Health Law Advisor

On September 12, 2025, the United States Court of Appeals for the Fifth Circuit, in AbbVie v. Fitch, Case No. 24-60375, (5th Cir. 2025), affirmed a federal District Court’s denial of a preliminary injunction sought by the pharmaceutical manufacturer AbbVie. AbbVie sought to enjoin enforcement of the state of Mississippi’s 2024 law, H.B. 728, which prohibits drug manufacturers from interfering with how a 340B covered entity distributes 340B drugs to eligible patients.

The 340B Program requires drug manufacturers to give discounts to certain categories of safety-net providers under the law – known as "covered entities" – in order to have their drugs covered by Medicaid. Covered entities commonly contract with third-party pharmacies – known as “contract pharmacies” – to dispense drugs to 340B-eligible patients. In recent years, citing concerns relating to the growth of the 340B program, compliance with 340B requirements, and transparency, AbbVie and other manufacturers have implemented restrictions that limit the number of contract pharmacies with which each covered entity can contract. Covered entities counter that these policies undermine the 340B program's intent to serve low-income and uninsured patients and cause hospitals to reduce patient services. AbbVie’s policy restricted covered entities to contracting with a single contract pharmacy within 40 miles of the covered entity.

By the third quarter of 2025, the Department of Justice (DOJ) has made plain that it will continue using the False Claims Act (FCA) to advance administration priorities.

While the focus on diversity, equity, and inclusion (DEI)—addressed in our August 8 post—continues to make headlines, DOJ is not taking its eye off cybersecurity. Two settlements announced in late July, totaling approximately $11.5 million, reinforce that noncompliance with cybersecurity obligations can trigger FCA exposure.

On August 29, 2025, the U.S. Department of Justice (DOJ) announced the creation of a new Trade Fraud Task Force (“Task Force”).

DOJ touts this cross-agency initiative as being designed “to aggressively pursue enforcement actions against any parties who seek to evade tariffs and other duties”—promising “robust enforcement against importers and other parties who seek to defraud the United States.”

Created to further the administration’s “America First Trade Policy” announced on January 20, 2025, the Task Force will consist of civil and criminal components of the DOJ along with U.S. Customs and Border Protection and Homeland Security Investigations. It will focus on ensuring compliance with trade laws, including payment of all tariffs and duties (e.g., antidumping and countervailing duties, Section 301 tariffs, and other customs obligations). DOJ promises increased parallel civil and criminal actions under the False Claims Act (FCA), Tariff Act, and federal criminal statutes related to trade fraud and conspiracy.

California’s Assembly Bill 489 (“AB 489”) signals more than just a tweak to existing healthcare law—it’s a glimpse into how the next generation of regulation may shape the future of AI development and deployment in healthcare.

As large language models (LLMs) and other AI-driven health platforms accelerate in capability and adoption, lawmakers are scrutinizing where technological innovation may result in the unauthorized practice of medicine. The message is clear: the days of operating in a regulatory gray zone are numbered and the regulatory perimeter around healthcare AI is tightening such that states may begin to legislate how AI can present itself to the public, not just what it does in the background.

On July 17, 2025, the U.S. Court of Appeals for the Fourth Circuit held that a federal district court was “within bounds to order a do-over” in the case of Ron Elfenbein, a Maryland doctor who was found guilty of COVID-19-related health care fraud in 2023 in connection with upcoding and false documentation. Elfenbein was acquitted by the district court four months after his trial.

The Fourth Circuit affirmed a contingent order of the U.S. District Court for the District of Maryland granting a new trial and also reversed Elfenbein’s acquittal, rejecting the trial court’s conclusion that the jury had too little evidence to convict.

“[W]e do agree that the case was close—and we find it significant that the most damning evidence came not from the government’s witnesses but Elfenbein’s,” Judge Julius N. Richardson wrote for the appellate court.

On July 17, 2025, Oregon Governor Tina Kotek signed SB 537, which adds to Oregon’s growing set of workplace violence prevention laws relating to health care. The bill passed the state Senate with an 18-11 vote on June 23, and the House, 37-12, on June 26, during the final days of the legislative session. The new provisions add detailed requirements for health care work sites.

On July 29, 2025, Attorney General Pam Bondi issued a memorandum to all federal agencies providing guidance addressing “unlawful discrimination” on the basis of race, color, national origin, sex, religion, or other protected characteristics (the "July 29 Guidance").

According to the memorandum, the July 29 Guidance is intended to clarify “the application of federal antidiscrimination laws to programs or initiatives that may involve discriminatory practices, including those labeled [DEI] programs.”

The Expanding Enforcement Framework

Although the July 29 ...

On August 1, 2025, the U.S. Department of Health and Human Services (“HHS”) Health Resources and Services Administration (“HRSA”) issued a call for applications for a 340B Rebate Model Pilot Program (the “Pilot Program”).

The announcement of the Pilot Program signifies the intersection of several notable policy issues upon which stakeholders of the pharmaceutical supply chain have focused over the past few years, including drug manufacturer efforts to provide 340B discounts via retrospective rebates as opposed to upfront discounts, and the January 1, 2026 ...

On July 10, 2025, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule to establish the Ambulatory Specialty Model (ASM)—a mandatory value-based payment model for specialists who treat patients with heart failure or low back pain.

CMS selected heart failure and low back pain because these chronic conditions represent roughly 6% of total, annual spend for traditional Medicare. The model is scheduled to run from 2027 through 2031 and represents an expansion of CMS’s strategy to integrate specialty care into its broader efforts to manage chronic disease and control Medicare spending.

CMS is accepting public comments on the proposal through September 12, 2025, offering stakeholders an opportunity to help shape the model’s design and implementation.

On July 7, 2025, the Office of Inspector General (“OIG”) for the Department of Health and Human Services published Advisory Opinion 25-08 (“AO 25-08”), an unfavorable and strongly worded opinion interpreting the “arranging for” language in the Anti-Kickback Statute (“AKS”).

The AO involves a proposed arrangement for a medical device company (the “Requestor”) to pay a third-party vendor to access an electronic billing portal operated by the vendor that is used by some of the Requestor’s customers for certain billing operations. In issuing the unfavorable opinion, the OIG said the proposed arrangement “presents anti-competitive risks and risks of inappropriate steering” and characterized the arrangement as being “for the purpose of accessing referrals” from hospital customers that are clients of the vendor.

The Requestor in this AO is a medical device company that supplies "bill-only" products to hospitals. “Bill-only” products are items that are not part of a hospital’s regularly purchased inventory but rather are purchased in real time, such as when a surgeon is selecting the right size or component of a device to use during a surgery. According to the AO, what typically happens with “bill-only” products is that a representative of the medical device company delivers a selection of items to a hospital customer the day before or the day of a patient’s procedure so that the surgeon can select the specific items needed for that specific patient. Some of these “bill-only” items are used in procedures reimbursable by federal health care programs.