Well, This Changes Things: King v. Burwell and the New(?) Chevron Doctrine

By on June 26, 2015

I first flagged this all the way back in 2013. As everyone reading this probably knows, the Supreme Court had its final say on the matter earlier today. Long story short: The administration won. Insurance exchange subsidies under the Affordable Care Act are available on state and federal exchanges.

My colleague Knicole Emanuel has a piece up about the decision here. I’m a little less skeptical of the majority opinion in general. I think it’s pretty clear that the subsidies were intended by Congress to be available on the federal exchange, and while we should be wary about reading unambiguous laws as we think they were intended to function, and not as their wording indicates they should function, I think Chief Justice Roberts has a fair-enough point that the seemingly unambiguous language in question isn’t so clear cut when one reads it in the context of the law as a whole.

But that’s not the most interesting part to me. The most interesting part is what this decision may well do to the Chevron doctrine. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., for those who don’t know, is perhaps the most cited Supreme Court case in history (hat tip to my former admin law professor, Cass Sunstein). The Chevron opinion basically says that when a federal agency is confronted with a potentially ambiguous statute, and that agency promulgates formal rules or regulations interpreting the statute, the agency’s interpretation will be upheld provided that (1) the intent of Congress on the issue in question is not clear (i.e., the statute is silent or ambiguous), and (2) the agency’s interpretation is “permissible.”

Law professors and courts have debated what this means and how it should be applied literally for decades. (For example, what does “permissible” even mean?) But those days may be over due to King. From the outset of the case – or, at least, the certiorari grant – there was a good deal of speculation that the Supreme Court would endorse the administration’s interpretation of the subsidy issue on Chevron grounds. This would be important because it would mean that the next Republican administration could reverse that interpretation just as easily. (That’s the whole point of Chevron!)

Uh, not so fast. In his King majority opinion, Chief Justice Roberts expressly decided not to go this route. He explained:

When analyzing an agency’s interpretation of a statute, we often apply the two-step framework announced in Chevron, 467 U. S. 837. Under that framework, we ask whether the statute is ambiguous and, if so, whether the agency’s interpretation is reasonable. Id., at 842–843. This approach “is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps.” FDA v. Brown & Williamson Tobacco Corp., 529 U. S. 120, 159 (2000). “In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.” Ibid.

This is one of those cases. The tax credits are among the Act’s key reforms, involving billions of dollars in spending each year and affecting the price of health insurance for millions of people. Whether those credits are available on Federal Exchanges is thus a question of deep “economic and political significance” that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly. Utility Air Regulatory Group v. EPA, 573 U. S. ___, ___ (2014) (slip op., at 19) (quoting Brown & Williamson, 529 U. S., at 160). It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort. See Gonzales v. Oregon, 546 U.S. 243, 266–267 (2006). This is not a case for the IRS.

In other words, Chief Justice Roberts just added some teeth to the previously vague – and essentially inapplicable – language from Brown & Williamson. Now, Chevron will not apply to an agency’s interpretation of “question[s] of deep ‘economic and political significance.’” And what’s more, King seems to have given us some indication of what this might mean – if the issue in question is “central” to the legislation at issue, then Chevron appears to be inapplicable.

On the one hand, this may seem somewhat limited at first blush. After all, how many questions put in front of an agency involve those sorts of deeply significant issues? On the other hand, that kind of misses the point. A litigant can always argue that the agency interpretation at issue involves such a question. And a court inclined to disagree with a particular agency interpretation now has an out – it can always classify the statutory language being interpreted as involving a question of deep economic and/or political significance.

All of this is deeply problematic for one simple reason – under an expansive reading of King, the state of the Chevron doctrine is now up in the air. Heck, it’s unclear to me that the question at issue in Chevron itself – the definition of a “pollution source” under the Clean Air Act – would have been sufficiently unimportant or insignificant to invoke Chevron deference. In other words, it’s not settled to me that under the exception announced in King that the Chevron doctrine would have been appropriate to apply in the Chevron case itself. At the very least, this is going to spark a lot of litigation.

Filed under Affordable Care Act, Chevron Doctrine

OIG Issue Fraud Alert on Physician Compensation Arrangements

By on June 26, 2015

The Office of Inspector General (OIG) at the Department of Health and Humans Services (HHS) recently issued a fraud alert for physicians who enter into compensation arrangements. Every physician should review carefully the terms and conditions of compensation arrangements, such as medical directorships, to ensure that they reflect fair market value for bona fide services provided by the physician. The OIG cautioned that a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for past or future referrals of federal health care program business.

The fraud alert highlighted the OIG’s recent settlements with 12 individual physicians. According to the OIG, the compensation paid to these physicians under medical directorship arrangements violated the anti-kickback statute for several reasons, including the following:

  • The payments took into account the volume or value of the physicians’ referrals rather than the fair market value for the services;
  • The physicians did not actually provide the services; and
  • Some of the physicians entered into arrangements where an affiliated health care entity paid the salaries of the physicians’ front office staff which relieved the physicians of a financial burden resulting in improper remuneration to the physicians.

Given the OIG’s recent focus on physician compensation arrangements, physicians should proactively review their agreements to ensure that they meet anti-kickback statute requirements, including any applicable safe harbors.

Filed under Compensation Arrangements, Department of Health and Human Services, Fraud Alert, Office of Inspector General

U.S. Supreme Court Issues False Claims Act Ruling of Interest to Health Care Providers

By on June 19, 2015

The United States Supreme Court recently issued a ruling in a False Claims Act case with mixed implications for the health care industry. Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, No. 12-1497, decided May 26, 2015. In this qui tam lawsuit brought under the False Claims Act, a former employee of a defense contractor during the Iraqi conflict alleged that defense contractors and related entities had fraudulently billed the government for water purification services that were not performed or not performed properly. Although this was not a health care case, the Court’s ruling will impact False Claims Act matters involving health care providers.

The case involves two restrictions on qui tam lawsuits under the False Claims Act. The first restriction is the “first-to-file” bar which prohibits a qui tam lawsuit “based on the facts underlying [a] pending action.” 31 U.S.C. § 3730(b). The second restriction involves the statute of limitations: the False Claims Act requires that a qui tam action must be brought within six years of the violation or within three years of the date the United States should have known about the violation, but cannot be brought more than ten years after the date of a violation. 31 U.S.C. § 3731(b). The Court had to decide whether the Wartime Suspension of Limitations Act, which suspends the statute of limitations involving fraud whenever Congress authorizes the use of the armed forces as described in section 5(b) of the War Powers Resolution, is limited to criminal actions or whether it extends to civil claims.

In a unanimous decision, the Court issued a ruling that has both good and bad consequences for health care providers. The Court declined to extend the qui tam statute of limitations under the Wartime Suspension of Limitations Act to civil claims. After analyzing the statutory language, the Court concluded that the Wartime Suspension of Limitations Act applies only to criminal charges. Thus, the Wartime Suspension of Limitations Act did not suspend the time for filing civil claims under the False Claims Act.

Adopting the ordinary meaning of “pending,” the Court also decided that the False Claims Act’s first-to-file bar does not keep new claims out of court once the related suit is dismissed because a qui tam suit ceases to be “pending” once it is dismissed. The first-to-file bar does not forever prevent a subsequent lawsuit from being filed. Thus, an earlier suit bars a later suit only while the earlier suit remains undecided. However, the Court noted that the issue of claim preclusion, which may protect defendants if the first-filed action is decided on the merits, was not before it. Thus, a subsequent lawsuit may nonetheless be barred if it was decided on the merits under the doctrine of claim preclusion, which generally speaking, bars relitigation of a claim that was already decided on the merits.

Filed under False Claims Act, first-to-file bar, Health Care Providers

U.S. Supreme Court Declines to Review Oklahoma Case Denying Arbitration in Wrongful Death Case

By on June 17, 2015

The United States Supreme Court refused to review a decision by the Oklahoma Supreme Court denying a nursing home’s request to arbitrate a wrongful death claim with a resident’s family members. Thus, the Oklahoma Supreme Court’s decision will stand: family members of a deceased nursing home resident will not be required to arbitrate because they did not sign the arbitration agreement in their personal capacities and their claim is not wholly derivative of the former resident’s claim. Most nursing home arbitration agreements have language stating that the agreement binds a resident’s spouse and heirs, whether or not any claims are brought on behalf of the resident, and that the agreement covers wrongful death claims. Whether or not a court will enforce a provision that heirs arbitrate claims has been the subject of much litigation.

In Boler v. Security Health Care, LLC, the Oklahoma Supreme Court examined cases from other jurisdictions that considered whether a decedent’s heirs are bound by an arbitration agreement signed by or on behalf of the decedent. The Oklahoma high court noted that in states that consider wrongful death actions to be independent and separate causes of action, courts are more likely to hold that beneficiaries are not bound by the arbitration agreement. In contrast, the Oklahoma Supreme Court noted, beneficiaries are more likely held to be bound by a decedent’s agreement to arbitrate in states where wrongful death actions are wholly derivative of the decedent’s claims. Noting that Oklahoma’s wrongful death act created a new cause of action for the losses of the deceased’s spouse and next of kin and that recovery does not go to the estate of the deceased, the Oklahoma Supreme Court explained that wrongful death claims in Oklahoma are not wholly derivative claims. Thus, the court held that a decedent cannot bind beneficiaries to arbitration.

Colorado has taken a different approach from Oklahoma even though Colorado’s wrongful death act also creates a separate cause of action. Colorado’s Supreme Court did not analyze whether a wrongful death claim is wholly derivative or not in deciding whether a decedent can bind his or her heirs to arbitration. Instead, Colorado’s high court in Allen v. Pacheco turned to contract law. Thus, the court examined whether the parties intended to bind a spouse to arbitrate a wrongful death claim. Examining the plain language of the arbitration agreement, the court concluded that the agreement required a spouse to arbitrate her wrongful death claim.

While there is no way to guarantee that a court will enforce an arbitration agreement, this discussion illuminates the importance of knowing the nuances of arbitration case law in order to draft the strongest arbitration agreement possible. It is also advisable to review arbitration agreements periodically to determine whether they should be modified due to developments in the law, particularly evolving case law.

Filed under Arbitration, Nursing Homes, Wrongful Death

ONC Updates Guide to Privacy and Security of Electronic Health Information

By on June 1, 2015

The Office of the National Coordinator for Health Information Technology (ONC) recently issued an updated Guide to Privacy and Security of Electronic Health Information. The guide is a resource that can help health care providers comply with the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs’ privacy and security requirements and the HIPAA Privacy, Security, and Breach Notification Rules.

6-1The guide provides a summary of key information in the following areas:

  • Understanding HIPAA rules;
  • Patients’ Health Information Rights;
  • Electronic Health Records, the HIPAA Security Rules, and Cybersecurity; and
  • Medicare and Medicaid EHR Incentive Programs’ Meaningful Use Core Objectives that Address Privacy and Security.

The guide walks health care providers through the key components of each of these subject areas.

In addition, the guide provides tools for health care providers who want to implement a security management process or provide notification about a HIPAA breach. The guide has a sample seven-step approach that can be used to implement a security management process, including help addressing the security requirement contained in the Meaningful Use for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. Finally, the guide provides information about what to do if there is an impermissible use or disclosure under the Privacy Rule that compromises the security or privacy of protected health information. The information includes a risk assessment process for breaches, reporting breaches, and government investigation and enforcement of potential HIPAA violations.

Filed under Electronic Health Record, HIPAA Privacy Rule, Medicaid, Medicare, Office of the National Coordinator for Health Information Technology