Hello. Our Saul Ewing Health Law Practice Group is thrilled to share with you our 2025 predictions article addressing multiple areas of interest in the health care delivery system. Many of our group’s colleagues have shared with you their thoughts relating to topics that affect providers of all types and sizes, including tax policy; bankruptcy; public finance; antitrust; non-competes; telemedicine; cannabis; reproductive health; HIPAA and privacy; AI; civil rights; patents; and appellate issues.
Our health care delivery system continues to be heavily regulated at the federal level and by many states. Courts have increasingly been used to resolve disputes. It is not yet known how active the 2nd Trump Administration and a GOP Congress will be in respect to health care issues. Similarly, it is not clear what policies will be advocated by the new HHS and CMS leadership.
One thing is certain. Our talented group of health law colleagues across the Saul Ewing footprint will continue to monitor federal and state developments and assist clients to achieve their strategic objectives and proactively address regulatory and compliance issues. We will regularly publish alerts relating to important issues and speak to interested audiences about health care legal issues. Please let us know if you wish to have one of our attorneys speak with you and or co-author an alert on a topic of interest.
Thank you for your continued trust in Saul Ewing and its attorneys and colleagues to handle your legal needs.
We wish you a successful 2025. We stand ready to assist you and your organization with your legal needs. We hope you enjoy the 2025 predictions article!
Bruce Armon
Chair, Saul Ewing Health Law Practice
Navigating the AI Frontier: Balancing Innovation, Compliance, and Patient Privacy in Healthcare
Author: Matt Kohel
Artificial intelligence (AI) continues to transform healthcare. AI’s potential to improve patient care, streamline operations, and drive innovation is immense. However, as AI systems become increasingly integrated into healthcare environments, ensuring their compliance with complex regulations and protecting sensitive patient data are two major challenges. In 2025, expect to see increased regulatory clarity, the development of new privacy-enhancing technologies, and a growing focus on patient-centric AI models that prioritize fairness, transparency, and security. This article highlights some of the challenges and opportunities healthcare organizations face in ensuring AI systems comply with existing regulations like HIPAA and emerging frameworks like the EU’s AI Act and the US National Artificial Intelligence Initiative. Also, this article examines AI-related patient privacy concerns and identifies some best practices for safeguarding data in an AI-driven healthcare landscape.
AI systems rely on vast amounts of data, much of which may be personal and sensitive depending on the use case and how the model was trained. For AI systems used for healthcare, the training data is likely to include Protected Health Information or PHI. The collection and use of PHI is protected by stringent laws, such as HIPAA (Health Insurance Portability and Accountability Act) in the U.S., and GDPR (General Data Protection Regulation) in the EU. Healthcare providers must take care to ensure that AI systems do not inadvertently compromise patient privacy, and that third-party vendors handle PHI and sensitive data responsibly and in accordance with privacy laws and regulations.
Moreover, as AI systems and use cases evolve, so too does the regulatory landscape. Governments and organizations around the world are working to create regulatory frameworks that balance innovation with safety, fairness, and transparency. For example, the European Union is leading the charge with its AI Act, the first major legal framework for regulating AI. The EU AI Act classifies AI systems into four risk categories—minimal risk, limited risk, high risk, and unacceptable risk—and applies different levels of regulation based on the risk level of the system. For example, high-risk AI systems in healthcare (e.g., diagnostic AI tools) will need to comply with stringent requirements related to transparency, data quality, and accountability. Similarly, the U.S. National AI Initiative aims to promote the development of AI technologies while ensuring their ethical use. While not as prescriptive as the EU’s AI Act, this initiative provides guidelines for AI safety, trust, and transparency which will be critical for healthcare providers adopting AI-driven tools.
In healthcare, patient data privacy is paramount, and healthcare organizations are prime targets for cyberattacks due to the volume and value of patient data. AI systems that are trained on and use sensitive data may inadvertently introduce new vulnerabilities or be exploited by malicious actors. Therefore, while AI holds immense promise, the healthcare industry has already seen its share of data privacy breaches. Some notable incidents include:
- Change Healthcare Cyberattack: In 2024, the protected health information of at least 100 million individuals was compromised in the ransomware attack.
- AI Healthcare Firm Confidant Health Exposure: A misconfigured server from US-based AI healthcare firm Confidant Health exposed 5.3 TB of sensitive mental health records, including personal details, assessments, and medical information, posing serious privacy risks for patients.
As AI continues to revolutionize healthcare, ensuring regulatory compliance and protecting patient privacy will remain top priorities. By adopting trustworthy AI systems, maintaining robust data security measures, and adhering to regulatory guidelines, healthcare organizations can unlock the potential of AI while safeguarding patient rights. Furthermore, as AI technology evolves and new regulations emerge, it is critical for stakeholders to stay informed, collaborate, and proactively address emerging challenges to ensure that AI in healthcare is both ethical and effective. With the right safeguards in place, AI can improve patient care and foster greater trust in healthcare systems worldwide.
Reproductive Rights Under the Next Administration: What to Expect
Authors: Brenda Glaser Abrams and Bunyad Bhatti
The election consequences for reproductive health will start quickly after President-Elect Trump begins his second term. No crystal ball is needed to predict the steps that he will take to undermine access to reproductive health care, as Project 2025 provides a roadmap for the implementation of conservative policies pertaining to reproductive health and rights during the second Trump Presidency. Within the first few months after Trump returns to office, he likely will revoke all executive orders that President Biden issued related to reproductive health care, including general policies to support the ability to seek abortion care in states where it is legal and orders to protect access to contraception. To block abortion access nationwide, the Trump-Vance administration might apply an interpretation of the Comstock Act to enforce restrictions on mifepristone, a key medication used in medication abortions, and potentially ban all abortion. The Trump-Vance administrations also is expected to reinstate the domestic gag rule limiting Title X family planning providers from referring patients for abortion, block funding for international reproductive health programs, prevent Planned Parenthood from receiving Medicaid and Title X funding for essential health services, including contraception and cancer screening, and work to allow employers and schools to refuse to provide contraceptive coverage by claiming religious or moral exemptions to undermine the ACA’s birth control benefit and increase out-of-pocket costs for employees and students.
In 2025, coalitions of advocates of reproduction health rights will use their law and policy expertise to oppose the Trump-Vance administration’s anti-rights agenda and forcefully resist any attempts to reduce reproductive freedoms. These reproductive health rights advocates can be expected to defend patients and providers who are being targeted for investigation or prosecution, bring litigation to challenge any application of the 1873 Comstock Act to block abortion access, use administrative law and the courts to block actions by the Department of Health and Human Services, the Department of Justice, and the State Department that reduces access to care, monitor policies and appointments, and institute any necessary litigation to protect access to care. As obstetricians continue to depart from states with restrictive or ambiguous requirements to accessing abortion and other reproductive health care, medical students increasingly choose to avoid states with restrictive abortion laws, and women continue to share their poignant experiences about risking their lives while trying to safely terminate unviable pregnancies while preserving their fertility, voters will witness the outcomes that result from abortion bans and be moved to demand their reproductive freedom in amendments enshrining reproductive freedom into their state constitutions. Supporters of reproductive rights will work vigorously to countermand Project 2025 policy directives and the fight for reproductive freedom will continue.
Can Physicians Be Restricted From Competing in 2025?
Author: Alyson Leone
There is a non-competition provision in almost every physician employment agreement, operating/shareholder agreement and purchase agreement that I draft or review. Employers are concerned that after investing time, money and effort in training and developing a physician-employee, that the physician will leave their practice and set up shop down the street, stealing away all of the employer’s patients. A typical non-compete for employees runs two years after termination and 10 miles around the employer’s locations. For purchases of assets or ownership interests, those restrictions are often broader, extending five years and 25 miles. A significant amount of time is spent by the parties negotiating these terms, and exceptions therefrom.
However, non-competition clauses have long been seen as anti-competitive. On April 23, 2024, the Federal Trade Commission (“FTC”) approved a final rule (the “FTC Rule”) that banned non-compete restrictions, with limited exceptions. The FTC Rule permitted existing non-competes to remain in place, so long as the employee met the requirements for a “senior executive”. In the healthcare industry, many physicians would have met the annual compensation test, but may or may not have satisfied the requirement that they be in a “policy-making position”. Further, the FTC Rule permitted non-compete clauses to remain in bona fide asset or ownership interest sale transactions.
There was significant concern over the ambiguous language in the FTC Rule and its broad implications, as evidenced by the 26,000 comments that were submitted to the FTC and the lawsuits that followed. The FTC Rule was set to go into effect on January 1, 2025. However, on August 15, 2024, a Federal court in Florida partially blocked the FTC Rule. The FTC Rule was then fully blocked on August 20, 2024 by a Federal court in Texas. While it remains to be seen whether the FTC Rule is amended, most believe that this federal restriction on non-competition provisions will not be revived.
While it is unlikely to see a federal ban on non-competes, some states already prohibit these types of provisions, and still others are implementing new laws. California[1] has long prevented the use of these types of restrictions, with limited exceptions. In early 2024, California adopted new laws that tighten even further the use of these provisions. Just this past July, Pennsylvania[2] enacted the Fair Contracting for Health Care Practitioners Act which prohibits non-compete covenants in employment agreements for healthcare providers entered into after January 1, 2025, unless the restriction is less than one-year and the employee voluntarily left his/her employment. The new Pennsylvania law also has exceptions for owners of practices and sale and merger transactions.
In 2025, there will likely be additional scrutiny on non-competes and their effects on competition. In those states that have already acted, physicians may change jobs more often. But the non-solicitation provisions will still remain and prohibit physicians from calling on patients to follow them. In other states, I predict we will continue to see the prolific use of these clauses to prevent physicians from leaving and competing with their employers. However, since it is so easy nowadays for patients to find their physicians with an online search, and often easy for patients to travel many miles, any laws to prevent non-compete clauses are likely to have little to no effect on how the healthcare industry currently operates.
Preparing for the New Hart-Scott-Rodino Regime
Author: Mike Finio
As of right now, February 10, 2025 may mark the beginning of a new and more involved process for parties planning to engage in business combinations that are likely to trigger a required premerger notification filing with the Federal Trade Commission and U.S. Department of Justice. The new regime results from extensive changes to the nature, type and volume of information which must be submitted when making a Hart-Scott-Rodino (HSR) Premerger Notification Form filing.
“May” is used purposefully above – February 10, 2025 marks the end of the waiting period after the final HSR rules were published in the Federal Register. That effective date assumes no legal challenge which successfully enjoins implementation of the new rules and also assumes that the incoming Trump administration will not either freeze implementation of the new rules for a short period beyond February 10 or take other action to withdraw the new rules entirely.[3]
Setting aside the uncertainty at this point is important, particularly for parties in the midst of deal negotiations with as-yet uncertain timelines but which have a known need to make an HSR filing. The new rules do not change the thresholds which govern the need-to-file analysis, but they do, as briefly laid out below, significantly change not only the quantum of information required of filing parties, while also making some of those requirements different for acquiring as opposed to acquired parties. In addition, the FTC itself has opined that the amount of time and expense associated with an HSR filing is expected to increase by multiples upwards of 4x to 12x compared to the existing and long-standing HSR filing process.
Bottom line at this point? If there’s a chance to get your deal buttoned up and an HSR filing made before February 10, 2025, every effort to make that a reality is encouraged.
But, if that is just not possible, what does the landscape look like if February 10, 2025 passes by without legal or Executive Branch interruption of the new rules’ efficacy? In no particular order, what follows are some thoughts triggered by the new rules which should be top-of-mind between development and acquisition personnel and their antitrust counsel in anticipation of making a filing under the new rules.
*Do any of your officers or directors also serve as an officer or director of another entity operating and earning revenues in the same space? If so, antitrust counsel should be consulted to analyze whether there is a risk of an “interlocking directorate” issue.
*Antitrust counsel should be involved in a discussion about the flow of documents during the course of deal development – in other words, to whom are drafts of key transaction documents transmitted? Under the new rules, a draft, for example, of a purchase agreement distributed to a board member is considered to be a final version in the hands of that director, and it must be submitted with the HSR filing. Given this, and the ease with which drafts are not only distributed but the frequency with which they are developed, it would be wise to establish internal protocols governing the distribution of draft agreements, so as to avoid the creation of document production requirements that will most likely have no bearing on the outcome.
*It is time to bring a sense of order and organization to compiled information regarding key customers and suppliers, including sales and purchase figures. The FTC and DOJ have regularly looked into those third-party relationships, but only required such information on a voluntary basis in connection with a preliminary investigation. Now, however, this information has become a required part of the HSR Form submission.
*Whether you are a buyer or seller, the new rules significantly expand the documents required. Briefly, there are two key elements to keep in mind. The new rules have added the concept of a “supervisory deal team lead” – which is defined as the “individual who has primary responsibility for supervising the strategic assessment of the deal, and who otherwise would not qualify as a director or officer.” In addition, “plans and reports” – not previously required – must now be submitted, (defined as documents analyzing market shares, competition, markets and which discuss products and services regarding which both parties have some engagement or are known to have some engagement) and which are regularly prepared, were prepared within one year of the deal date and which were distributed to the CEO.
*A significant new requirement is the submission by both the acquiring and acquired parties of a narrative statement setting out the strategic rationale for the deal, and the narrative needs to include the nature of actual and potential competition between the parties.[4] The FTC has said these submissions should be “brief” and not be legal advocacy pieces – but antitrust counsel should review and be involved in what is crafted so as not to create problems in any future investigation.
*If the transaction has been diagrammed, that diagram has to be submitted. But, no diagram needs to be created as a part of the filing.
*Acquiring parties need to identify agreements with the acquired entity which are currently in place or which had expired within one year of the filing.
*Exhibits, side letters, schedules, non-compete/non-solicitation agreements must now all be included in addition to the main transaction document. Such things were not previously required unless there was a non-compete agreement in the mix.
Again, the list above represents just a few examples of aspects of the new rules which will materially change the nature of developing an HSR submission. Health care executives who are currently involved in deal discussions would be wise to sit down soon with their antitrust counsel to discuss the new rules not only generally, but also in terms of how the deal under consideration will or may be impacted by them, and whether, given the current date, a required HSR filing can be made prior to February 10, 2025.
Bankruptcy in Health Care
Author: Adam Isenberg
Although bankruptcy filings in the health care sector slowed in 2024, it was still a busy year, with several significant health care-related filings. These filings included Steward Health Care Systems (Bankr. S.D. TX), which operated 31 hospitals across the country; and CarePoint Health Systems, Inc. (Bankr. D. Del.), which operates three hospitals in New Jersey. But not all financially troubled hospitals end up in bankruptcy; financial advisors report a significant amount of financial restructuring taking place out of court, rather than in bankruptcy. The underlying causes of this financial distress vary, but often include high interest rates, heightened antitrust scrutiny, cost hikes, labor shortages, stagnating payer rate increases, Medicare denials and Medicaid enrollment disruptions. Separately, senior care facilities – independent living, assisted living, memory care, continuing care facilities and nursing and skilled nursing facilities – continue to experience high levels of financial distress for similar reasons, in addition to staffing difficulties, labor costs, low reimbursement rates and regulatory challenges. In certain instances, these difficulties have resulted in the abrupt closure of facilities, which causes obvious disruption to patients and family members. Unfortunately, these trends are expected to continue in 2025, which is likely to be another difficult year in health care.
Cannabis and Psychedelics – 2024 Recap and the Year Ahead
Author: Jonathan Havens
While 2024 was marked by some incremental changes in the cannabis space – the U.S. Drug Enforcement Administration (DEA) issued a proposed rule to reschedule marijuana to Schedule III, and Ohio launched its adult-use cannabis program, among other developments – many stakeholders had been hopeful for more substantive reform (e.g., DEA completion of its marijuana rescheduling rulemaking and Florida voter approval of adult-use cannabis, for example) and have been left disappointed.
And despite some promising psychedelics developments this year – FDA granted breakthrough designation to a form of LSD to treat generalized anxiety disorder – stakeholders were disappointed on a few other fronts, including Massachusetts voters not approving Question 4, which would have authorized certain psychedelic medicines and paved the way for regulation of the same, and the U.S. Food and Drug Administration (FDA) rejecting a marketing application for MDMA-assisted therapy to treat post-traumatic stress disorder (PTSD).
Notwithstanding these mixed results, some are looking ahead to 2025 with cautious optimism. For example, President-elect Trump’s nominations of Robert Kennedy, Jr. to be Secretary of the Department of Health and Human Services (HHS) and Dr. Mehmet Oz to be Director of the Centers for Medicare and Medicaid Services (CMS) are being viewed by some as potential boons to the cannabis and psychedelics spaces. This of course assumes, among other things, that the U.S. Senate confirms Kennedy and Oz, both of whom are considered by some to be controversial picks. Kennedy has indicated he is supportive of both cannabis and psychedelics therapies and Oz has touted the benefits of medical cannabis. The exact details of their positions come in 2025 and their impact on cannabis and psychedelics regulation and policy, if confirmed, remain to be seen. Although beyond the scope of this alert, because of the arguably controversial nature of these picks, the prospects of confirmation are unclear and so President-elect Trump could be considering so-called “recess appointments” for the three positions. Article II, Section 2 of the United States Constitution govern such appointments, and the Supreme Court’s 2014 precedent-setting decision in NLRB v. Noel Canning could also come into play.
Speaking of cannabis, another development we are monitoring for 2025 is whether Congress will enact changes to laws governing hemp (i.e., cannabis with 0.3% delta-9 tetrahydrocannabinol (THC) or less on a dry weight basis). Last fall, Senate Democrats proposed in their draft of the Farm Bill an amendment to the definition of hemp, which, if the bill becomes law, would materially close the so-called intoxicating hemp “loophole.” Instead of hemp being defined as 0.3% delta-9 THC or less, the 0.3% threshold would be determined by considering total THC (e.g., tetrahydrocannabinolic acid (THCA) and delta-8 THC). Additionally, the bill would define industrial hemp by carving out derivatives used in the manufacturing or synthesis of natural or synthetic cannabinoid products. If enacted, these changes could make illegal a number of “intoxicating" products that are currently on the market. As the full Senate did not take up the Farm Bill proposal before the end of the last legislative session – the Farm Bill was extended another year as part of the last-minute Continuing Resolution – it will be up to the next Senate (which will be under Republican control) to decide how to address hemp and the myriad other topics addressed in the nearly 1,400 page measure. Interestingly, an amendment adopted by the House Agricultural Committee earlier last year would remove from the definition of hemp certain cannabinoids that are “synthesized or manufactured outside of the plant” (e.g., cannabidiol (CBD) that is converted into delta-8 THC). While it is not yet clear whether both the full House and Senate would support such hemp restrictions, and if they would whether President-elect Trump would sign a Farm Bill containing the same into law, it is noteworthy that at least some Senate Democrats and at least some House Republicans favor such a move.
We are continuing to monitor these and other cannabis and psychedelics-related matters and will issue further updates, as appropriate.
Tax Outlook for For-Profits and Nonprofits
Author: Richard Frazier
FOR-PROFITS. With the election behind us, Congress will need to focus on the expiration of the 2017 Tax Cuts and Jobs Act, which was the centerpiece of President Donald Trump’s economic agenda in his earlier term. It appears likely that this Congress will continue many of the expiring tax breaks that were part of the 2017 Tax Act. In particular, the corporate rate of 21 percent and the pass-thru entity provisions should survive. While President-elect Trump has said he will lower the corporate rate to 15 percent, we think that is unlikely due to the ever-evolving world of the global minimum tax and the meshing of the U.S. corporate tax system with the global taxation of international businesses. However, the federal government will need to find new sources of revenue to offset the continuing tax cuts and any other provisions that the tax writers and their colleagues want to tag along with the President-elect’s wish list. Tariffs are an option, although not one embraced by many in the business community. The struggle has already begun.
NONPROFITS. The tax-exempt community should have a fairly quiet tax year unless somehow it ends up as a target for expense reduction or revenue raising. Since the tax money that can be generated from that sector is relatively small, we don’t expect that will happen. However, the one item that may be impacted is the ability of tax-exempts to benefit from certain energy tax credits, since such credits are part of the entire climate legislation that the President-elect says he wants to dismantle. As for the Treasury Department, its 2024-2025 Priority Guidance Plan lists as its number one item revised guidance regarding group exemptions and has as its number two item guidance illustrating the application of the regulations under section 501(r) regarding the community health needs assessment. In addition, Senator Chuck Grassley has indicated he will once again be pressing the issue of whether tax-exempt hospitals deserve to be tax-exempt.
Municipal Bond Financing
Author: Joshua Pasker
The municipal bond market rebounded in 2024 with more transactions completed in the second half of the year as interest rates began to stabilize. Market professionals are predicting that we will continue to see additional rate cuts in 2025 which should lead to a higher volume of deals. Expected rate cuts will allow healthcare entities to make needed investments in facilities and programs, especially in the world of AI. The incoming Trump administration is expected to ease some of the regulations around mergers and healthcare transactions; as such we may see more affiliations, mergers, breakups, and strategic alliances in 2025 then we have in years past. Deregulation may help distressed systems with exit strategies and expediate the growth of larger systems active in the M&A space.
In the area of healthcare and hospital transactions, we will continue to see borrowers working with existing and new lenders to ensure that financing covenants such as debt service coverage and liquidity requirements can be maintained. It is imperative that health care and hospital systems with municipal debt keep their investors informed if issues arise with existing debt covenants. In addition to new-money and refunding transactions, as consolidations and mergers continue in the health care and hospital arena, it is imperative that the due diligence process includes an in-depth review of any outstanding bond documents that may exist for the merging/consolidating entities, especially for 501(c)(3) organizations.
Government Enforcement Priorities in Healthcare
Author: Aloke S. Chakravarty
In 2025, we expect government enforcement activity in the healthcare industry to continue to be robust. Both because the practicality that appointed personnel in the outgoing administration have vested interests in completing investigations and bringing actions before they leave, as well as the innate target-rich environment in healthcare. The rise of various applications of Artificial Intelligence (AI) in all aspects of insurance and healthcare delivery is sure to gain the attention of regulators in the coming year. Technology almost always outpaces regulation, but regulators have shown over the past several years that despite the rapid pace of emerging technologies, such as the increasing use of blockchain for authentication and for exchanging value, aggressive enforcers are willing to fashion remedies using existing tools in cases where there is a risk to consumers or the fair market. Similarly, changes in the healthcare marketplace, such as the increased prevalence of private equity ownership, have already attracted scrutiny of regulators based on consumer complaints based on access and quality of care, anti-competitive behavior, as well as for coding and billing practices, and all of this is likely to push some to exit the space, and for the others to face the added enforcement risks, including those seeking to hold executives personally liable. With increasing sophistication of marketing technologies and the potential exploitation of consumers, direct to consumer offerings are likely to be scrutinized when fraud or misrepresentation is detected by enforcers, and is also likely to be political catnip. But politics will not define all enforcement in the year ahead, as line attorneys and agents are unlikely to be asked to stand down from ongoing investigations, and incoming regulators will consider where they can make a significant impact in their new roles. In brief, despite the political winds, it is premature to consider the age of corporate enforcement in healthcare to be cooling.
Health Care Predictions: Section 1557 and Other Civil Rights Laws
Author: Rob Duston
No one should be surprised that predictions regarding civil rights laws and enforcement had to wait until after the election. Based upon the actions taken in the first Trump administration, and election promises of regulatory rollbacks, we can expect change in regulations under Section 1557 of the Affordable Care Act (ACA) and a reduction in enforcement activity. But as we saw in 2016-2020, advocacy groups and private plaintiffs stepped up their activities, and the result was regulation by litigation.
Every time a new party takes control of the White House, there is usually a burst of activity that the President can do through Executive Orders, then directives to the agencies trickle down for implementation, which begins only when key posts are filled and the newcomers begin to learn their jobs. Federal agencies take time to change direction.
The Trump administration has promised to speed up the pace of change. One of the first actions of President Trump in 2017 was to put a hold on all new rulemaking, and direct that “guidance” documents be removed. Given the anti-regulation approach promoted by Elon Musk and others advising the President-elect, we anticipate that HHS will be subject to budget cuts and the departure of a significant number of longtime HHS employees, in addition to a change in priorities and enforcement.
One area of likely change is in Section 1557. On April 26, 2024, the HHS Office of Civil Rights (OCR) issued a final rule under Section 1557 of the Affordable Care Act advancing protections against discrimination in health care. This rule expanded the scope of covered entities and of protected characteristics, and included many new or expanded requirements and procedures. One of those was including “gender identity” as part of the definition of “sex” discrimination. The Biden administration largely reversed the final rule adopted by the Trump administration on June 20, 2020, which in turn had reversed some key provisions in the Obama administration regulation. So, like any other federal regulations that were finalized prior to the lookback period under the Congressional Review Act, it would ordinarily take a full notice and rulemaking to change it again.
But there have already been several challenges to the 1557 rule and three different injunctions issued. See: Section 1557 of the Patient Protection and Affordable Care Act | HHS.gov. While most of the challenge provisions involved the definition of “sex” as including gender identity, the nationwide injunction issued in Texas v. Becerra, now on appeal, included a number of other new provisions on compliance, as well as other ACA provisions. The Trump Department of Justice can change its positions in pending litigation, including withdrawing its defense of regulations.
Relaxed in the first Trump administration were efforts across the government to remove sexual orientation and gender identify from various laws prohibiting sex discrimination. The Supreme Court Bostock decision concluded that Congress’ definition of “sex” under Title VII was broad enough to encompass sexual orientation and gender identity. But the subsequent Supreme Court decisions curtailing administrative agency discretion (reversing Chevron and requiring a clear grant of authority by Congress) provide those seeking to curtail LGBTQ+ rights the ability to challenge regulations. If the new administration follows the approach taken in 2016-2020, we could see significant changes in the 1557 regulations (as well as those of other agencies) on LGBTQ+ inclusion. What is less clear is whether the new administration will continue to defend other 1557 provisions, including the new requirements for national origin and disability discrimination. There are other new regulations that will have effects on the health care industry, including the ADA Title II regulations on digital accessibility. The Trump DOJ might well decide to take a more pro-business approach and extend deadlines, provide more flexibility for compliance or relax enforcement. We will also be watching whether changes in immigration policy have an effect on enforcement of non-discrimination based on national origin.
As we noted above, advocates are not likely to stand on the sidelines for four years. If there is a decline in federal enforcement of civil rights laws, that will likely be filled by advocates and plaintiffs using private lawsuits under federal and state laws.
Unionization of Physicians is Here to Stay and Growing
Author: Harriet E. Cooperman
The past decade has witnessed a steady rise in unionization among hospital residents and fellows. Currently, more than 33,000 medical residents are unionized, representing approximately 20 percent of the country’s resident workforce. This is more than double the number of graduate medical students who were represented by unions in 2019. Just this year, the American Federation of Teachers (“AFT”) won a representation election for a unit of over 900 residents and fellows in Baltimore; nearly 3,000 residents and fellows from four major healthcare systems in Philadelphia filed petitions for union representation with the National Labor Relations Board, which elections are scheduled for the first half of January 2025; and DC’s George Washington University narrowly averted a residents strike by reaching a collective bargaining agreement within hours of the strike deadline.
While the Covid pandemic created extremely challenging working conditions, such as 24-hour shifts, lack of sufficient protective gear and resources, and overall mental stress, which fostered unionization, since coming out of the pandemic the choice of resident physicians to be represented by a union has grown even more rapidly. In addition to complaints about excessive hours and demands for mental stress and fatigue services, resident unions regularly seek better pay, enhanced benefits, improvements in the working conditions and environment, such as adequate and clean sleeping facilities, and a greater say and participation in decisions that affect their terms and conditions of employment.
The union movement has now spread beyond residents to staff physicians and is growing rapidly. Currently, over 10,000 doctors in the United States are represented by unions. The Service Employees International Union (SEIU), which has been at the forefront of resident organizing for years, has a separate “Doctors Council” devoted to organizing and representing physicians. In November, the Doctors Council filed a petition to represent 400 academic primary care physicians at Mass General Hospital Primary Care and Brigham and Women's Hospital Primary Care. This summer, AFT announced the launch of a brand-new doctors’ organizing initiative and division: Union Physicians of AFT, which focuses its efforts on organizing doctors nationwide – “from emergency room doctors to hospitalists and palliative care physicians, from women's health doctors to urgent care doctors and primary care doctors.” The ranks of AFT’s physicians have already grown at an unprecedented rate—with over 3,200 new members joining the union over the last year. In January 2025, endocrinology physicians employed at Mass General Brigham Medical Group Northern Massachusetts will vote on whether they wish to be represented by yet another union, the American Federation of State, County, and Municipal Employees. And the list keeps growing.
The issues and demands of the hospital staff physicians largely mirror those of the residents, specifically understaffing, burnout and a lack of resources to help manage patient care such as mental health support. The unions are focused on securing better wages, benefits and work schedules that reflect the demanding nature of the medical profession, and, as AFT explains, “improving not only the well-being of doctors but also attracting and retaining talented healthcare professionals—ultimately benefiting patient care.”
With the continuing consolidation of medical practices and health systems and the financial challenges faced by the healthcare industry, it is expected that more and more physicians will turn to unions in an effort to regain some control over their working lives and profession.
FTC, Private Litigants, and FDA Will Step Up Scrutiny of Pharmaceutical Patents in the FDA’s “Orange Book”
Author: Alexander Callo
Several developments in 2024 have led me to double down on my prediction in the last edition of our “Healthcare Predictions.” In short, and as further detailed in my post earlier this year, the Orange Book discloses patents on branded pharmaceutical drugs that another drugmaker must certify against before marketing a generic version of a certain branded drug. If that certification alleges that the applicable Orange Book-listed patents are invalid or not infringed by the contemplated generic drug, the patent holder may then instigate a litigation that triggers an automatic 30-month stay of FDA approval of the generic drug so as to provide the parties with time to resolve the patent litigation. Over the past couple of years, the FTC and certain generic drug companies have increasingly alleged that drug companies abusively list patents in the Orange Book to delay generic drug entry, and this activity has continued into 2024.
For instance, on April 30, the FTC sent 10 more warning letters (on top of the seven that it sent the prior November) to branded pharmaceutical companies that disputed the listing of more than 300 Orange Book-listed patents across 20 different branded products. In response to the FTC’s letters, at least a few branded pharmaceutical companies have agreed to withdraw some Orange Book-listed patents this year, such as Impax Laboratories in connection with its Adrenaclick® epinephrine injector. Additionally, on June 10, the U.S. District Court for the District of New Jersey granted a generic’s (Amneal) motion for judgment on the pleadings in connection with its patent litigation counterclaims that the branded company (Teva) improperly listed patents in the Orange Book for Teva’s ProAir® HFA inhaler product (this case is currently on appeal). In so doing, the Court held that Teva’s patents—which only covered the inhaler aspect ProAir® HFA—did not claim the drug (albuterol sulfate) or finished dosage form that was the subject of Teva’s New Drug Application, as they must under the Listing Statute, 21 U.S.C. § 355.
The Court’s opinion frequently relied on arguments submitted by the FTC in amicus briefing for this case and, following this decision, The Washington Post reported on July 1 that the FTC opened an investigation into Teva based on the company’s refusal to delist about two dozen patents for some of its inhaler products. More recently, on September 30, U.S. Senator Bill Cassidy wrote to FDA Commissioner Robert Califf to express his concern about FDA’s “ongoing efforts to provide clarity to drug manufacturers regarding their obligation to list relevant patents in the Orange Book.” In his letter, Senator Cassidy stated: “Letting FTC enforce terms of the [Food, Drug, and Cosmetic Act] is an extraordinary abdication of authority by FDA. Rather than defer to FTC accusations that drug manufacturers are breaking ambiguous rules, FDA should clarify the rules for brand and generic manufacturers alike.” This movement suggests that the FDA may wade into this issue in 2025 after ceding the driver’s seat to FTC these last couple of years.
Taken together, it seems that the federal government and generic drug manufacturers will continue to scrutinize (and challenge) branded pharmaceutical companies’ listing of patents in the Orange Book. Accordingly, any company that has listed a patent in the Orange Book, or that plans to list a patent in the Orange Book, should carefully assess its compliance with the Food, Drug, and Cosmetic Act and take into consideration this current state of affairs.
Appellate Courts Tackle Significant Healthcare Disputes in 2025
Authors: Katie Barrett Wiik and Chris Klein
Federal courts of appeal and the U.S. Supreme Court will be deciding several cases impacting the healthcare industry in 2025. For healthcare providers and other stakeholders industry, these pending disputes may lead to additional regulatory and compliance risks. The decisions will have tangible human implications that impact healthcare entities as employers, as well as their employees and patients.
The October 2024 term of the U.S. Supreme Court, which will wrap up in late June or early July 2025, will include a decision concerning safety-net hospital payments and decide whether hospitals are entitled to additional reimbursements if they treat patients who are eligible for supplemental security income (“SSI”) benefits but do not actually receive those benefits in the month in which they receive medical services. The issue focuses on the phrase “entitled . . . to benefits,” used twice in the same sentence of the Medicare Act. The petitioners—more than 200 hospitals who treat low-income individuals—argue that the phrase “eligible to benefits” requires only that a patient is eligible or qualifying for the SSI program. The federal government, however, argues that patients are “eligible to benefits” only if they actually receive monthly cash benefits through the SSI program during treatment.[5] A decision in favor of the hospitals could result in additional revenue for institutions serving some of the most vulnerable populations.
Recently, the Supreme Court also agreed to consider whether a state could end a provider’s participation in a state’s Medicaid program.[6] The case concerns a South Carolina Medicaid-recipient who was prevented from receiving non-abortion medical care at a Planned Parenthood by the state’s exclusion of providers of abortion services from its Medicaid program. The recipient and Planned Parenthood sued under the Medicaid Act, which provides that any Medicaid-eligible patient may seek health care from any “qualified” provider. The Fourth Circuit agreed with the plaintiffs and blocked the state from excluding Planned Parenthood from its Medicaid program. The state contests the plaintiff’s standing to bring their lawsuit, and the Supreme Court will hear argument on the issue later this year.
The Supreme Court will also decide an important case relating to the availability of gender-affirming healthcare for transgender individuals. In December 2024, the Court heard argument on the federal government’s challenge to a Tennessee law prohibiting all gender-affirming medical treatment for transgender individuals who are minors.[7] A central question in the case is whether such bans are subject to heightened scrutiny because they are legal prohibitions based upon sex. The Court has not yet acted upon the cert petition in a related case brought by the parents of transgender minors, who argue that Tennessee’s law violates their fundamental rights as parents to make decisions concerning the medical care of their children.[8] During oral argument, Justice Barrett and Tennessee’s Solicitor General agreed that the parental rights issue was not before the Court, and that case remains pending according to the case docket. With more than twenty other states also having anti-trans healthcare laws on the books, how the Supreme Court rules will have a significant impact upon the availability of access to medical treatments for gender dysphoria.
Federal courts of appeal are also adjudicating cases with important implications for patients and healthcare providers alike. The Second Circuit,[9] Third Circuit,[10] and Sixth Circuit[11] all have pending cases concerning the Inflation Reduction Act’s Medicare drug price negotiation program. Drug manufacturers and pharmaceutical industry representatives have challenged the program on constitutional and statutory grounds. These pending appeals introduce uncertainty about whether the Act’s requirement that the government negotiate drug prices of Medicare-covered drugs will remain. A circuit split also seems likely, so the Supreme Court may have the opportunity to weigh-in next term.
The Fifth Circuit will review a nationwide injunction blocking the Federal Trade Commission’s (“FTC”) rule banning noncompete clauses.[12] If reversed, courts would then have to decide how to apply the FTC’s rule to nonprofit organizations, including many healthcare organizations and hospitals, who are potentially exempted from FTC jurisdiction.
The Fifth Circuit and Eighth Circuit courts are set to consider cases related to the Deferred Action for Childhood Arrival (“DACA”) program and Affordable Care Act (“ACA”) Marketplace. In 2023, a district court in the Fifth Circuit ruled that the DACA program is unlawful but allowed the Department of Homeland Security to process DACA renewal requests (as opposed to initial requests).[13] The federal government has appealed that decision to the Fifth Circuit, and that case is currently pending. Meanwhile, in May 2024, the Biden administration issued regulations which extended ACA Marketplace coverage subsidies to previously ineligible DACA recipients. In December, a district court in the Eighth Circuit blocked the federal government from implementing the ACA Marketplace coverage in 19 states (including Texas),[14] only for the Eighth Circuit to issue a temporary stay of the district court’s injunction one week later.[15] The change in federal administration means the position of the federal government in many if not most of these pending healthcare appeals is likely to change.
Saul Ewing’s appellate practice will be closely monitoring these and other healthcare-related issues in the state and federal appellate courts and will provide updates of interest to stakeholders in the healthcare industry throughout the coming year.
Update on Telehealth Services
Author: Caroline Patterson
Last year I predicted that Congress would fail to enact legislation by December 31, 2024 to ensure continued coverage for telehealth services, which is widely regarded to be in the best interest of Medicare beneficiaries. I was pleased to see that on September 18, 2024, the House Committee on Energy and Commerce voted unanimously to advance HR 7623, the Telehealth Modernization Act of 2024 (TMA). The TMA permanently extends certain flexibilities that were initially authorized during the public health emergency relating to COVID-19 until the end of 2026. In addition to the TMA, on December 21, 2024, President Biden signed the American Relief Act, 2025, a short-term spending package that extends Medicare telehealth flexibilities through March 31, 2025. I am predicting that Congress will pass the TMA in 2025, allowing continued and reliable coverage of telehealth services.
HIPAA; Privacy Protections and Enforcement Remain Paramount
Author: Bruce Armon
HIPAA and health care privacy continue to be very important for health care providers, health care clearinghouses, payors, and their respective business associates. During the Biden Administration, HHS OCR was very active in enforcing (and publishing) settlements with entities that allegedly did not fulfill their HIPAA requirements. Over the past few years, there has been a shift from HIPAA Privacy Rule settlements to those relating to alleged infractions of the HIPAA Security Rule. Expect the Security Rule issues to continue to get the ‘headlines’ as breaches and ransomware attacks continue to escalate and cause havoc and jeopardize patient privacy rights. Similarly, the Biden Administration committed significant resources to ensuring patients get ‘timely’ access to their PHI upon request. When providers delayed in providing this information, significant settlement agreements with monetary fines became commonplace.
While I do not expect there to be changes in the federal privacy law (specifically HIPAA) in 2025, I do anticipate that enforcement action by HHS OCR will decrease. This will be due to a combination of new HHS leadership and a reluctance to impose significant fines as part of any settlement conversations with parties that are alleged to be noncompliant. Similarly, I expect the new administration will look to reverse the HIPAA final rule that took effect in late 2024 relating to reproductive health and law enforcement privacy protections.
Many ‘blue’ states will likely look to increase their privacy oversight if the federal government takes a more passive role. Of course, privacy violations are not a ‘red’ state or ‘blue’ state issue and the wave of populism rolling across the country may force the federal government and state governments to rethink their approaches to ensuring patient privacy is respected and enforced.
I expect health systems, hospitals, medical practices and payors to remain susceptible to ransomware attacks. Whether or how these attacks will be enforced may become a moving (and political) target.
[1] Cal. Bus. and Prof. Code §§ 16600, 16601, and 16602.5.
[2] Act 74-2024.
[3] There is no credible way to handicap any of those outcomes, but, it is important to note that the new rules resulted from a unanimous, bipartisan 5-0 vote by the FTC to adopt the new rules.
[4] Interestingly, the FTC has commented that counsel on opposing sides of a deal should not be discussing things like competitive overlap with each other. In this writer’s experience over 30+ years, when competitive overlaps are discovered – usually via the exchange of NAICS codes – counsel quite directly discussed the potential issues and whether the overlap is of the type that might cause detailed inquiry into the deal by one of the agencies. Only time will tell regarding the FTC’s admonition that such discussions not occur.
[5] Advoc. Christ Med. Ctr. v. Becerra, 80 F.4th 346 (D.C. Cir. 2023), cert. granted, No. 23-715 (U.S. June 10, 2024).
[6] Planned Parenthood S. Atl. v. Kerr, 95 F.4th 152 (4th Cir. 2024), cert. granted in part sub nom. Kerr v. Planned Parenthood, No. 23-1275 (U.S. Dec. 18, 2024).
[7] L. W. by & through Williams v. Skrmetti, 83 F.4th 460 (6th Cir.), cert. dismissed in part sub nom. Doe v. Kentucky, No. 23-492 (U.S. Dec. 14, 2023), and cert. granted sub nom. United States v. Skrmetti, No. 23-477 (U.S. June 24, 2024).
[9] Boehringer Ingelheim Pharms., Inc. v. U.S. Dep't of Health & Hum. Servs., No. 3:23-CV-01103 (MPS), 2024 WL 3292657 (D. Conn. July 3, 2024), appeal filed, No. 24-2092 (2d Cir. Aug. 8, 2024).
[10] Novartis Pharms. Corp. v. Becerra, No. CV 23-14221 (ZNQ) (JBD), 2024 WL 4524357 (D.N.J. Oct. 18, 2024), appeal filed, No. 24-2968 (3d Cir. Oct. 2, 2024); Novo Nordisk Inc, v. Beccera, No. 3:23-cv-20814-ZNQ-JBD (D.N.J. July 31, 2024), appeal filed sub nom. Novo Nordisk Inc. v. Dep’t of Health & Hum. Servs., No. 24-02510 (3d Cir. Aug. 19, 2024); Janssen Pharms., Inc. v. Becerra, No. 3:23-cv-03818 (D.N.J. Oct. 18, 2024), appeal filed sub nom. Janssen Pharms., Inc. v. Sec’y Dep’t of Health & Hum. Servs., No. 24-1821 (3d. Cir. May 6, 2024); Bristol Myers Squibb Co. v. Becerra, No. 23-cv-3335-ZNQ-JBD (D.N.J. Apr. 29, 2024), appeal filed sub nom. Bristol Myers Squibb Co. v. Sec’y U.S. Dep’t of Health & Hum. Servs., No. 24-1820 (3d. Cir. May 6, 2024); AstraZeneca Pharms. LP v. Becerra, Civ. No. 23-931-CFC (D. Del. Mar. 1, 2024); appeal filed sub nom. AstraZeneca Pharms. LP v. Sec’y U.S. Dep’t of Health & Hum. Servs., No. 24-1819 (3d Cir. May 2, 2024).
[11] Dayton Area Chamber of Com. v. Becerra, No. 3:23-cv-00156 (S.D. Ohio Aug. 8, 2024), appeal filed, No. 24-3868 (6th Cir. Oct. 8, 2024).
[12] Ryan, LLC v. Fed. Trade Comm’n, No. 3:24-CV-00986-E (N.D. Tex. Aug. 20, 2024), appeal filed, No. 24-10951 (5th Cir. Nov. 5, 2024).
[13] Texas v. U.S. Dep’t of Homeland Sec., No. 6:23-CV-00007 (S.D. Tex. May 28, 2024), appeal filed, No. 23-40653 (5th Cir. Mar. 12, 2024).
[14] Kansas v. United States, No. 1:24-cv-00150 (D.N.D. Aug. 8, 2024), appeal filed, No. 24-3532 (8th Cir. Dec. 12, 2024).
[15] Kansas v. United States, No. 24-3521 (8th Cir. Dec. 16, 2024).
