Health Law Advisor

Recently, the California Legislature made a series of major revisions to Assembly Bill 3129 (“AB 3129” or “the Bill”), a highly anticipated piece of legislation expected to have a substantial impact on transactions in California’s healthcare space.  Although Epstein Becker Green has previously discussed the Bill (see original post here, as well as a first update here), this blog post will discuss the legislature’s most recent revisions on June 19 and June 27.

Why Assembly Bill 3129 Was Introduced

The Bill was introduced by Assembly Member Wood and is supported by Attorney General Bonta in response to growing concerns about the increasing involvement of private equity and hedge funds in California’s healthcare sector. As private equity firms have increasingly acquired healthcare facilities and provider groups, California’s legislature wants to strengthen oversight to ensure that these transactions are conducted in a transparent manner that protects patients, ensures access, and preserves affordability.

What the Bill Will Do

AB 3129 seeks to address these concerns by requiring private equity groups and hedge funds to provide written notice to, and obtain the written consent of, the Attorney General before engaging in any change of control or acquisition involving healthcare facilities, provider groups, or nonphysician providers. This includes changes of control, acquisitions, or agreements that may impact healthcare services or access.

When I was working on my Masters in data science, one of the projects I did was to create an algorithm that would take an intended use statement for a medical device and predict whether FDA would require a clinical trial.  It worked fairly well, with accuracy of about 95%.

Since that’s a dynamic algorithm in which the user inputs an intended use statement and gets a prediction of FDA’s decision, I wanted to go about a similar task this month: create a static word cloud to show what words are most associated with intended use statements where FDA has required a clinical trial.  At least in theory, this static representation might give you a sense of words in an intended use statement that are more likely to push your device toward a clinical trial.

The ability to obtain public records in New Jersey is about to undergo a massive overhaul. A new bill, S2930 (the “Reform Bill”), was signed into law by New Jersey Governor Phil Murphy on June 5, 2024, and has the potential to make it more difficult for requestors to obtain access to certain government records.

The controversial move to pass the Reform Bill has been called out by numerous critics for imposing limits on government transparency and inviting corruption to the state. Governor Murphy’s response has remained that the Reform Bill considers these concerns and aims to simplify the current public record requests process by imposing much-needed limitations and modernizations. The Reform Bill will be effective 90 days following enactment.

New Jersey’s Reform Bill is not the only open record law introduced recently. A number of different states, including Utah, Louisiana, and Michigan, have introduced and, in some cases, passed different kinds of government transparency bills in their respective state governments. However, the level of transparency ranges, with some of these bills limiting public record access, while others introduce more public transparency.

In this episode of the Diagnosing Health Care Podcast: Will the reclassification of marijuana from a Schedule I to a Schedule III drug disrupt the cannabis marketplace? What consequences must industry stakeholders consider if the Drug Enforcement Administration's proposal becomes a reality?

On this episode, special guests Anthony Minniti, a New Jersey-licensed pharmacist, and Stacey Udell, an accountant with expertise in representing cannabis operators across the United States, join Epstein Becker Green attorney Lisa Gora to discuss the regulatory domino effect and tax implications related to this major potential change to the cannabis industry.

On Friday, June 14, the Texas Supreme Court declined to consider a case that asked the Court to determine whether frozen embryos are persons or property under Texas law.

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 that will 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 posts, we considered the importance of negotiating initial terms and renewal terms, operating expense provisions, assignment and subletting terms, and maintenance and repair obligations. This latest post focuses on negotiating holdover provisions. Holdover provisions should be carefully negotiated in order to limit a tenant’s liability for expenses arising from unforeseen circumstances.

What happens if a tenant does not vacate on lease expiration without having negotiated a renewal or a new lease? Circumstances may arise which interfere with a tenant’s ability to vacate premises in a timely manner, such as delays in new space being ready for occupancy or delayed or terminated negotiations with respect to a lease for intended new space.

On June 13, 2024, a unanimous Supreme Court held that physicians and medical associations opposed to abortion lacked standing to challenge the U.S. Food and Drug Administration’s (FDA’s) approval of the drug mifepristone, which is primarily used in terminating pregnancy. The Court’s decision in FDA v. Alliance for Hippocratic Medicine affirms the status quo—mifepristone will remain available to patients without in-person dispensing requirements and for pregnancies up to 10 weeks.

In April 2023, the U.S. District Court for the Northern District of Texas ruled that the physicians and medical associations in this case did have standing to sue the FDA for approving mifepristone in 2000. Based on that standing, the District Court determined that the FDA’s approval of mifepristone was invalid under the Administrative Procedure Act and enjoined the FDA’s original approval. The District Court delayed its decision for seven days and, as we have previously discussed on this blog, set off a flurry of filings before the Fifth Circuit and Supreme Court, ultimately leading the latter to issue a stay on the District Court’s injunction of the FDA’s original approval of mifepristone. The stay allowed mifepristone to remain on the market under its current approval and remained in effect through the June 13, 2024 decision by the Court.

Distressed businesses are often compared to melting ice cubes or an aircraft in rapid descent. The goal for a distressed business is to get to a transaction before the ice cube melts or the aircraft and ground meet at an unsurvivable speed. New state laws modeled after the federal Hart-Scott-Rodino (HSR) Act now require, or will soon require, parties to provide notice of certain health care transactions to state regulators creating additional hurdles for distressed healthcare businesses.

Most people have seen the growth in artificial intelligence/ machine learning (AI/ML)-based medical devices being cleared by FDA.  FDA updates that data once a year at the close of its fiscal year.  Clearly the trend is up. But that's a bit backward looking, in the sense that we are only learning after the fact about FDA clearances for therapeutic applications of AI/ML.  I want to look forward.  I want a leading indicator, not a laggard.

I also want to focus on uses of AI/ML that are truly therapeutic or diagnostic, as opposed to the wide variety of lifestyle and wellness AI/ML products and the applications used on the administrative side of healthcare.  As a result, in this post I explore the information on clinicaltrials.gov because not only are those data focused on the truly health related, they are also forward-looking. The more recent clinical trials involve products still under investigation and not yet commercially available or even submitted to FDA.

In April, we shared with you our thoughts on what to consider before opening in or investing in a medical spa, thinking about corporate structure, scope of practice, licenses and registrations, referral restrictions, HIPAA and data privacy, and more. This month, we’re focusing on how states are beginning to regulate in this area, so owners and operators can hit the ground running in terms of compliance—or relax and breathe deep, knowing they are ahead of the plan. 

In March 2024, the state of Rhode Island introduced S 2870, the Medical Spas Safety Act, providing (within the definition of “cosmetic medical procedure”) that:

• The performance of cosmetic medical services is the practice of medicine and surgery; and
• A cosmetic medical service shall be performed by a qualified licensed or certified non-physician only if the services have been delegated by a medical director, supervising physician, supervising physician’s assistant (PA) or supervising advanced practice registered nurse (APRN) who is responsible for onsite supervision of services performed.