Health Law Advisor

In our latest upcoming series of blog posts, we will look at several key points to consider when negotiating commercial real estate purchase and sale agreements from the perspectives of buyers and sellers. The first post in our series offers suggestions for negotiating the letter of intent. The letter of intent, although usually non-binding, is an important first step in the commercial real estate contract process. It makes the agreement as to business terms clear, sets expectations of the parties, and serves as a guide for the contract negotiation process going forward.

The following are the key points to address in the letter of intent (the “LOI”):

• Purchase Price: The LOI should specify the purchase price and how the purchase price shall be paid. The Seller and Buyer should consider the amount of the deposit and whether there will be an additional deposit after expiration of any due diligence period. In addition, the Seller and Buyer may agree to a purchase money note at closing, rather than cash due at closing. In such cases, the terms of such purchase money note and any security should be specified in the LOI.

A new year brings about new legislation. Given the recent trend of health care transactions coming under increased scrutiny at the state level, EBG has released its map summarizing states that already have laws regulating health care transactions. As legislatures reconvene around the country, there continues to be regulatory scrutiny of health care transactions and private equity investment in health care. Below is a brief summary of recently proposed legislation.

California

On February 12, 2025, the California Senate introduced SB 351, which is remarkably similar to AB 3129, a bill the EBG team wrote about extensively in 2024 and that Governor Gavin Newsom vetoed in September 2024. The proposed legislation has three key components: (i) it adds new defined terms, including “hedge fund” and “private equity group,” in an attempt to capture all parties involved with Management Service Organizations (“MSOs”) and Dental Service Organizations (“DSOs”); (ii) it provides a list of prohibitions for any “private equity group” or “hedge fund” that is “involved in any manner with a physician or dental practice doing business in the state; and (iii) it contains a provision that restates existing California law on restrictive covenants and California’s prohibition on restrictions barring a provider from competing with a practice in the event of termination or resignation. Whether this bill advances and is ultimately signed remains unclear. EBG is actively monitoring this legislation.

On March 3, 2025, the Secretary of Health and Human Services published a policy statement in the Federal Register that reverses a policy adopted over 50 years ago that was intended to expand public participation in the process of rulemaking at the Department of Health and Human Services (the “Department”).  90 Fed. Reg. 11029 (2025).  This action is at odds with the “radical transparency” that Secretary Kennedy had promised previously, and may affect many programs and financial relationships between individuals, organizations, and others that interact with Health and Human Services (“HHS”).

Regulatory agencies such as HHS and its components, including the Centers for Medicare and Medicaid Services (“CMS”), the Food and Drug Administration (“FDA”), and the National Institutes of Health (“NIH”) must follow rulemaking procedures set out in the Administrative Procedure Act (“APA”) when they formulate and publish regulations that are intended to implement a statute and have the force of law. Those procedures include offering the public an opportunity to be notified of proposed regulations and to submit comments to the agency. The APA also contains several exceptions to the notice and comment requirement, including one for matters relating to “public property, loans, grants, benefits, or contracts.” Nevertheless, HHS and several other federal departments adopted policies that voluntarily waived these exceptions.

Once again, Congress is quickly approaching a telehealth cliff. Without passing additional legislation, current Medicare telehealth flexibilities will expire on March 31, 2025. If this happens, millions of beneficiaries who have used telehealth as a means for receiving needed and often critical health care services, especially since 2020, will lose coverage for this benefit starting on April 1, 2025. This will mean, with limited exceptions, that Medicare beneficiaries will have to travel to a health care provider’s office or a health care facility to receive most telehealth services.

Clinical laboratories still face uncertainty and the difficult decision of whether to start the work needed to comply with the with Phase 1 expectations under FDA’s Laboratory Developed Tests Final Rule (the “LDT Final Rule”), which remain set to go into effect on May 6, 2025. To be sure, the shift in priorities of the new administration has kept the health care industry on its toes for the last few weeks, especially as the leadership and messaging of the Department of Health and Human Services (“HHS”) has started to come into sharper focus. The theme of ‘deregulation’, particularly when it comes to the activities of the Food and Drug Administration (“FDA”), has sparked interest and discussion among stakeholders in the life sciences industry – including clinical laboratories that are weighing how to approach the upcoming May 6 deadline for compliance.

We discussed the details of the LDT Final Rule in a previous Insight, explaining that as of the May 6, 2025 Phase 1 deadline FDA will expect all laboratories that manufacture LDTs to comply with medical device reporting (“MDR”) requirements, correction and removal reporting requirements, and quality system (“QS”) requirements regarding complaint files.

In 2010, as part of the Affordable Care Act, Congress resolved a highly litigated issue about whether a violation of the Anti-Kickback Statute (AKS) can serve as a basis for liability under the federal False Claims Act (FCA). Specifically, Congress amended the AKS to state that a “claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of the [FCA].” 

This amendment, however, did not end the debate over the relationship between the AKS and the FCA. Over the last several years, multiple courts have been called upon to interpret what it means for a claim to “result from” a violation of the AKS. Courts across the country are split on the correct standard. On February 18, 2025, the U.S. Court of Appeals for the First Circuit joined the Sixth and Eight Circuits in adopting a stricter “but-for” standard of causation—while the Third Circuit has previously declared that the government must merely prove a causal connection between an illegal kickback and a claim being submitted for reimbursement.

New York State appears poised to become the fourth state to explicitly regulate consumer health data not covered by the federal Health Insurance Portability and Accountability Act (HIPAA). In May of 2023, Washington State enacted the My Health My Data Act; in June of 2023, Connecticut amended its Data Privacy Act; and in March of 2024, Nevada passed Senate Bill 370. In many respects, NY HIPA is broader in scope and effect than its three predecessors.

New York’s S929 (Health Information Privacy Act or NY HIPA), sponsored by state Senator Liz Krueger (D), establishes requirements for communications to individuals regarding the disposition of their health information; and requires written consent or a designated necessary purpose for the processing of such health information. NY HIPA addresses vulnerabilities unaddressed by HIPAA because it applies to a broader range of private companies and protects health information at risk of disclosure through the commercialization of health data.

On Friday, February 14, 2025, the Drug Enforcement Administration (“DEA”) and the U.S. Department of Health and Human Services (“HHS”) announced that the effective dates for two recently published final rules involving telemedicine prescribing of controlled substances – the final rule titled “Expansion of Buprenorphine Treatment via Telemedicine Encounter” and the final rule titled “Continuity of Care via Telemedicine for Veterans Affairs Patients” (collectively referred to herein as the “Buprenorphine and VA Telemedicine Prescribing Rules”) – are delayed from February 18, 2025, until at least March 21, 2025 (see our previous post on the Buprenorphine and VA Telemedicine Prescribing Rules).

The final rule delaying the effective dates of these final rules is scheduled for publication to the Federal Register on Wednesday, February 19, 2025.

The delays stem from the Presidential Memorandum titled “Regulatory Freeze Pending Review,” (the “Freeze Memo”) issued on January 20, 2025. The Freeze Memo orders all executive departments and agencies to “consider postponing” the effective dates of all rules published to the Federal Register that have not yet taken effect, such as the Buprenorphine and VA Telemedicine Prescribing Rules, until at least March 21, 2025 (sixty days from the issuance of the Freeze Memo), to allow review of any questions of fact, law, and/or policy raised by the rule, and to “consider opening” a comment period for stakeholders to comment on those questions. Accordingly, the DEA is also soliciting comments on: 1) the extension of the effective dates, 2) whether the effective dates should be further extended, and 3) questions of fact, law, and policy raised by these rules, for consideration by officials of the two agencies. Comments are due by February 28, 2025.

New from the Diagnosing Health Care Podcast: It is critical for health care and life sciences businesses to understand what might and might not change during this transitionary period.

How can you advocate for your needs and priorities in a time of such uncertainty? 

On this episode, Epstein Becker Green (EBG) attorneys James Boiani, Rachel Snyder Good, Marjorie Scher, and Rob Wanerman discuss the proposed leadership of the U.S. Department of Health and Human Services under the second Trump administration and the top-ticket items for these potential new leaders.

On February 7, the National Institutes of Health (“NIH”) issued a Notice (NOT-OD-25-068) entitled “Supplemental Guidance to the 2024 NIH Grants Policy Statement: Indirect Cost Rates” (the “Notice”), though which NIH announced the adoption of a uniform indirect cost rate (“IDC Rate”) of 15% applicable to all new grants, and to existing grants awarded to Institutions of Higher Education (“IHEs”) – encompassing the vast majority of postsecondary educational institutions in the United States – as of the date the Notice was issued (February 7, 2025). The Notice also indicates the policy will apply for “all current grants for go forward expenses from February 10, 2025 as well as for all new grants issued.” The Notice, as written and supported by underlying regulations, appears to apply the 15% IDC Rate to existing awards only for IHE recipients (see the Notice’s acknowledgment that “NIH may deviate from the negotiated rate both for future grant awards and, in the case of grants to institutions of higher education (“IHEs”), for existing grant awards.  See 45 CFR Appendix III to Part 75, § C.7.a; see 45 C.F.R. 75.414(c)(1).” (emphasis added)). However, there is some ambiguity in the wording and existing non-IHE awardees should be prepared for a possibly broader read by the NIH. The IDC Rate covers “facilities” and “administration” costs of the grantee institution. As a general matter, an institution’s IDC Rate is pre-negotiated and although the NIH cited 27-28% as the average negotiated IDC Rate, it has been reported that many institutions negotiate upwards of 50-60%, with some even as high as 75%.