Category: Blog Posts

Does OSHA Lack Authority to Impose a Vaccine Mandate?

Maddie Gilmore, Class of 2023, Belmont Law

On January 13th, the Supreme Court stopped the Biden administration’s push to enact its policy of encouraging vaccine use through a mandate that would apply to 84.2 million employees to get vaccinated or “obtain a medical test each week at their own expense and on their own time and wear a mask each workday.”  While the Court is allowing the administration to continue to impose a vaccine requirement on most U.S. health care workers, the opinion is sharply worded to emphasize that this is outside the scope of OSHA’s domain and is unprecedented.

Some key aspects of the original mandate highlight that this was less about health and safety, and more about imposing the Biden administration’s executive policies. Health and safety, no doubt, are at play behind both the mandate and the administration’s policies, however the sweeping nature of the mandate is unprecedented, which is exactly how the Supreme Court in its recent opinion justified continuing delay of enforcement. Employees would face a choice, vaccines or weekly testing and masks. Arguably masks at work while most of the workforce is vaccinated and unmasked, serve as a mark of segregation as to certain political leanings. You might as well have to wear a sticker that indicates to co-workers your political feelings about the vaccine and the Biden administration’s policies. While it might not feel like a coercive choice to some, to others, it is a closely guarded and sincerely held belief.

Furthermore, the employers are duty-bound to enforce this requirement. The penalty on employers for failing to do so is up to $13,653 for a standard violation, and up to $136,532 for a willful one. 29 CFR §1903.15(d) (2021). The mandate preempts contrary state laws. Neither OSHA nor Congress has ever imposed a mandate this broad. To justify the mandate and avoid notice-and comment procedures, OSHA invoked its “emergency temporary standards.” Although the standards take immediate effect, they are only permissible if the Secretary shows (1) that employees are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful or from new hazards,” and (2) that the “emergency standard is necessary to protect employees from such danger.” This has only been invoked by the agency nine times, and of the six times the standards were challenged in court, only one was upheld.

In addition to the mandate being so broad as to cover 84.2 million employees, the exceptions are limited to foreclose exempting workers who pose a significantly lower risk of transmission. For example, there is an exception for workers who work outside. However, the wording of the exceptions is too limited and only exempt outside workers if they spend 100 percent of their time outside. The Secretary has estimated, for example, that only nine percent of landscapers and groundskeepers qualify as working exclusively outside.

The combination of the controversial politics behind the mandate, the unprecedented and general scope of the authority claimed by OSHA to impose such a mandate, as well as the limited exceptions and broad reach of the mandate are all reasons cited by the Supreme Court in their finding that those challenging the mandate are extremely “likely to succeed on the merits of their claim that the Secretary lacked authority to impose the mandate.”

However, instead of resting its decision solely on precedent and politics, the Supreme Court in large part reasoned that the risks of COVID-19 are not a workplace-specific threat. The Court emphasized that OSHA’s responsibilities are limited to correcting overly hazardous workplace conditions and implementing protocols to combat health and safety dangers that specifically emanate from the workplace. What effect this will have on OSHA’s latitude in future cases remains to be seen. Creative administrative lawyers might use this as precedent to further constrain OSHA’s ability to implement certain unpopular health and safety protocols.

Works Cited:

Congressional Clarification: Why We Shouldn’t Be Afraid to Ask Congress What it Meant

Maddie Gilmore, Belmont Law, Class of 2023

Congress sets up control-and-demand agencies to carry out its legislative schemes. The typical structure of a federal agency is laid out by Congress. When Congress passes a statute that sets up an agency, called an Enabling Act, drafters try to include the various enforcement powers that they intend for the agency to have. Under the APA, regulated entities have the right to sue an agency for taking an action that is outside the scope of this delegated enforcement power or for taking an action that is procedurally deficient. For a judge to determine this, Congress’ intent must be clearly discernible. That is, when a regulated party does sue under the APA, a federal judge will have no way to tell whether the agency took an action within its power or outside its power, unless Congress makes it clear.

The Health Resources and Services Administration, (“HRSA”), is a federal regulatory agency with broad powers under its enabling act to regulate pharmaceutical companies. In a recent lawsuit filed by six regulated drug-makers under the APA, a federal judge faced this exact dilemma.

The HRSA has the authority to issue opinion letters, warnings, and interpretive statements that are non-binding, but announce the agency’s intent and what they expect drug companies to comply with. One of these areas in which the HRSA was attempting to enforce compliance was allowing contract pharmacies unrestricted access to discounted drugs under the 340B program. The HRSA issued a series of warning letters, expecting compliance, but six drug companies did not act as swiftly or as definitively as HRSA would have liked. Finding that these companies refused to offer discounted drugs under the 340B program to contract pharmacies, the Biden administration initiated a lawsuit. The complaint alleged instead of competing as they should, the companies colluded “together to boost their profits by coordinating to retract a long-standing discount for safety-net hospitals and clinics.” Eli Lilly, Sanofi, AstraZeneca, Novartis, Novo Nordisk, and United Therapeutics, however, are taking a firm stance against the government’s position and whether the companies can be faced with a fine of $5,000 for each violation.

A federal judge, Sarah Evans Barker, found that the HRSA did have the authority to decide that drug companies cannot unilaterally restrict sales of products discounted under the 340B program to contract pharmacies. She did, however, hand the companies a conditional win, in finding that the HRSA did not have any ground for penalizing the drug companies for noncompliance and denied HRSA’s motion to dismiss. Specifically, she found the December advisory opinion from The Department of Health and Human Services (“HHS”) Office of the General Counsel and a May enforcement letter from the HRSA were “arbitrary and capricious” and in violation of the Administrative Procedures Act. In a difficult decision, Barker said the letters had an unfair element of surprise, and Congress’ intent being so unclear must be remanded. After ruling that the HRSA warning letters should be vacated because HHS has suddenly changed its views over whether to clamp down on the drug-maker restrictions, she specifically asked for Congress to to step in and settle the issue via new legislation. Bipartisan lawmakers have asked HHS to quash the drug-maker moves but so far legislation has not been introduced to make a fix.

The body of law governing regulatory agencies, including the APA itself, is complex and is predicated upon the ability of judges to discern Congress’ intent on how and when to let agencies handle certain issues. Because Congress’ intent is often indiscernible, the results are often mixed, and are non-uniform rulings. It is good to see that Barker, in the face of uncertainty, is asking for Congressional clarification instead of allowing the agency’s policies to change with the courses of the wind. Too much change means the companies do not have fair notice of the possibility of penalties. This uncertainty on the restrictions of 340B is exacerbated by the change in presidential administration, which is why it is important that Barker is asking for Congressional input. She is helping to curb at least some of the non-uniformity that regulated entities face constantly in this realm of administrative law.

Works Cited:

NBA and NFL Health Care Programs Are Not Immune From False Claims

David Brust, Class of 2022, Belmont Law

Eighteen former National Basketball Association (“NBA”) players have been charged with conspiracy to commit health care fraud and wire fraud for making false claims to the NBA’s health and welfare benefit plan. The NBA’s health and welfare benefit plan provides players with health coverage after their careers end. The indictment claims that the eighteen former players collectively submitted false claims to get reimbursed for medical and dental care that they never received. Overall, these players allegedly filed over $3.9 million in false claims from 2017 to 2020. The individual claims ranged from $65,000 to $420,000. The players, who collectively earned over $343 million during their NBA careers, face up to twenty years in prison if convicted.

This scheme is not the first among former professional athletes. As of September of 2021, fifteen ex-NFL players have pleaded guilty to participating in a health care fraud scheme. These players filed false claims with the Gene Upshaw NFL Player Health Reimbursement Account Plan, which gives tax-free reimbursements of up to $350,000 to former players for health expenses that are not covered by insurance. In this case, the former players mainly filed claims for reimbursement for medical equipment they never received. For example, former All-Pro running back Clinton Portis received over $99,264 in two months for false claims and Robert McCune received around $2.9 million. Portis, who faces up to ten years in prison, is set to be sentenced in January 2022, while McCune, who faces up to twenty years in prison, is set to be sentenced on November 19, 2021.

Overall, these cases show that the DOJ is actively pursuing those who commit health care fraud. Anyone can commit health care fraud, not just doctors, nurses, and providers. In 2020 alone there was 1,148 criminal health care fraud investigations that resulted in 412 cases. Furthermore in 2020 alone the Department of Justice recouped $1.8 billion that was lost due to healthcare fraud. Clearly, the DOJ is cracking down on those who commit health care fraud, even if it is not against Medicare or Medicaid.

Works Cited:

OSHA’s Emergency Temporary Standard

Will Brandt, Class of 2022, Belmont Law

On November 5th, 2021, the Occupational Safety and Health Administration (OSHA) published the COVID-19 Vaccination and Testing; Emergency Temporary Standard (ETS). To summarize the ETS, employers who employ over one hundred employees, or Covered Employers, “must develop, implement, and enforce a mandatory COVID-19 vaccination policy, with an exception for employers that instead adopt a policy requiring employees to either get vaccinated or elect to undergo regular COVID-19 testing and wear a face covering at work in lieu of vaccination.”

A question that has plagued media sources and Facebook posts throughout the United States: Are these vaccine mandates legal? The Biden administration is mandating the vaccine and testing requirements through OSHA. The operative law, which allows OSHA to make regulations, is the Occupational Safety and Health Act of 1970. The OSHA Act of 1970 empowers OSHA to develop workplace standards to keep workers safe in their employment. Typically, the dangers of the workplace manifest in risks that are specific to a job, not a virus that is widespread throughout the community.

Interestingly, OSHA has issued this specific regulation under an Emergency Temporary Standard. What this means is that the regulation “takes effect immediately and are in effect until superseded by a permanent standard.” To use the ETS, OSHA must demonstrate that there is a “grave danger due to exposure to toxic substances or agents determined to be toxic or physically harmful or to new hazards and that an emergency standard is needed to protect them.” However, the validity of the use of an ETS may be challenged in the appropriate U.S. Court of Appeals.

Currently, GOP lawmakers are arguing that this use of the ETS to mandate vaccines and testing is essentially forcing regulation onto the American people through improper channels. To support this argument the point is made that OSHA is meant to regulate the workplace, and through this ETS, it has exceeded the scope of its mandate by doing this as a matter of public health rather than worker safety.

Procedurally, the Biden Administration has the power to direct OSHA to develop these regulations. OSHA has the legal right to issue these emergency regulations. The question whether OSHA can prove that this ETS regulation is necessary for the current risk posed to workers by COVID-19. There exists debate about why the OSHA ETS only places these mandates on employers who employ over one-hundred employees, but the most likely reason seems to be that larger workforces have a larger network, which increases risk of infections coming into the office. As a final point, it should be noted that employers can enforce these mandates so long as there are accommodations made for religious objections or medical reasons.

Works Cited:

Merck Sued for Allegedly “Monopolistic Practices”

Will Brandt, Class of 2022, Belmont Law

Insurance providers Humana and Centene have filed suit against Merck & Co. and Glenmark Pharmaceuticals Ltd. alleging a monopolistic scheme to delay generic versions of its blockbuster cholesterol drug, Zetia. Merck is an American multinational pharmaceutical company that is headquartered in New Jersey. Merck produces the drug Zetia, which is used to treat high cholesterol by reducing the amount of cholesterol the body can absorb. Merck and Glenmark have been sued in a New Jersey federal court for allegations of state and federal antitrust violations. The plaintiffs include: Centene Corporation, WellCare Health Plans, Inc., New York Quality Healthcare Corporation dba Fidelis Care, and Health Net, LLC.

Interestingly, this matter started when Merck sued Glenmark, (a related company to Merck) who intended to launch a generic version of Zetia, for patent infringement. Merck allegedly filed suit against Glenmark knowing that the case had no merit because Merck never made the proper disclosures to the United States Patent and Trademark office. Thereafter, it is alleged that Glenmark dropped all its “meritorious” defenses to Merck’s lawsuit and entered into a settlement that delayed Glenmark’s ability to begin selling its generic version of Zetia for 180 days. Further, by Merck filing a suit against Glenmark, a thirty-month stay was triggered that prevented the FDA from approving Glenmark’s generic version of Zetia. In the terms of the settlement, Glenmark agreed to not launch a generic version of Zetia for five years.

The plaintiffs, who each filed separate suits, include two of the nation’s largest health insurance companies, Humana and Centene. Both companies claimed that Merck has reaped billions of dollars in additional sales of Zetia due to the delay in a generic alternative to Zetia being launched into the market. Therefore, the plaintiffs, as health insurance agencies, claimed that they have overpaid millions of dollars for brand-name Zetia, that would not have been paid if a generic alternative was available.

The predominant issues within the lawsuits are the pay-for-delay deals between generic companies and branded companies. This practice has been criticized by the Federal Trade Commission and there is a proposed ban from the Biden Administration. Moreover, a 2010 report from the FTC has said that these schemes cost consumers over $3.5 billion dollars a year, which has likely increased in the following decade of the report.

On September 9th, the Biden administration included the following comments in a report:

“To facilitate competition, it is important to reduce regulatory challenges to approving new products . . . .”

“Reforms should address industry tactics and regulatory challenges that delay or discourage competition by slowing down the approval of competing generics and ‘biosimilar’ products.”

“Improving competition through these methods will result in a more resilient and transparent prescription drug industry than we have today, which in turn should lower prices.”

Works Cited:

Steps in the Right Direction

Maddie Gilmore, Class of 2023, Belmont Law

The representation or lack thereof of minority populations in clinical trials for new drugs and medical devices is a well-established issue. The Food and Drug Administration (“FDA”) is the administrative agency tasked with regulating the research required to accompany applications for approval of new drugs or devices as well as the standards to which the research is held. There are currently no substantive requirements for research that represents adequate racial quotas. The FDA instead, releases industry guidance and the guidelines warn corporate entities not to turn a blind eye to the need for minority populations to be adequately represented in clinical trials. Significant progress has been made, but the trend of progress does not mean that there is no room for improvement.

One reason inadequate representation is a persistent issue is a lack of access or open channels of communication to potential minority participants. This has sparked a discussion in the medical community about possible solutions, such as promoting and funding outreach or intervention programs. These programs are designed at building a referral network with those trusted, yet “research-naïve” physicians who serve as a conduit to opening channels of communication. These interventions would also contemplate providing access to childcare for purposes of easing participation in research, disseminating clinical trial information more widely and intentionally within communities of color, and educating both corporate entities and potential minority patients about areas of concern.

Considering these discussions, the National Cancer Institute (“NCI”) has created a new federal program designed at connecting underrepresented populations to clinical trials. The program is in the form of a federal grant which invites healthcare entities to apply by submitting a proposal for interventions. The program would then evaluate the proposals, and if found to be well-crafted and potentially helpful, implement it. The intervention proposal would be expected to be culturally tailored to focus on “accrual of underrepresented racial/ethnic (R/E) minority populations, to NCI-supported clinical trials. This will require outreach and education multilevel interventions at the CT site, provider, and/or patient levels.”

This is a unique opportunity that researchers and providers should be eager to take advantage of. In light of FDA guidance indicating such a strong and growing trend of industry focus on appropriate levels of minority-inclusive research, it is not unfathomable that eventually FDA will implement binding rules and regulations to the same effect. A forward-looking entity will recognize the need for eventual compliance. Should such rules ever come into effect, the game of catch-up may be an insurmountable hurdle. Considering this trend, why not take advantage of this federal grant? In addition to the financial assistance, participation even in the application process will ensure that the entity is well informed by relevant theories, frameworks, and models. Unfortunately, many providers and patient level physicians will not take advantage of this unique opportunity.

Works Cited:

A New York Judge Declines the DOJ’s Attempt to Delay Purdue Pharma’s Bankruptcy Settlement

David Brust, Class of 2022, Belmont Law.

On Wednesday, October 13, 2021, a federal judge in New York declined to grant the Department of Justice’s attempt to delay Purdue Pharma’s bankruptcy settlement. Purdue Pharma, founded and owned by the Sackler family, invented OxyContin and has received sharp criticism for the drug’s role in the ongoing opioid crisis in the United States. The bankruptcy settlement plan was confirmed by a federal bankruptcy judge in September 2021 and contains several provisions that were objected to by the Department of Justice. These provisions include immunity from opioid lawsuits for members of the Sackler family in exchange for giving up ownership of Purdue Pharma and paying around $4.3 billion to support drug treatment and addiction programs.

The Department of Justice’s main issue with the settlement is the release of liability for individual members of the Sackler family. The Sackler family generated approximately $10 billion in wealth from their roles in the opioid industry. The Sackler family and Purdue Pharma’s biggest money maker, OxyContin, was approved by the FDA and released in 1995. Prior to its release, Purdue Pharma conducted zero clinical studies as to how addictive the drug could be. Additionally, Purdue Pharma was able to get FDA approval for a package insert that stated OxyContin was safer than rival painkillers. Lastly, Purdue Pharma engaged in an aggressive marketing campaign to make OxyContin one of the most, if not the most popular pain medication available. It is noted that “public health experts believe Purdue Pharma’s aggressive and at times illegal marketing of OxyContin played a key role ushering in the opioid crisis that has killed hundreds of thousands of people.”

Due to the Sackler family’s role in the opioid crisis, the Department of Justice believes that granting immunity to the family will violate due process because individuals and the government will lose their right to directly sue the family. While the District Court judge refused to delay the bankruptcy settlement, she did note there may be an issue as to whether the release of liability is constitutional. The Department of Justice can still appeal this issue to the Second Circuit and further hearings are scheduled in the federal bankruptcy court. Thus, this will likely not be the last the public hears of this case.

Works Cited:


A Primer: The No Surprises Act

Will Brandt, Class of 2022, Belmont Law

The following will serve as a primer on the “No Surprises Act” (“The Act”) that Congress passed on December 27, 2020. The Act goes into effect on or after January 1, 2022. At the highest level, The Act seeks to protect patients from surprise medical bills and deter out-of-network provider payments. As a preliminary matter, it is important to define “surprise medical bills” and “out-of-network provider payments.”

First, let us establish an example. In the example, a person is in a bad car accident. The person is rushed to the hospital and has emergency treatment. The patient is well-insured and believes that she will only be responsible for paying the deductible. However, at the hospital the patient was taken to the doctor the patient saw was “out-of-network.” This means that the patient’s health plan will not cover, or cost-share, like it would have if the doctor was an “in-network” provider. Because the patient expected the costs of emergency care to be covered by her health plan, she will be surprised with a bill indicating that her health plan did not cover this scenario.

With that example as background, let us now look at how The Act seeks to protect patients from these surprise bills. The Act contains key provisions that ban surprise billing in some, but not all, emergency situations. Specifically, “. . . . it will be illegal for providers to bill patients for more than the in-network cost-sharing due under patients’ insurance in almost all scenarios where surprise out-of-network bills arise, with the notable exception of ground ambulance transport.” Further, The Act includes provisions that protect against the cost of surprise medical bills. Once The Act goes into effect, patient health plans must treat in-network and out-of-network services the same when evaluating cost-sharing.

The Act seeks to protect patients who lack a meaningful choice. For most elective procedures, a patient can choose the provider and make sure that the provider is covered under their health plan. Even then, the Physician Assistant, Anesthesiologist, or other attendant staff may not be covered.  So, The Act is absolutely a win for patients who won’t be surprised by large out-of-network bills when receiving emergency care or elective procedures or being transported by an air ambulance. However, this does create a problem. If the patient visits an out-of-network provider for emergency services, the patient can’t be denied. So, the provider will charge the patient (or their health plan) some amount of money for those services. However, because this is out of network, there is not an agreed upon price between the insurer and the provider. Therefore, The Act includes a process to resolve payment disputes. First, insurers have thirty days after they receive a bill to either pay the “out-of-network rate” directly to the provider or deny the claim. If the insurer denies the claim, then the provider and insurer enter an Independent Dispute Resolution (IDR) process.

According to United Healthcare, the IDR process functions as follows. Both the insurer/health plan and the provider will submit an offer along with any documentation supporting their position to the IDR entity, which will choose between them. In choosing either the insurer/health plan or provider offer, the IDR can consider certain factors such as the median contracted rate for the disputed items and services, the provider’s market share, the provider’s training and qualifications, and the severity of the patient’s condition. When making a decision, the IDR entity cannot consider government program rates (Medicare, Medicaid, Tricare), provider billed charges or usual and customary charges.

Works Cited

What is the HIPAA Right of Access Initiative?

David Brust, Class of 2022, Belmont Law

On September 10, 2021, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) announced that it settled its twentieth HIPAA Right of Access Initiative investigation. The investigation stemmed from a March 2020 complaint made by a parent alleging that Children’s Hospital & Medical Center (CHMC) in Omaha, Nebraska “failed to provide her with timely access to her minor daughter’s medical records” despite multiple requests. To settle this potential HIPAA Privacy Rule violation, CHMC agreed to pay OCR $80,000 and to take corrective actions. These corrective actions include CHMC updating procedures for providing individuals with their health information, training its workforce on receiving, reviewing, processing, or fulfilling records requests, and reporting to HHS any future compliance failures.

Under the HIPAA Privacy Rule, covered entities are required to allow individuals to access their medical records and other private health information (PHI). Typically, covered entities, such as health care providers, require the individual to request their medical records in writing before the information will be provided. Once an individual requests their medical records, the covered entity has thirty calendar days, from receiving the request, to provide the individual access to their medical records. The covered entity may extend this deadline for another thirty calendar days one time per request. Additionally, covered entities may only impose reasonable costs to cover the labor of copying the PHI, the supplies used for making the copy or electronic media, the postage if mailed, and the preparation of a summary of the PHI. Failure to comply with the rules regarding an individual’s request for PHI can result in a violation of the HIPAA Privacy Rule.

In 2019, OCR announced that it would begin the Right of Access Initiative. The aim of the initiative is to enforce individuals’ rights to access their health information in a quick and easy way. As stated, since the initiative began, OCR has now settled twenty investigations of covered entities failing to provide individuals with their health information in a timely manner. These settlements have ranged from as low as $5,000 to $200,000. The most recent settlement was the seventh settlement in 2021 alone, and brings the total amount recovered in 2021 to $525,000. OCR has made it clear that it intends to keep enforcing the right of individuals to access their health information. Thus, covered entities should review their policies regarding fulfilling individuals’ requests for health information to make sure they comply with the HIPAA Privacy Rule and avoid potential hefty settlements with OCR.

Works Cited:

The FTC’s New Attitude Toward Mergers and Acquisitions: Showing Us They Are Serious

Maddie Gilmore, Class of 2023, Belmont Law

On July 9, 2021 President Joe Biden issued an Executive Order with seventy-two new initiatives for the purpose of promoting competition in the American economy while simultaneously reducing the trend of corporate consolidation and control. Among these initiatives, he called on the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) to “enforce antitrust laws vigorously.” President Biden’s executive order demonstrates his concern that lack of competition in the healthcare market often leads to price increases without improving quality of care. Furthermore, while consolidating hospitals and other large healthcare facilities benefits the industry by reducing costs, it provides an access barrier and leaves many communities, “especially rural communities, without good options for convenient and affordable healthcare service.” The White House said it is urging antitrust regulators to recognize that “the law allows them to challenge prior bad mergers that past Administrations did not previously challenge.”

The executive order was prompted by the “tidal wave” of premerger filings suggesting rapidly increasing hospital consolidation. Indeed, the FTC received 343 premerger filings in the month of July, more than three times the amount from July of last year, when 112 transactions were submitted for review. The size and number of deals were only accelerated by the COVID-19 pandemic which caused smaller companies to go out of business and become an acquisition target. However, the order alone was not enough. “Thanks to unchecked mergers, the ten largest healthcare systems now control a quarter of the market,” said the White House in its release.

Attempts to rein in the industry have either been met with resistance or not effectively policed. For example, the Trump Administration’s price transparency rule, which was upheld by the U.S. Court of Appeals for D.C., requires hospitals to act transparently and post two lists of prices: “(1) A comprehensive, “machine-readable” list of various charges for all items and services. (2) A consumer-friendly list of prices for a smaller set of “shoppable” services.” Biden’s executive order specifically “directs HHS to support existing hospital price transparency rules,” indicating that the new administration intends to police transparency more rigorously. However, a substantial majority of hospitals are not following the price transparency protocol.

Subsequent crack-down measures on behalf of the FTC are being taken in response to a trend of noncompliance in the industry. Such measures include working on legislation to address and punish ‘surprise’ hospital billing; expanding the applicability of premerger notice requirements; and even, in its latest attempt to regulate, sending letters to monitoring entities informing them that if mergers are not properly investigated or investigated at all, the FTC retains the ability to investigate later. This means that companies who go forward with intended mergers which cannot get investigated in a timely manner, through no fault of their own, run the risk of the merger later being declared unlawful.

This has a significant, and potentially adverse impact on the healthcare industry in its mergers and acquisitions. This impact has already been felt by various entities and has spurred one of the nation’s most influential lobbyist groups to call for more freedom in hospital mergers. The American Hospital Association (“AHA”) sent a letter on August 18, 2021 to the White House which included a study. Although many challengers are saying that the data contained in the accompanying study is cherry-picked, the study tends to show that contemporary hospital mergers result in cost savings and quality improvements, without a corresponding increase in revenue consistent with the acquisition of market power.

Considering the competing interests of the White House and healthcare entities, as well as the competing bases for support of these interests, the arguments raised by the AHA’s August 18th letter may well become of vital importance for ensuing litigation. Consider the case of Hackensack Meridian Health, the largest health system in New Jersey. Hackensack attempted to acquire a close competitor, but the deal was blocked by a preliminary injunction on the ground that the deal is harmful and would reduce competition and quality of care, while making it more costly for patients. Indeed, the merger, if successful, would put Hackensack in control of half of the county’s acute care hospitals, which leaves insurers with very few options. FTC administrative proceedings are set to begin on October 12, 2021.

While the agency’s directives from the White House are clear, the FTC might yet be persuaded by arguments raised in the August 18th AHA letter, which ultimately implores the FTC to switch its focus to commercial health plans themselves, rather than providers.

Works Cited: