States likely to succeed in lawsuit challenging contraceptive exemption regulations

Pennsylvania and New Jersey are likely to succeed in proving that the agencies did not follow the Administrative Procedure Act (APA) in creating the contraceptive mandate exemption regulations and that the regulations are not authorized under the Affordable Care Act (ACA) or required by the Religious Freedom Restoration Act (RFRA), held the Third Circuit Court of Appeals. The court also concluded that the States will suffer a concrete and imminent financial injury from the increased use of state-funded services were the regulations to go into effect, and that an injunction would redress that injury. Therefore, it affirmed the district court’s order preliminarily enjoining the rules’ enforcement nationwide (Commonwealth of Pennsylvania V. Trump, July 12, 2019, Shwartz, P.).

State challenges to regulations

As previously reported, the Health Resources and Services Administration determined that health plans covered by the Affordable Care Act (ACA) (P.L. 111-148) must provide contraceptive services. This mandate included a narrow exemption for certain religious organizations. In 2017, President Trump issued an executive order directing the relevant agencies to consider amending regulations to address conscience-based objections to the contraception mandate. These agencies promulgated two interim final rules (IFRs) which expanded the religious exemptions authorizing employers with religious objections to limit employees’ access to health insurance coverage for contraception (see Contraception coverage exemptions extended for objecting employers on religious, moral grounds, Health Law Daily, October 11, 2017).

Pennsylvania and New Jersey (the States) sued seeking to enjoin enforcement of these two new rules. Both have state-funded programs that provide family planning and contraceptive services for eligible individuals and argued that when women lose contraceptive insurance coverage from their employers, they will seek out these state-funded programs and services. The district court granted a preliminary injunction, enjoining the rules’ enforcement nationwide. While the appeal of the order preliminarily enjoining the IFRs was pending, the agencies promulgated two final rules, virtually identical to the interim final rules.

States have standing

The court concluded that the States will suffer a concrete and imminent financial injury from the increased use of state-funded services, and that an injunction would redress that injury. The States are not required to define a specific woman who will be affected by the final rules.

Preliminary injunction granted 

The court held that the States are likely to succeed on their procedural APA claims because the agencies failed to comply with the notice-and-comment requirement and this defect tainted the final rules. The regulation provision of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) does not grant the agencies discretion to proceed by IFR in lieu of notice-and-comment rulemaking and the agencies lacked good cause for dispensing with notice of and comment to the IFRs. The court rejected the agencies’ argument that there was an urgent need to alleviate harm to those with religious objections to the current regulations. It also held that previous notice and comment does not allow agencies to forego notice and comment for a later regulation on similar matters. In addition, the notice and comment provided for the final rules suggest that the opportunity for comment was not a meaningful because the final rules are virtually identical to the IFRs and the IFRs impaired the rulemaking process by altering the agencies’ starting point in considering the final rules.

The court also held that the States were likely to succeed on their substantive APA challenges because neither the ACA nor RFRA authorized the agencies to create exemptions. The unambiguous language of the ACA’s Women’s Health Amendment only authorized the agencies to decide what services would be covered, not who provides them, and RFRA did not require or authorize such broad exemptions, particularly given RFRA’s remedial function that places the responsibility for adjudicating religious burdens on the courts, not the agencies. In addition, the final rules would impose an undue burden on nonbeneficiaries—the female employees who will lose coverage for contraceptive care. The public interest favors minimizing harm to those third parties. Because the current accommodation does not substantially burden employers’ religious exercise and the exemption is not necessary to protect a legally-cognizable interest, the States’ financial injury outweighs any purported injury to religious exercise. Finally, a nationwide injunction is appropriate to provide complete relief (for example, 14 percent of the New Jersey workforce works out of state).

No relief; EMTALA doesn’t cover medical malpractice claims

A U.S. District Court in Alabama has dismissed a claim brought by a patient against the Health Care Authority of the City of Huntsville (the Hospital). The patient, a woman who came to the emergency room, alleged the hospital violated EMTALA by failing to conduct an appropriate screening exam and stabilize her after her admission to the hospital. The hospital moved to dismiss the lawsuit claiming they screened her appropriately and stabilized her after she arrived. The court held that the hospital met EMTALA requirements and granted motion to dismiss under Federal Rules of Civil Procedure 12(b)(6) (Baker v Health Care Authority of the City of Huntsville, July 9, 2019, Kallon, A.).

The court looked to the EMTALA requirements to determine whether the patient stated a claim for which relief could be granted. The court noted that congress enacted EMTALA to prevent hospitals from turning away or transferring indigent patients without evaluation or treatment. The court noted that to prevail on the patients EMTALA claim she must plead facts showing that the hospital violated the appropriate medical screening or stabilization requirements.

Screening requirement

EMTALA requires that when a person goes to the emergency room for an exam or treatment, the hospital must provide for an appropriate medical screening exam. The screening must be within the capability of the emergency room to determine whether or not an emergency medical condition exists. It also requires that indigent patients receive similar care to anyone else that would be screened in the emergency room with similar symptoms.

Under the facts of this case, the woman was given four screenings within an hour of arrival in the emergency room. She was diagnosed with a hypertensive emergency and admitted to the hospital. Several hours later she was examined again and properly diagnosed with a stroke. The woman argues that because she was not diagnosed with a stroke earlier, the hospital did not conduct a proper screening. The woman did not allege any facts to show that she was screened differently from any other patient. The court held that as long as the hospital screened her similarly to any other patient with the same symptoms there is no liability under EMTALA.

Stabilization requirement

Under EMTALA the stabilization requirement has to do with transferring the patient to another facility. The statute requires that the hospital treat the emergency condition as necessary to assure with reasonable medical probability that no material deterioration of the condition occurs during transfer of the patient. The court found that the EMTALA obligation to stabilize ends when the patient is admitted to the hospital and not transferred. In this case the woman was admitted to the Huntsville Hospital and therefore the woman would have had to plead facts to show that the hospital admitted her with intention to subterfuge to avoid EMTALA liability. Since she did not allege any facts to support that allegation the court holds that she has not alleged a plausible claim for violations of EMTALA’s stabilization requirement.

Holding

The court found that the woman’s allegations against the hospital for failure to provide her with timely and necessary treatment may support a malpractice claim but do not fall under a violation of the EMTALA statute. The woman would have had to show that the hospital treated her differently than other patients who presented with similar symptoms. The claim was dismissed under Rule 12(b)(6) and the court declined to exercise supplemental jurisdiction over her state law claims.

Prohibition on paid referrals not limited to ‘relevant decisionmakers’

The Seventh Circuit affirmed the conviction of an individual under the Anti-Kickback Statute (AKS) (42 U.S.C. § 1320a-7b) whose referral agency had provided referrals to a home health company in exchange for $500 per referral. In affirming the lower court’s decision, the Seventh Circuit found that criminal liability under the AKS is not limited to relevant decisionmakers and that no safe harbors applied (U.S. v. George, August 14, 2018, Rovner, I.).

Referrals for money

The referrer was a certified homemaker employed by Help at Home, a home healthcare agency, beginning in 2007. In 2010, she decided to start a referral agency and signed a work for hire agreement with another home health service, Rosner Home Health Care, Inc. (Rosner), in which she agreed to convince providers, including doctors, case managers, discharge planners, and social workers, to refer patients to Rosner. In exchange, Rosner paid the referrer $500 for each patient referred. In 2015, the referrer was indicted and then found guilty of two counts of violating the AKS and one count of violating the general conspiracy statute (see Receipt of per-patient referrals, knowledge of illegality enough to overcome doubt, Health Law Daily, March 25, 2016).

Appeal

Under the AKS, the government must demonstrate that the referrer knowingly and willfully solicited or received remuneration in return for referring an individual to Rosner to provide or arrange services paid at least in part under Medicare. The referrer appealed her conviction arguing that there was insufficient evidence to support the substantive counts of her conviction falling under the AKS. According to the court, rather than merely demonstrate that evidence could have supported a finding of innocence, the referrer must demonstrate on appeal that the evidence could not have allowed a reasonable trier of fact to find her guilty.

Relevant decisionmakers

The referrer argued that she could not be held liable, as the statute applied only to “relevant decisionmakers,” which she was not. In making this argument, the referrer relied on a previous Fifth Circuit decision in which the court held that payments to a marketing firm distributing advertisement brochures of a provider to physicians did not fall within the AKS because they were not payments made to the relevant decisionmaker in exchange for sending patients to the provider. However, the court cited a subsequent case rejecting an interpretation of that case limiting criminal liability to persons would could be deemed relevant decisionmakers.

Safe harbors

The referrer also argued that she had a reasonable basis to believe she fell within the safe harbor provision of the AKS applying to “any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services. However, her written agreement with Rosner specifies that she was acting as an independent referral agency, not an employee. The court also noted that the referrer was paid for referrals, not for the provision of items or services covered by Medicare. Thus, the safe harbor provision did not apply.

No abuse of discretion pill mill trial procedure, sentencing vacated and remanded

The trial court did not abuse its discretion when it admitted expert testimony deemed admissible under Daubert, a federal appellate court has ruled. The testifying physician relied upon several sources that are generally accepted by the medical community when he reviewed the prescribing physician’s patient files, and he applied his methodology reliably. The court also did not err when it gave the pattern jury instructions on deliberate ignorance without tailoring the instruction to the facts of the case, nor when it refused to give the physician’s proposed jury instructions. However, the trial court did err when it applied the firearms increase in the course of sentencing the physician (U.S. v. Roland, June 14, 2018, per curiam).

Pill mill operations

In August 2014, an Atlanta-area physician was charged in a 22-count indictment with conspiracy to dispense controlled substances and related violations. All of the alleged activities arose from his and his co-conspirators’ participation in a “pill mill” scheme involving several pain management clinics in the greater Atlanta area. A jury convicted the physician on one count of conspiracy to distribute controlled substances and seven counts of unlawful distribution of controlled substances, in violation of 21 U.S.C. §841. The district court sentenced him to 130 months of imprisonment. On appeal, he challenged his convictions and his sentence.

Expert testimony

The government’s expert witness described the standards set forth in the Federation of State Medical Boards’ model policy for the use of controlled substances to treat pain (FSMB), and he also relied upon several other sources that are generally accepted by the medical community when he reviewed the physician’s patient files. The expert witness summarized each of the guidelines in order to analyze the physician’s prescribing practices, and he then individually compared 96 patients’ files to this analysis, pointing out instances where the physician failed to adhere to the guidelines’ standards. The appellate court found that by commenting on and making conclusions about the physician’s care for each patient based on the review criteria, the expert witness applied his methodology reliably and did so without relying exclusively on his own experience as a prescribing physician. Accordingly, they found that his expert testimony met the required standards, and that the expert testimony was properly admitted.

“Deliberate ignorance” jury instruction

The government had requested that the pattern jury instruction on deliberate ignorance be modified by adding a sentence that “in this example, you would treat the defendant as having knowledge that the package contained a controlled substance.” The physician requested that the district court omit the deliberate ignorance instruction entirely, arguing that the instruction did not make sense based on the theories presented at trial: his theory was that he was deceived by a co-conspirator and did not know that he was working at pill mills, while the government’s theory was that the physician possessed actual knowledge that the clinics were pill mills. Therefore, neither party had raised an argument as to deliberate ignorance. The district court denied both parties’ requests and gave the pattern deliberate ignorance instruction. The appellate court ruled that the trial court did not err in giving the deliberate ignorance jury instruction based on the fact that the evidence presented at trial warranted it because the physician had advised a co-conspirator to lie to the Georgia Composite Medical Board, and because he had explained to his patients that he needed to write the prescriptions in a certain way in order to avoid criminal liability.

Firearms increase at sentencing

The district court cited two reasons for the firearm increase: (1) the co-conspirator’s security guard possessed a firearm while monitoring the parking lots at the clinics; and (2) several firearms were found in the physician’s bedroom at his own clinic. However, the appellate court found that the district court erred in applying §2D1.1(b)(1) of the U.S. Sentencing Guidelines Manual, a firearm increase, for two reasons. First, the evidence showed that the co-conspirator alone hired the security guard, and the government presented no evidence that the physician ever interacted with the guard or knew he had a firearm; and second, because the physician was a licensed firearm instructor and his possession of so many firearms was simply a reflection of his hobby.

For the foregoing reasons, the physician’s convictions were upheld, but his sentence was vacated and the matter remanded for resentencing.