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March 2, 2020

Health Headlines – March 2, 2020


U.S. Supreme Court Agrees to Hear Appeal on ACA’s Constitutionality – On March 2, 2020, the Supreme Court of the United States granted certiorari to hear appeals in two cases concerning the constitutionality of the Affordable Care Act (ACA): California, et al. v. Texas, et al., Case No. 19-840 and Texas, et al., v. California, et al., Case No. 19-1019.  The order sets the stage for the Court to hear a key challenge to the ACA – whether a legislative change to eliminate the tax penalty of the individual mandate rendered the ACA unconstitutional.

As previously reported here, the United States District Court for the Northern District of Texas issued a ruling in December 2018, holding the entire ACA unconstitutional based on Congress’s decision to set the penalty under the individual mandate at zero dollars.  The district court also held that the entire ACA was invalid because the individual mandate could not be severed.  As previously reported here, in a split decision on appeal, the Fifth Circuit affirmed the district court’s decision that the penalty-free individual mandate was unconstitutional but ordered the district court to reconsider the severability question on remand.

The petition for certiorari filed in California v. Texas, No. 19-840 can be found here.  The petition for certiorari filed in Texas v. California, No. 19-1019 can be found here.  The Supreme Court ordered the two cases consolidated for briefing and oral argument under case No. 19-840.  The Court also granted leave for 33 State Hospital Associations to file a brief as amici curiae

The Court did not indicate when it would hear the case, but it is likely that arguments will not be heard until spring or summer of 2021.  King & Spalding will be carefully monitoring developments in this case, so please stay tuned for future updates.

Reporter, John Whittaker, Sacramento, +1 916 321 4808, jwhittaker@kslaw.com.

King & Spalding Client Alert: DOJ Announces FCA Settlement with NIH-Funded Institute Related to Disclosure of Foreign Influence in Research – The Department of Justice (DOJ) recently announced that it reached a $5,500,000 settlement with a biomedical research institute that received NIH grant funding to resolve allegations that it violated the False Claims Act (FCA) by failing to disclose Chinese government grants that funded two research scientists.  In a press release the U.S. Attorney for the Western District of Michigan stated, “It’s unfair to other grant applicants and to the NIH for any institution to withhold requested information about whether the research that an institution wants the NIH to support may be getting funding from outside sources, specifically including foreign governments.”  This settlement should alert all healthcare providers to the risks of foreign influence in clinical research.  Please click here for more information in a King & Spalding Client Alert.

Ninth Circuit Upholds HHS Authority on Abortion Gag Rule – On February 24, 2020, the Ninth Circuit, sitting en banc, upheld the Trump administration’s regulation that prohibits grantees under Title X of the Public Health Service Act from referring patients for, or otherwise encouraging, an abortion (the Rule). A seven-judge majority of the court reversed preliminary injunctions issued by district courts in California, Oregon, and Washington and held that the rule was not arbitrary and did not run afoul of the HHS Appropriations Act or the Affordable Care Act. Four judges dissented and would have affirmed the preliminary injunctions.

The majority of the court reasoned that the Supreme Court’s holding in Rust v. Sullivan, 500 U.S. 173 (1991), which had upheld an earlier version of the Title X regulations, controlled the outcome here.  The court recognized that Congress had addressed Title X funding in several statutes enacted after Rust, but reasoned that these statutes did not lessen Rust’s precedential force.  An appropriations rider, first enacted in 1996 and re-enacted in each year since, instructs that pregnancy counseling shall be “nondirective”; the court held, however that HHS had reasonably interpreted the statute not to require abortion referrals.  Section 1554 of the Affordable Care Act prohibits the agency from issuing regulations that create unreasonable barriers to the ability of individual to obtain appropriate medical care.  The court held that the statute did not govern how the agency distributed the funds it administers.  The court also held that the Rule was not arbitrary and capricious.

In the dissenting opinion, the four-judge minority strongly criticized the majority’s reasoning, arguing that “[b]ecause Congress has clarified the scope of HHS’s authority, the Rust line of cases has little bearing on the matter before us.  Our only task is to determine whether HHS has exceeded the authority Congress granted it.  And as the district courts concluded, it has.”  The dissent reasoned that the Rule, by prohibiting medical facilities from informing patients of the full range of their medical options, was not “nondirective” within the meaning of the appropriations rider, and that the Rule created unreasonable barriers to medical care.  The dissent also would have affirmed the preliminary injunctions on the ground that the Rule was arbitrary and capricious, and it faulted the majority for deciding the arbitrary-and-capricious challenge on the merits rather than remanding the case for the development of the full administrative record.

The case is State of California v. Alex Azar II et al., Case number 19-15974. A copy of the Ninth Circuit opinion can be found here.

Reporter, Amy L. O’Neill, Sacramento, +1 916 321 4812, aoneill@kslaw.com.

ALSO IN THE NEWS

King & Spalding 29th Annual Health Law & Policy Forum - On March 16, 2020, King & Spalding LLP will host its annual forum in Atlanta, GA, focusing on the foremost legal and political developments impacting the healthcare industry.  This year’s Keynote Speaker is George F. Will, America’s foremost political columnist.  He will speak on healthcare’s role in the 2020 political campaign.  Other Forum highlights include:

  • Leading practitioners providing policy and regulatory enforcement updates, and other industry developments;
  • Special considerations healthcare providers face in pandemics; and
  • Developments in telehealth.

Registration closes today, on March 2, 2020, and capacity is limited.  For more information and to register, please click here.

King & Spalding to Host Reception at the American Health Lawyers Association (AHLA) Institute on Medicare and Medicaid Payment Issues - Please join us on March 26, 2020, for a reception hosted by King & Spalding at AHLA’s Institute on Medicare and Medicaid Payment Issues in Baltimore.  The reception will be held in the Laurel Room on the 4th Floor of the Baltimore Marriott Waterfront from 7:00 p.m. to 9:00 p.m. ET.  To register for our reception, please click here.