Health Law Advisor

On January 15, 2025, the U.S. Department of Justice (DOJ) issued a press release announcing its fiscal year (FY) 2024 False Claims Act (FCA) recoveries and reported that settlements and judgments exceeded $2.9 billion in 2024—up from $2.68 billion in FY 2023.

Recoveries from entities in the health care and life sciences industries continue to represent the lion’s share of the dollars. However, health care recoveries have dropped year over year, and 2024 saw a decrease in the number of cases pursued by the DOJ on its own. What does the future hold as we look forward to a new administration? History might provide some interesting guidance.

Overview of the Statistics

While the 423 FCA cases filed by the DOJ in FY 2024 represented a marked decrease from the 505 FCA cases filed the previous year, FY 2024 saw the highest number of qui tam actions filed in history. FY 2024, coincidentally, ended on the same day (September 30, 2024) that a Florida judge ruled in U.S. ex rel. Zafirov v. Florida Medical Associates that the qui tam provisions of the FCA were unconstitutional.

As Cyberattacks targeting the health care sector have continued to intensify over the past year, including ransomware attacks that have resulted in major data breaches impacting health care organizations, the protection of health data has gained the focus of regulators and prompted bipartisan legislative efforts to strengthen cybersecurity requirements in the health care sector.

OIG Report on OCR’s HIPAA Audit Program

Under the Health Information Technology for Economic and Clinical Health Act (HITECH), the HHS Office for Civil Rights (OCR) is required to perform periodic audits of covered entities and business associates (collectively, Regulated Entities) to assess compliance with the Health Insurance Portability and Accountability Act (HIPAA) Privacy, Security and Breach Notification Rules (collectively, “HIPAA Rules”).

Last month, the HHS Office of Inspector General (OIG) released a new report assessing OCR’s HIPAA audit program, raising concerns about the effectiveness of current oversight and the need for enhanced measures to address growing cybersecurity risks in the sector. In its assessment of OCR’s HIPAA audit program, OIG reviewed OCR’s final HIPAA audit reports of Regulated Entities, guidance, and enforcement activities from January 2016 to December 2020.

On January 8, 2025, Massachusetts Governor Maura Healey signed into law House Bill No. 5159, “An Act enhancing the health care market review process” (“H. 5159”), which was passed by the Massachusetts legislature in the last few days of 2024. The bill, which takes effect April 8, will implement greater scrutiny of certain health care entities and affiliated companies—including private equity sponsors, significant equity investors, health care real estate investment trusts (“REITs”), and management services organizations (“MSOs”)—as well as pharmaceutical companies and pharmacy benefit management companies (“PBMs”) in the Commonwealth. 

The passage of H. 5159 follows debate between the House and Senate earlier in 2024 over similar bills, which failed to pass during the summer legislative session. Notably, similar bills included debt limitations on certain private investor-backed entities and bans of certain private equity investments, as well as significant restrictions on the MSO business model. However, these restrictions (among various others) were stripped from H. 5159.

Although H. 5159 has widespread implications for health care entities in the Commonwealth, a significant portion of the bill is clearly aimed at increasing regulatory oversight of for-profit-backed health care organizations through increased regulatory oversight of certain health care transactions and expanded reporting obligations. The bill also seeks to contain health care costs, including by increasing oversight of pharmaceutical company and PBM arrangements.

On December 27, 2024, the U.S. Court of Appeals for the Second Circuit held in U.S. ex rel. Camburn v. Novartis Pharmaceuticals Corporation that a relator adequately pleads a False Claims Act (“FCA”) cause of action premised on violation of the Anti-Kickback Statute (“AKS”) by alleging, with sufficient particularity under Federal Rule of Civil Procedure 9(b) (“Rule 9(b)”), that at least one purpose (rather than the sole or primary purpose) of the alleged kickback scheme was to induce the purchase of federally reimbursable health care products or services.^[1] In doing so, the Second Circuit joins seven other Circuit Courts—the First, Third, Fourth, Fifth, Seventh, Ninth, and Tenth Circuits—in adopting the “at least one purpose” rule. This ruling lowers the bar in the Second Circuit for relators pleading AKS-based FCA claims. 

Interplay Between FCA and AKS Violations

Under the AKS, “a claim that includes items or services resulting from a violation [of the AKS] … constitutes a false or fraudulent claim” under the FCA.^[2]

The AKS prohibits persons from, among other things, “knowingly and willfully” soliciting or receiving “any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—

Background

On December 10, 2024, the Supreme Court of Ohio issued its decision in Stull v. Summa, a medical negligence case in which the defendants argued that Ohio’s statutory peer-review privilege protected from discovery the file the hospital maintained on a resident physician, which included, among other things, quality reviews and assessments of the resident’s clinical competency and professional conduct. The Supreme Court of Ohio decided one issue: Does the peer-review privilege in R.C. 2305.252 apply to a health care entity’s files about resident physicians?

This case arose from the medical treatment of head injuries that the patient sustained during a car crash. The patient and his guardians filed a medical negligence lawsuit against the hospital and its employed health care professionals, including a resident physician who participated in the patient’s care. The plaintiffs alleged that the resident improperly intubated the patient, causing the patient to sustain a brain injury.

You may be familiar with the data that FDA publicly shares on devices designated as having breakthrough status, and devices ultimately approved after receiving that status. As of September 30, 2024, 1041 devices had received breakthrough designations, and 128 of those devices had received ultimate clearance or approval. Inquiring minds want to know, though: what about the difference, the 913 devices granted breakthrough designation but at least not yet approved or cleared? 

I wanted to learn as much as I could about those devices, so I submitted a FOIA request.  The numbers are not going to match up with the public data, in part because my FOIA request only extended through June 1, 2024.  But the data FDA shared in response to my FOIA are quite revealing, both about where industry has placed its development priorities in terms of potential breakthrough devices and where FDA seems inclined to grant breakthrough designation. We also learned how quickly FDA responds to requests for breakthrough designation.

Results

Let’s start with how quickly FDA responds. As a preliminary note, these data only reflect where the designation has been granted, not whether designation has been rejected. I have no data on rejections. But at least for those where FDA responds favorably, here’s what the responses look like in terms of timing by therapeutic area.

In our ongoing series of blog posts, we have examined key negotiating points for tenants in triple net health care leases. We also have offered suggestions for certain lease provisions designed to protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. In our previous blog posts, we considered the importance of negotiating initial terms and renewal terms, operating expense provisions, assignment and subletting terms, maintenance and repair obligations, holdover provisions and surrender terms, tenant improvement allowances, exclusivity, expansion and relocation provisions, and default provisions. This final blog post in our series focuses on negotiating the letter of intent.  

While a letter of intent (“LOI”) is usually non-binding, it is an extremely important part of the lease process and a valuable tool to make expectations clear and prevent time consuming and costly back and forth during lease negotiations. The topics covered in our earlier blog posts in this series should be addressed in the LOI, which should serve as a road map for the parties and counsel in drafting and negotiating the lease. By agreeing on these basic terms up front, the parties will significantly reduce the amount of back and forth needed to arrive at a lease both parties find acceptable.

In our ongoing series of blog posts, we have examined key negotiating points for tenants in triple net health care leases.

We have also offered suggestions for certain lease provisions designed to protect tenants from overreaching and unfair expenses, overly burdensome obligations, and ambiguous terms with respect to the rights and responsibilities of the parties. These suggestions are intended to result in efficient lease negotiations and favorable lease terms from a tenant’s perspective. In our previous blog posts, we considered the importance of negotiating initial ...

New from the Diagnosing Health Care Podcast: The recent 2024 elections resulted in a new Trump administration and a Republican-controlled House and Senate.

From policymakers to stakeholders across the industry, everyone is wondering what health policy will look like in 2025 and beyond.

On this episode, Epstein Becker Green attorneys Ted Kennedy Jr., Leslie Norwalk, Philo Hall, and Alexis Boaz discuss the results of the 2024 elections and their impact on the health policy space. What will a second Trump administration look like? How might the election results affect the health care policies addressed during Congress’s 2024 lame-duck session?

As the dietary supplement industry continues to draw attention from Congress, state attorneys general, and class action lawyers, now comes another state law prohibiting the sale of over-the-counter (“OTC”) dietary supplements that target weight loss and muscle building to minors – this time, in New Jersey.

On October 28, 2024, by a majority vote of 56 to 17, with four abstentions, the New Jersey General Assembly passed Assembly Bill No. 1848, which, if it goes into effect, will prohibit the sale or delivery of OTC diet pills, weight loss, and muscle building supplements to minors, unless the minor is accompanied by a parent or guardian. Bill No 1848 is an exemplar of efforts intended to combat the misuse and abuse of these products and the potential causal relationship between these dietary supplements and eating disorders. Violators, including employees of retail establishments, may face a civil penalty of not more than $750.