
• States using the federal exchanges (like Wisconsin) – Probably very
little, compared to what might have been
• States using their own exchange – creates incentive to move toward
federal exchanges
• Employers? No real change.
• Insurers? Greater certainty, renewed focus on other elements of
ACA such as value-based reimbursement
• Providers? Greater certainty in revenue streams, renewed focus on
other elements of ACA.
The Potentially Important One
• North Carolina Board of Dental Examiners
v. FTC, 574 U.S. ______
• Background
– North Carolina Board of Dental Examiners created to regulate
dentistry practice
– Dentists learned of non-dentists selling teeth whitening services
and complained to Board
– Board sends out cease and desist letters and threatens criminal
prosecution
– FTC determines this is anticompetitive behavior and sues to stop
the Board
NCBDE v. FTC
• To understand ruling, need to back up
– Parker v. Brown, 317 U.S. 341 (1943) held
that when the state acts in its sovereign
capacity it is cloaked with antitrust immunity
• NCBDE - L’etat c’est moi
• SCOTUS – No.
NCBDE v. FTC
• Holding: Because decision makers are
active market participants, there is
antitrust immunity only if the challenged
restraint is clearly articulated and
affirmatively expressed as state policy and
is subject to active supervision by the state
NCBDE v. FTC
• Why is this important?
– Wisconsin has professional boards for:
Athletic Trainers
Chiropractors
Dentists
Dieticians
Therapists
Counselors
Physicians
Nurses
Pharmacists
Psychologists
Massage
Therapists
…and so on.
– Which are staffed by these professionals.
NCBDE v. FTC
• Wisconsin law provides some oversight over rule making
under Wis. Stat. sec. 227.11, but the boards retain
incredible discretion.
• Consider the Court’s observation:
“ . . . established ethical standards may blend with private
anticompetitive motives in a way difficult for even market
participants to discern. Dual allegiances are not always
apparent to an actor …”
Cybersecurity
2015 was the year of the
DATA BREACH
“And this problem is not going to go away –
it’s going to accelerate.”
President Obama
Recent Health Care Breaches
Date of Breach
Patients Affected
Community Health
System
Company
Aug. 18, 2014
4.5 million
Premera Blue Cross
Jan. 29, 2015
11 million
Anthem
Feb. 4, 2015
78.8 million
UCLA Health System
May 5, 2015
4.5 million
CareFirst
May 11, 2015
1.1 million
* And each company already has one or more class action lawsuits
against it!
Class Action Litigation
• Plaintiff Legal Theories
– Negligence
– Breach of contract
– Violations of state notification or privacy laws
• Standing?
– The 7th Circuit recently held that data breach plaintiffs
have standing to sue because there is objectively
reasonable likelihood that they will be injured by the
breach
Who’s Minding the Store?
• Responsibility and jurisdiction for cybersecurity
is dispersed between numerous federal
agencies and the states; no single response
• Office of Civil Rights has come down on covered
entities
• Now the FTC?!?
Cybersecurity
The bottom line is that hacking, data
breaches and the fallout will get worse
before they get better
Consumer Focused Health Care
From Gundersen Health System’s
Legacy Building to
Partners HealthCare’s
Connected Health Program,
health care is becoming more and
more consumer focused.
Telehealth
• Medicare Telehealth Parity Act
• Telemedicine commercial reimbursement
statutes
• The Iowa Supreme Court endorses!
• Interstate Physician Licensure Compact
Medical Apps
• FDA Guidance – limited regulatory
oversight and enforcement over low risk
and general wellness apps
• Hey Developers! Remember state and
federal privacy laws ….
Right to Try Legislation
• Right to Try laws based on
“compassionate use” exemptions under
FDA laws
• Since 2014, more than 20 states, including
Wisconsin, have introduced Right to Try
laws
Right to Die Legislation
• Renewed push for “Right to Die” laws in
2015
• We anticipate that these proposed bills will
gain momentum as the Boomers age …
Questions?
Guy DuBeau and Tyler Wilkinson
Axley Brynelson, LLP
www.axley.com