Health Law Advisor

In a previous post, we discussed the appropriate use of the Provider Relief Funds authorized and appropriated by Congress under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Public Health and Social Services Emergency Fund (“Relief Fund”) for healthcare providers and facilities. Within that post, we specifically discussed the limitation imposed on use of the Relief Funds for payment of salaries, a topic of great interest to many recipients. Under the Terms and Conditions, recipients are prohibited from using the funds for salaries in excess of the Senior Executive Service Executive Level II amount – an annual salary of $197,300 – or $16,441 a month. We noted that, although the Department of Health and Human Services (“HHS”) had not spoken to this requirement with respect to the Provider Relief Funds, HHS permits other HHS grant Recipients to pay individuals’ salaries in excess of the $197,300 limit with non-federal funds.[1] Also, HHS’ federal contract regulations similarly limit use of federal contract funds for salary costs to the Executive Level II amount, but allow for amounts in excess of that limit to be paid with non-federal funds.[2]

The Supreme Court of New Jersey unanimously held in Linda Cowley v. Virtua Health System (A-47-18) (081891) that the “common knowledge” exception of the Affidavit of Merit Statute applies only when a simple negligence standard is at issue, and does not apply when a specific standard of care must be evaluated.  In this case involving if and how to reinsert a removed nasogastric tube, the Court reversed the judgement of the Appellate Division and dismissed the plaintiff’s complaint with prejudice because she failed to submit an affidavit of merit within the time required by the Affidavit of Merit Statute.

Enacted in 1995, the Affidavit of Merit Statute requires that plaintiffs in medical malpractice cases “provide each defendant with an affidavit of an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards or treatment practices.” N.J.S.A. 2A:53A-27. The statute’s primary purpose “to require plaintiffs in malpractice cases to make a threshold showing that their claim is meritorious, in order that meritless lawsuits readily [can] be identified at an early stage of litigation.” Cornblatt v. Barow, 153 N.J. 218, 242 (1998). Failure to provide an affidavit or its legal equivalent is “deemed a failure to state a cause of action,” N.J.S.A. 2A:53A-29, requiring dismissal with prejudice.

An exception to this rule is the judicially-created “common knowledge” exception which provides that an expert is not needed to demonstrate that a defendant professional breached some duty of care “where the carelessness of the defendant is readily apparent to anyone of average intelligence.” Rosenberg v. Cahill, 99 N.J. 318, 325 (1985). In those exceptional circumstances, the “jurors’ common knowledge as lay persons is sufficient to enable them, using ordinary understanding and experience, to determine a defendant’s negligence without the benefit of the specialized knowledge of experts.” Hubbard v.  Reed, 168 N.J. 387, 394 (2001). Thus, a plaintiff in a malpractice case is exempt, under the common knowledge exception, from compliance with the affidavit of merit requirement where it is apparent that “the issue of negligence is not related to technical matters peculiarly within the knowledge of [the licensed] practitioner[].” Sanzari v.  Rosenfeld, 34 N.J. 128, 142 (1961).

On March 23, 2020, Governor Phil Murphy signed Executive Order 109, which “limit[ed] non-essential adult elective surgery and invasive procedures, whether medical or dental, [in order to] assist in the management of vital healthcare resources during this public health emergency.” The purpose of EO 109 was to “limit[] exposure of healthcare providers, patients, and staff to COVID-19 and conserve[] critical resources such as ventilators, respirators, anesthesia machines, and Personal Protective Equipment (‘PPE’) [that] are essential to combatting the spread of the virus.” At the time EO 109 was executed, coronavirus cases were rapidly increasing within the State. On March 23rd, New Jersey had 2,844 coronavirus cases in all 21 counties, an increase of 935 over the previous day, and at least 27 people had died.

In the weeks that followed, New Jersey saw the surge in cases for which it was preparing. On April 4, the three-day average of new confirmed positive COVID-19 cases peaked at 4,064 cases, and by April 14th, there were 8,084 of COVID-related hospitalizations and a staggering 1,705 patients on ventilators. But since that time, thanks to social distancing and New Jersey’s ability to flatten the curve, these numbers have fallen drastically. By May 11th, the three-day average of new, positive cases had fallen to 1,572 new cases—a 61 percent decrease. Likewise, the three-day average of new hospitalizations had fallen to 4,277 patients—a 48 percent decrease.

In light of this decreased burden on the healthcare system, Governor Murphy signed Executive Order 145, which allows for elective surgeries to resume as of 5 am on May 26, 2020. EO 145 provides that elective surgeries and invasive procedures may proceed at both licensed healthcare facilities and in outpatient settings not licensed by the Department of Health (e.g., health care professional offices, clinics, and urgent care centers), subject to limitations and precautions set forth in policies to be issued by the Division of Consumer Affairs, in consultation with the Department of Health, by Monday, May 18, 2020. EO 145 further states that the Department of Health and/or the Division of Consumer Affairs may issue supplemental or amended policies concerning elective surgeries and elective invasive procedures on or after Monday, May 18, 2020.

Our colleagues Adam C. Abrahms, Steven M. Swirsky, and Brock Olson at Epstein Becker Green has recently published a post on the Management Memo blog that will be of interest to our readers in the health care industry: “Tie Goes to the Employer: National Labor Relations Board Overrules Past Precedent Regarding Dual-Marked Ballots."

Following is an excerpt:

The National Labor Relations Board (“Board” or “NLRB”) on Wednesday, May 13, 2020, overruled decades of convoluted Board precedent regarding “dual-marked ballots” in union representation elections – ...

To limit exposure and reduce the spread of COVID-19, New York and New Jersey are requiring long-term care facilities to implement testing for staff.

New York

On May 11, 2020, New York Governor Andrew Cuomo issued Executive Order 202.30 requiring nursing homes and adult care facilities, including all adult homes, enriched housing programs and assisted living residences (“facilities”), to test all staff for COVID-19 twice per week.  Staff who refuse to be tested will be deemed to have incomplete health assessment and will be prohibited from providing services until the test has ...

To address the COVID-19 public health emergency fiscal burdens, Congress authorized and appropriated the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act[1], Public Health and Social Services Emergency Fund (“Relief Fund”) for healthcare providers and facilities. The Department of Health and Human Services (“HHS”) has begun to distribute several tranches of the Relief Funds. All totaled, Congress provided $175 billion to the Public Health and Social Services Emergency Fund (“Relief Fund”) through the CARES Act and the Payroll Protection Program and Health Care Act.[2]

As of May 7, 2020, HHS identified $50 billion for general distribution to Medicare providers. HHS distributed to Medicare providers the Relief Fund’s initial $45 billion tranche in April 2020, and is distributing the Relief Fund’s second $20 billion tranche. Also, HHS allocated Relief Funds to: hospitals in COVID-19 high impact areas ($10 billion); rural providers ($10 billion); Indian Health Services ($400 million), and skilled nursing facilities, dentists, and providers that take solely Medicaid (unidentified amounts).[3]

Failing a drug test may not kill the buzz for medical marijuana patients in the Empire State.  In contrast to courts in California and other jurisdictions, a New York state court has held that medical marijuana users are entitled to reasonable accommodations, even if they only obtain certification after testing positive for marijuana.

In Gordon v. Consolidated Edison, Inc., Kathleen Gordon failed a random drug test by her employer, Consolidated Edison, Inc. (“CEI”).  After testing positive, but before her termination, Gordon became a certified medical marijuana patient to ...

Our colleague David J. Clark at Epstein Becker Green has recently published a post on the Trade Secrets & Employee Mobility blog that will be of interest to our readers in the health care industry: “New Indiana Law Will Restrict Physician Non-Competes.”

Following is an excerpt:

Joining many other states that in recent years have enacted laws regarding physician non-competition agreements, Indiana recently enacted a statute that will place restrictions on such agreements which are originally entered into on or after July 1, 2020.

Under Pub. L. No. 93-2020 (to be ...

One of the many relief efforts contained in the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), signed into law on March 27^th, 2020, is a hiatus of sequestration as it applies to Medicare payments. Section 4408 of the CARES Act exempts Medicare from the effects of sequestration from May 1, 2020, through December 31, 2020.[1] It also postpones the sunset of sequestration as it applies to Medicare from the end of 2029 to the end of 2030.

As background, on January 2, 2013, “sequestration,” automatic spending cuts applicable to all categories of the Federal budget, went into effect. Sequestration included a 2.0% reduction in most Medicare spending, and as a result of its implementation, many providers experienced reductions in their reimbursement. In addition to traditional fee-for-service Medicare payments, some Medicare Advantage plans reduced reimbursement under their contracts with providers to reflect the effect of sequestration, effectively passing on to providers the reductions in premiums recovered by such plans due to sequestration. Even non-Medicare reimbursement was affected for many providers whose participation agreements with plans contained fee schedules based off of Medicare reimbursement.

While this suspension of sequestration is certainly good news for providers participating in traditional fee-for-service Medicare, and plans offering Medicare Advantage products, the effect the suspension will have on reimbursement for providers participating in Medicare Advantage or commercial lines of business which rely on Medicare rates is slightly less clear.

Certifications, Acknowledgments,
and Reports

The CARES Act[1], passed by Congress and signed into law on March 27, 2020, provides $100 billion for the Public Health and Social Services Emergency Fund (“Relief Fund”) to support eligible health care providers. Less than a month later, Congress passed the Payroll Protection Program and Health Care Act[2], providing an additional $75 billion to the Relief Fund, raising the total funds available to $175 billion. As of the end of April 2020, the Department of Health and Human Services (“HHS”) released to providers two tranches of Relief Funds totaling $50 billion.[3] HHS disbursed the first $30 billion tranche (“Tranche 1”) between April 10 and April 17, 2020. Currently, HHS is disbursing the second $20 billion tranche (“Tranche 2”). Because these are grant funds – not loans – repayment is not required. What HHS requires is that the Recipients attest to and follow the Relief Fund’s Terms and Conditions. Before we turn to the Terms and Conditions, it is important to understand HHS’ Relief Fund disbursement process.

Relief Fund Disbursement Process

HHS disbursed the Tranche 1 Relief Funds as well as some of the Tranche 2 Relief Funds directly to providers participating in Medicare Part A and Part B. (“the Recipients”). Other Recipients must apply for the Relief Funds through the HHS’ on-line portal. No matter how the Recipient received the funds, either through direct payments or through the on-line application, all Recipients must attest to HHS’ published Terms and Conditions through the HHS on-line portal within 45 days after receiving the Relief Funds. Each tranche requires a separate attestation. If the Recipient retains the funds for at least 30 days without contacting HHS regarding the funds’ remittance, HHS deems the Recipient to have accepted the Terms and Conditions discussed below. There are two important considerations in determining whether to accept these funds:

1. The Terms and Conditions for Tranche 2 Relief Funds differ in several respects from the Terms and Conditions for the Tranche 1 Relief Funds; and
2. The Terms and Conditions listed provisions are not exhaustive and Recipients must also comply “with any other relevant applicable statutes and regulations”.