U.S. Supreme Court Health Reform Litigation, the Individual Mandate, Anti-Injunction Act, Commerce Clause and Even The Militia Act

We are literally only days away from the Supreme Court oral arguments in the ACA litigation (or the Health Reform case as it is popularly known) and as such, we thought it would be of some help to publish again some of our past posts on aspects of the law now being challenged. In addition to being published here at HRW, many of the pieces below found further life elsewhere, the Washington Post, NY Times, The Record, The Health Care Blog, Health Law Prof Blog, Concurring Opinions, the aca litigation blog, to name a few. Some originated elsewhere and found a home here. Either way, they’re here in one place for your enjoyment as we all hold our breaths and get ready to attempt to count robed votes by virtue of questions posed in the arguments to come.

Professor Mark Hall, Wake Forest University School of Law

Constitutional Mortality: Precedential Effects of Striking the Individual Mandate

Why the 11th Circuit’s Opinion on Health Care Reform Self-Destructs

Judge Vinson’s Tea Party Manifesto

Commerce Clause Challenges to Health Care Reform

From Justice Story: A Postal Power Parable on Mandating Health Insurance

What’s Surprising about the Virginia Ruling Striking the Individual Mandate?

Are The Attorneys General’s Constitutional Claims Bogus?

Is it Unconstitutional to Mandate Health Insurance?

Professor Frank Pasquale, Seton Hall Law

Professor Frank Pasquale featured in The Record on ‘A Constitutional Right to Health Care’

A Constitutional Right Not to be Bankrupted by Health Care Costs

Huq on Constitutional Challenges to HCR

Parsing “Populism” in Resistance to Reform

Professor Brad Joondeph, Santa Clara University School of Law

aca litigation blog (All the briefs, docs, lawyers, helpful updates, analysis, etc. in one easy place. Prof Joondeph and Brandon Douglass are to be commended for this splendid effort — yeomen’s work and finely done. The aca litigation blog is automatically fed into our sidebar and we were pleased to offer a few of Professor Joondeph’s posts in full here at HRW, and very much look forward to posting more. If you haven’t checked it out yet, you absolutely should.)

Clarifying the AIA question

The Anti-Injunction Act Complications

Professor Tim Greaney, St. Louis University School of Law

Health Reform, a Class Act

Bradley Latino, J.D.

The Individual Mandate, a Brief History - Part I, Conservative Origins

The Individual Mandate, a Brief History - Part II, The Republican Alternative (1993-1994)

The Original Individual Mandate, Circa 1792

Kate Greenwood, Research Fellow & Lecturer in Law, Seton Hall Law

Recommended Reading: Interesting Takes on the Individual Mandate

Michael Ricciardelli, J.D.

Judge Hudson, Bartleby the Scrivener and the “Tribeless, Lawless, Hearthless One”

Election Fallout and Why State Initiatives to Exempt Residents from Health Care Law are Not Just Symbolic

Missouri Votes Against Individual Mandate, May Impact Standing Argument in Federal Court

Judge Rules, Virginia Moves Forward Against Individual Mandate

Ruane v. Levy: Both Sides of the Bar Meet in Health Care Fraud and Abuse Class

[Ed note: This article was authored by John Barry '13, a second year law student pursuing a Health Care Concentration at Seton Hall Law.  A native of New York, he graduated in 2005 from the University of Pennsylvania with a degree is psychology.]

Recently, Professor Zack Buck’s Health Care Fraud and Abuse class was treated to a spirited panel on the current state of health care fraud, prosecution and defense.  The panel, meeting again this year to allow students an opportunity to hear details about actual practice from both sides of the bar, was moderated by Chris Zalesky, the Vice President of Global Policy & Guidance for Johnson & Johnson in the Office of Health Care Compliance & Privacy.  Zalesky has more than 20 years of experience in regulatory affairs, quality assurance and research and development functions within the medical device and pharmaceutical industries. He has also taught as an Adjunct here at Seton Hall Law.

The panel included Maureen Ruane, Assistant U.S. Attorney and Chief of the Health Care & Government Fraud Unit for the United States Attorney’s Office, District of New Jersey, and Bruce Levy, an attorney with the firm of Gibbons, P.C.  Ruane served as Assistant United States Attorney from 1998 to 2004, and returned to the office in 2010 after working as a partner in the law firm of Lowenstein Sandler.  Levy, also formerly an Assistant U.S. Attorney, currently focuses his practice at Gibbons on criminal, civil, and administrative cases arising from federal and state health care fraud investigations, health care compliance, The False Claims Act and qui tam cases, corporate investigations, and white collar criminal law.

Touching on a wide variety of topics, Ruane explained that the “sea of health care fraud is so deep” that it affects all aspects of the American health care system, from hospitals to physicians to pharmacies and all other health care providers.  Many of the fraud prosecutions that flow through Ruane’s office come in the form of qui tam actions under the False Claims Act.  Coming from a Latin phrase meaning “[he] who sues in this matter for the king as [well as] for himself,” a qui tam action is a unique fixture of the False Claims Act that allows private citizens to act as whistleblowers and sue health care corporations for perpetrating fraud on the government.  The whistleblower, or “relator,” stands to gain a percentage of the civil damages awarded against the corporations.

Having seen countless relators over her time with the government, Ruane was in a rather unique position to speak about the underlying motivations behind the people who sue on behalf of “king and self.”  Contrary to common thinking, Ruane explained that whistleblowers generally did not act out of greed or a desire to hurt the company.  In fact, she felt the opposite:  most relators were actually intensely loyal to their companies and had usually tried to voice their concerns multiple times in-house before bringing a complaint to the attention of government prosecutors.

Working as defense counsel, Levy voiced the concerns of private industry, in particular about the lack of guidance in the current law.  He stressed that many pharmaceutical companies, hospitals, physicians and health care providers feel as if they are trying to act within the bounds of the law when in reality those boundaries are more blurry than clear.  As an example, Levy talked about how he felt the need for clearer guidance on pharmaceutical marketing of “off-label” medications.   When the Food and Drug Administration approves a medication for use in the U.S. health care market, the drug is approved for a specific use or indication.  However, clinical studies often show beneficial uses for medications for additional aliments, and it is legal for physicians to prescribe the drugs for these other uses.  In addition, Medicare and many private insurers will pay for use of a medication for different indications than what the FDA approved, in effect, subsidizing “off-label” use. There are thus competing federal agency views on medications, with the FDA only approving the drug for a particular use, but the Center for Medicare Services alternatively approving use of the drug for other, off-label uses.  Problems arise because there are complex, and Levy felt unclear, regulations as to how pharmaceutical companies may represent or market the drug for off-label use.  Levy explained that he felt new legislation was required to give clear guidance to the industry.

Both Ruane and Levy, approaching the bar from different perspectives,  engaged in lively conversation and took questions from the audience, giving students numerous real-world examples of the theories and topics they learn about in class.  As might be imagined, bringing with them contrasting prosecution and defense-side perspectives, the two often approached the same issues from opposing viewpoints, providing a unique experience for the class.  However, the one thing they both agreed on was that with rising health care costs directly on the government’s radar, aggressive prosecution of health care fraud will not slow down any time in the future.

A New Insurance Product: Responsible Corporate Officer Defense Insurance

Unsurprisingly, the market has responded to the new risks corporate officials in the life sciences industry face if their companies commit crimes that threaten the public’s health.  On February 7, 2012 insurance broker Marsh USA and insurer Allied Assurance Co. unveiled a new product, called RCO Corporate Response, “which provides insurance coverage for pharmaceutical, life sciences, and health care corporate officers who may be held liable for their companies’ actions under the Responsible Corporate Officer (RCO) doctrine.”

For those who are rusty, The Responsible Corporate Officer Doctrine allows for the conviction of a high-level corporate official (ambiguity of terminology suggests that directors could be liable as well) whose company has violated the Food, Drug and Cosmetic Act irrespective of the official’s knowledge or involvement in the offense if the individual occupied a position that had a relationship with the unit that violated the statute, should have known about the activity, and had the authority to intervene. In short, the government need not produce evidence that the corporate official participated in or was aware of the illegal conduct. Potential penalties include fines, imprisonment, and debarment from the FDA.  As shall be discussed further, these penalties can lead to exclusion from Federal healthcare programs.

The Doctrine, which was first articulated by the Supreme Court in U.S. v. Dotterweich in 1943, was affirmed in 1975 in U.S. v. Park (and so sometimes referred to as the Park Doctrine).  The Dotterweich Court expounded on the rationale for imposing such a hardship on corporate defendants not actually involved in the illegal conduct: the welfare of unwitting consumers who have no ability to protect themselves against dangerous products and services must prevail over the hardship the Doctrine creates for the corporate executive with the position, responsibility and power to protect the public. The Park Court emphasized that guilt was not based solely on the defendant’s corporate position and explicitly recognized an affirmative defense where the defendant is “powerless to prevent or correct the violation.”

The Doctrine has been rarely used, so fast forward to 2007, when the corporate entity Purdue Frederick pled guilty to a felony of misbranding along with the CEO, Chief Medical Officer and Chief Legal Officer who plead to misdemeanor misbranding pursuant to the Responsible Corporate Officer Doctrine. The convictions arose from Purdue Pharma’s off-label promotion of OxyContin, which the FDA approved in 1995 to manage chronic moderate to severe pain.  From 1995 until 2001, contrary to the package insert and evidence on the ground, a number of Purdue employees promoted OxyContin “as less addictive, less subject to abuse and diversion, and less likely to cause tolerance and withdrawal,” as subject to fewer peak and trough blood level effects, and producing less euphoria than other pain short-action opioids. These representations apparently occurred in some instances at supervisors’ urging, or as a result of sales training.

OxyContin became the number one prescribed Schedule II narcotic in the United States, with 5.8 million prescriptions in 2000. OxyContin revenues reached approximately $3 billion in June 2001, accounting for 80% of Purdue Pharma’s revenue.  Despite its various troubles with OxyContin, Purdue Pharma never saw a dip in its revenues.  Effective August 9, 2010, Purdue discontinued manufacturing and distributing the original formulation, replacing it with an FDA-approved reformulation that is apparently more difficult for abusers to penetrate by cutting, breaking, crushing or dissolving.

OxyContin is an effective and efficient analgesic.  In addition to its legitimate use, however, OxyContin became very popular as a street drug, either taken orally, injected, or crushed, which circumvented the controlled release mechanism and allowed a more rapid and intense heroin-like high.   The legal complications began when Appalachia experienced particular challenges with Oxy diversion, leading to criminal charges by US Attorney for the Western District of Virginia against what appears to have essentially been a shell corporation,  Purdue Frederick, as well as three senior corporate officers.  Notably, Purdue Parma, L.P., which is the corporate entity that actually sells OxyContin as well as the company’s other pain medications, was not charged, thereby enabling it to continue to submit drug applications to the FDA and have its products paid for by the Federal healthcare programs.  Purdue Frederick and its executives agreed to plead guilty and pay fines totaling $634,515,475. Almost immediately, the HHS OIG used its discretionary exclusion power to debar all three executives from participating in Federal healthcare programs for twelve years. The executives have been unsuccessful in every level of administrative and judicial appeal thus far. In retrospect, the Purdue Parma execs may feel relieved after hearing that three Synthes executives received multi-month prison terms in addition to their fines pursuant to the RCO Doctrine for their company’s conduct of unauthorized clinical trials of bone cement in which three patients died.

On the heels of this success, the FDA announced that it was increasing its use of misdemeanor prosecutions against responsible corporate officials.  The agency unveiled its internal agency guidance for determining when to forward a case to the Department of Justice for a “Park Doctrine Prosecution.” The guidance provides that a first time conviction for a violation of the FDCA will be a misdemeanor, with the second resulting in a felony.  Further, some misdemeanor convictions can result in debarment by the FDA.  Most importantly for this discussion, the guidance states that “Knowledge of and actual participation in the violation are not a prerequisite to a misdemeanor prosecution but are factors that may be relevant when deciding whether to recommend charging a misdemeanor violation.”  The guidance enumerates the following additional criteria:

• The individual’s position in the company; relationship to the violation; whether the official had the authority to correct or prevent the violation
• Actual or potential harm to the public
• Obviousness of the violation
• Existence of a pattern of illegal behavior and/or failure to heed prior warnings
• Whether the violation is widespread
• Seriousness of the violation
• Quality of the legal and factual support for the proposed prosecution
• Whether prosecution is a prudent use of agency resources

Within the same week, Lewis Morris, Chief Counsel to the Inspector General of Health & Human Services testified before the House Ways and Means Committee that the OIG would review the case of any individual convicted pursuant to the RCO Doctrine for exclusion from participation in Federal healthcare programs.  This, Mr. Morris testified, will overcome the barriers presented by corporations’ attitude that they are too important to the healthcare system to criminally prosecute and that fines are simply a cost of doing business.   Mr. Morris assured the House Committee that the OIG would use this tool judiciously, employing a presumption in favor of exclusion only “when there is evidence that an executive knew or should have known of the underlying criminal misconduct of the organization.”  The HHS OIG criteria for permissive exclusions from Federal healthcare programs includes a consideration of the entity’s misconduct, including whether it is part of a pattern of conduct and whether it caused harm to beneficiaries; the individual’s role in the sanctioned entity with a focus on degree of managerial control or authority and the position’s relation to the underlying misconduct and whether the misconduct occurred in the individual’s chain of command; and finally, detailed information about the nature of the sanctioned entity including its size, revenues, organization and structure.

With this background, one wonders how the new RCO insurance policy would work in these cases?

The benefits of the policy include coverage for:

• Defense costs incurred in the investigation or defense of any misdemeanor criminal proceeding, administrative proceedings brought pursuant to the RCO doctrine, as well as debarment proceedings.
• Defense cost coverage for potential RCO claims.
• Lost future compensation resulting from exclusion/debarment.
• “Recoupment loss” and/or clawback awards, which is the value of any compensation that must be returned or repaid by an insured person as a result of a judgment, decision, or settlement of an RCO claim.

An obvious omission from this list of benefits is the actual fines that are levied as part of the conviction, which are generally in the hundreds of millions. This is undoubtedly because insuring such risk would be against public policy.  Not mentioned on the web site, but revealed in an interview with the Philadelphia Inquirer is that policy exclusions “might” kick in if evidence exists that the insured engaged in affirmative conduct that resulted in conviction. PharmaLot uncovered the same caveat in its interview with Jack Flug, a managing director at Marsh:  “If the government decided the target knew what was going on and intentionally did something wrong, the coverage would cease. The intent factor is critical.”  Again, maybe dictated by public policy concerns.

But how will this work in practice?  Recall that the FDA’s Park Doctrine guidelines - “Knowledge of and actual participation in the violation are not a prerequisite to a misdemeanor prosecution but are factors that may be relevant when deciding whether to recommend charging a misdemeanor violation.”  DOJ will employ a presumption in favor of exclusion only “when there is evidence that an executive knew or should have known of the underlying criminal misconduct of the organization.”   These criteria raise questions of just how the insurance company is going to ferret out evidence of intent, or whether it will use the language of these two government agencies to create its own presumption that intent exists once a conviction occurs, unless the insured can prove otherwise. Ultimately, there’s a real question of just how many payouts will actually be made under these new RCO policies.

Another question, obviously, is whether prosecutors engaged in settlement negotiations will allow these insurance policies to be invoked.  U.S. v. Stein, the 2008 opinion in which the Second Circuit held that prosecutors’ threat to indict KPMG if it paid its employees’ legal fees violated the employees’ Sixth Amendment rights to assistance of counsel, sheds one possible perspective on the outcome of this question.

Finally, the Marsh’s policy description does not mention covering directors, though one would have to imagine it would be willing to sell such a policy if so requested.  While it has yet to happen, given their aggressive stance, the FDA and OIG would not miss the opportunity, with the right facts, to  pursue the Responsible Officer Doctrine against a board member, perhaps on the Audit Committee.

A final twist: according to the Inquirer, upon learning of the new policy, Secretary of Health & Human Services Kathleen Sebelius replied, “I don’t practice law on a regular basis, but usually you can’t insure yourself as a bank robber for robbing banks. That is intriguing. I’d like a list of their customers because that would give us a pretty good target of people to go after.”

Making Health and Disability Law More Responsive to Lived Experience

Featuring Visiting Scholar, Ani Satz, Associate Professor, Emory University School of Law, Rollins School of Public Health, and Center for Ethics, this lecture will address how courts and legislatures respond to universal vulnerability to illness and disability. Currently, the law fragments–or breaks apart–the experience of the legal subject, by offering sporadic protections that fall short of what is needed for an individual’s well-being.

1 NY/NJ CLE credit available. Please contact Simone Handler-Hutchinson for more information at simone.handler-hutchinson@shu.edu.

Tuesday, March 20, 2012, 6:00 - 7:00p.m., Room 372, Seton Hall Law School, 1 NY/NJ CLE Credit
R.S.V.P. by March 18, Register Here.

Podcast: Distinguished Guest Practitioner Gian Luca Burci Lectures on the New Field of International Health Law

On Wednesday, February 22, 2012, Distinguished Guest Practitioner Gian Luca Burci, the General Counsel to the World Health Organization (WHO) in Geneva, Switzerland, gave a fascinating talk at Seton Hall Law School on “Navigating the New Field of International Health Law.” The program was sponsored by the Seton Hall Law Center for Health & Pharmaceutical Law & Policy and the International Law program at Seton Hall Law.

Mr. Burci emphasized at the outset that if one defines international health law narrowly, to encompass only international law created “for public health purposes … within a public health environment,” the field is very small indeed.  If one looks more broadly, though, health concerns impact many international law areas, including international environmental law, human rights law, intellectual property law, national security law, and trade law.

The WHO, which is the public health arm of the United Nations, is the source of much or all of what little “hard” international health law there is.  Like other international bodies, the WHO can adopt treaties, but it can also promulgate regulations which do not need to be ratified by its member countries.  Adopted by the WHO’s World Health Assembly, these regulations come into force for all member countries on a specified date.  States that do not wish to be bound by them must affirmatively opt out.

As Mr. Burci put it, the expectation was that the WHO would be a “powerful, normative organization” but “the record is poor, at least in terms of hard law.”  In its 65 years of existence, the WHO has adopted just one treaty, the 2003 Framework Convention on Tobacco Control, and two regulations, the Nomenclature Regulations, which address the classification of, and compilation and publication of statistics on, diseases and causes of death, and the International Health Regulations (IHRs), which aim to limit the international spread of disease.

On the other hand, Mr. Burci explained, the WHO has been “very successful” in introducing rules of a “recommendatory nature,” so-called “soft law.”  The agency is a source of a plethora of technical standards, guidelines, and best practices, including, for example, its non-binding codes on Marketing of Breast-milk Substitutes and on International Recruitment of Health Personnel.

The interplay between soft and hard law is complex and the line between the two can be blurred.  Mr. Burci offered as an example the case of the Codex Alimentarius, which is a collection of non-binding recommendations governing food safety.  If the steps a country takes to protect its food supply conform to the Codex Alimentarius, the country benefits from a presumption that it is in compliance with the General Agreement on Tariffs and Trade (GATT) and the Agreement on the Application of Sanitary and Phytosanitary Measures, both binding treaties. Concomitantly, if a country takes measures that do not comply with the Codex Alimentarius, it exposes itself to the possibility of legal challenge on the grounds that the measures are too trade restrictive.  The ostensibly soft Codex Alimentarius, then, is harder than it seems.

Might we see more hard law from the WHO?  Mr. Burci noted that there has been a strong call for a convention on alcohol control, but opined that such a convention is unlikely to be adopted.  Tobacco, he explained, is different from alcohol in that there is no level of use that is harmless.  Mr. Burci suggested that the problems of illicit trade in medicines and of counterfeit medicines might be amenable to a hard law solution, as might the failure of the market to produce medicines for certain diseases.  With regard to the latter, Seton Hall Law Professor Carl Coleman notes here that a WHO working group recently recommended “the adoption of a binding international convention to promote research and development related to diseases predominantly affecting developing countries.  The proposal is expected to be on the agenda for the May 2012 meeting of the World Health Assembly…, where it is likely to generate significant discussion.”

Listen to Gian Luca Burci’s lecture by clicking on the radio.

Open House - MSJ Program in Health, Science & Technology Law at Seton Hall Law

The next MSJ Open House will be on Saturday, February 25, 2012, from 9 a.m. until 11:30 a.m. (registration begins at 8:30 a.m.). Advanced registration is required. Register here >>

---

MSJ Program in Health, Science & Technology Law

Seton Hall Law School offers a Master of Science in Jurisprudence (MSJ) degree in Health, Science & Technology Law. The MSJ program provides professionals working in health care, information technology, telecommunication, pharmaceuticals and biotechnology with a solid foundation in the legal and regulatory aspects of these industries.

The MSJ is unique in that it provides a rigorous grounding in the law for students who do not want to become lawyers, but who, instead, want to use the law to enhance their effectiveness and marketability in a non-legal career. Combining this degree with their professional experiences, MSJ graduates have numerous opportunities available to them. Alumni work in a broad spectrum of positions as compliance officers, contract analysts, healthcare administrators, nurse managers, patent/trademark assistants, pharmaceutical financial analysts, quality assurance managers, supervisors, clinical operations directors, and lobbyists.

The MSJ Open House is an excellent opportunity for prospective applicants to meet and speak with faculty, students and administrators in a half-day long structured program.

The event will include an overview of the MSJ admissions process, the MSJ curriculum and course offerings, a question & answer session with the Director of the MSJ program, two mock classes led by current health law and intellectual property law faculty, information on financial aid, and tours of the law school. A relaxed lunch will allow for time to ask questions of special interest to you.

Please register for the Open House online or by contacting Helen A. Cummings, Administrator of Graduate Programs, at helen.cummings@shu.edu or 973-642-8380. Thank you for your interest in Seton Hall Law School’s MSJ program.

For more information on the MSJ Program as well as FAQs and Admissions criteria, click here.
For more information on the Open House, including a schedule, click here.

Navigating the New Field of International Health Law, Featuring Gian Luca Burci, Legal Counsel for WHO

This lecture, “Navigating the New Field of International Health Law,” will explore the intersection of health and international law and the emergence of International Health Law as a practice area. Featuring Gian Luca Burci, Legal Counsel for the World Health Organization, this program will focus on the growing interactions between health policy and various areas of international law, including international business transactions, intellectual property, international security, and human rights law. The program is sponsored by the Seton Hall Law Center for Health & Pharmaceutical Law & Policy and the International Law program at Seton Hall Law.

The event will take place at Seton Hall Law, Newark, NJ, on Wednesday, February 22, 6 to 7 p.m.  There is no charge. 1 New Jersey CLE credit will be available. Click here to make your reservation or for more information, please contact Sara Simon, Director, Healthcare Compliance Certification Program, at sara.simon@shu.edu or call 973-642-8190.

Cuts in Mental Health Funding Continue; Supreme Court to Rule

As America waits for the U.S. Supreme Court to hear oral arguments in, and decide on, the constitutionality of the Patient Protection and Affordable Care Act of 2010 (PPACA) in March, state cuts in mental health funding continue unabated in many states throughout the country.  As previously mentioned here, the PPACA review undertaken by the Court will not only focus on the constitutionality of the individual mandate but will also examine PPACA’s Medicaid expansion.  By expanding Medicaid, PPACA will provide coverage to millions of those living with serious mental illness.  PPACA also provides for increased community-based outreach, from changing the waiver laws to awarding grants for new programs, in order to further improve essential services for those living with mental illness.

While many fixate on late March, local governments continue a practice that started a few years ago:  slashing funding for mental health services.  Just last week, Chicago’s Department of Public Health announced they were closing half of their mental health clinics — disproportionately affecting the city’s African-American and Hispanic populations, according to advocates.  Over the last fiscal year, New York has cut its mental health budget by $95 million, and California has by $177 million.  According to a new NAMI study released late last year, from 2009 to 2012, four states have slashed their mental health expenditures by more than 30 percent; South Carolina, at the top of the list, has cut funding by nearly 40 percent.  Alaska and Nevada — the two states with the highest suicide rates in the country — are both in the top five.  In total, “general funds for mental health” are down $1.6 billion overall between 2009 and 2012.

Besides painful, the cuts are likely to be counterproductive:  advocates argue that they will actually cost states more in the long run.  Ronald Hornberg, director of legal and policy affairs at NAMI recently told ABC news that the cuts are resulting in those in need of services showing up in emergency rooms or prisons, where they are expensively boarded because there is nowhere else for them to go.   Eric Lindquist, a clinical therapist at the Chicago Department of Public Health, called the mental health clinics that Chicago has decided to cut, when compared to hospitalizations or incarcerations, “one of the taxpayer’s best bargains.”

At the same time, headlines late last week brought news that 20 percent of Americans were diagnosed with mental illness in 2010 — nearly one in four women and about one in six men.  Among other findings, nearly nine million Americans “thought seriously” about suicide in 2010, with over one million attempting to kill themselves.  Almost two million teenagers “experienced a major depressive episode.”  Those aged 18 to 25 had the highest incidence of illness:  nearly 30 percent.

Obviously, the incidence of illness and prevalence of spending cuts nationwide does not bode well for the future of mental health care in this country.  Those that depended on the services being cut are left to try and make it on their own, and those who worked for gutted agencies are looking for jobs.  And this is why advocates look toward March.  The Court’s decision later this year will shape the future of mental health services in this country for years to come — services that, right now, are increasingly endangered nationwide.

Professor Frank Pasquale featured in The Record on ‘A Constitutional Right to Health Care’

Professor Frank Pasquale wrote a featured Op-ed in The Record, New Jersey’s most awarded newspaper, regarding a constitutional right to health care. Professor Pasquale, who is Associate Director of the Center for Health & Pharmaceutical Law & Policy and Editor in Chief of HRW, writes:

SHOULD the Supreme Court weigh in on America’s great health care debate? Yes. It should declare a constitutional right to health care.

This right is already enjoyed by prisoners. Law-abiding citizens deserve it, too.

The United Nations’ Universal Declaration of Human Rights states, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including… medical care.”

Many advanced countries have adopted - and lived up to - similar commitments.

Of course, that’s not on the Supreme Court’s agenda. Instead, it will decide whether to cripple last year’s health reform, known as the Affordable Care Act, by declaring the individual mandate unconstitutional.

I understand objections to the mandate. Cash-strapped Americans don’t deserve one more drain on their resources. I’m also not a fan of making people buy health insurance from private insurers. They waste a lot of money, and are one reason why U.S. doctors’ administrative costs are a whopping 400 percent higher than those in Canada.

If I designed the ACA, I’d have given everyone a public option, modeled on Medicare.

But I didn’t write the bill, Congress did. In precedents going all the way back to the 1819 case of McCulloch v. Maryland (and affirmed as recently as 2010), the Supreme Court has deferred to Congress’s constitutional powers to solve national problems.

Politics

The court risks looking political if it abandons that approach now. It has already jettisoned once-venerable holdings on campaign finance, equal protection and antitrust.

Read the full Op-ed here.

AALS Panel on Teaching Health Law: A Tour de Force

The first speaker was Prof. Charity Scott,  Catherine C. Henson Professor of Law and Director of the Center for Law, Health & Society at Georgia State University College of Law.  Her presentation, “Collaborating with the Real World: Opportunities for Developing Skills and Values in Health Law,” was a terrific mix of high level observation, on-the-ground experiences, practical examples from her own health law program, and articles she edited as editor of the Teaching Health Law column of the JLME.  Scott noted that experiential learning can happen in time slots ranging from an hour to a day to a semester or year, so any committed professional can fit some opportunities into their schedule at some point.  She particularly focused on how students could help attorneys, doctors, and community members solve pressing problems.  In coming weeks, I’ll blog on some of the particular programs she mentioned.

Constitutional Mortality: Precedential Effects of Striking the Individual Mandate

Professor Mark Hall, Fred D. & Elizabeth L. Turnage Professor of Law, Wake Forest University School of Law

Abstract:

Because insurance is necessary for decent access to health care, credible studies estimate that eliminating the Affordable Care Act or its individual mandate could cause thousands of avoidable deaths a year. That is sobering, but far more chilling is the loss of life that might result from the constitutional precedent that a negative ACA ruling would set. If the challengers’ chief argument is accepted, it creates the frightening prospect that the federal government may be unable to respond effectively to a catastrophic public health emergency that threatens millions of lives, if effective response requires mandating citizen behaviors unconditioned on any engagement in commerce.

Credible scenarios for natural disasters and flu pandemics might require just such federal actions, in the form of mandatory vaccination, evacuation, screening, treatment, or even mundane sanitary measures — and the Commerce Clause is the only source for such power when military defense is not involved. State and local governments are the primary source of authority for such measures, but recent disasters and near-misses demonstrate the real possibility that their responses may prove inadequate. Thus, rather than fretting over what slippery-slope vegetables the government might force people to purchase if the mandate were upheld, courts should be much more concerned about the insurmountable barriers that a nullifying precedent would set for effective federal response to realistic catastrophes.

[Ed. Note: Professor Hall's paper may be found here]

Does the Fee Imposed by Section 9010 of the Affordable Care Act Apply to Stop-Loss Coverage?

It was the intent of Congress in enacting the Patient Protection and Affordable Care Act to regulate health insurance comprehensively. Most of the regulatory provisions of Title I (the insurance reforms) apply to “A group health plan and a health insurance issuer offering group or individual health insurance coverage.” The definitions of these terms are drawn from the definitional section of the Public Health Services Act (added by the Health Insurance Portability and Accountability Act), which defines a “group health plan” as an ERISA plan, and a “health insurance issuer” as “an insurance company, insurance service, or insurance organization (including a health maintenance organization, as defined in paragraph (3)) which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance.” 42 U.S.C. § 300gg-91(a)(1), (b)(2). Thus the ACA covers both self-insured ERISA plans and insured individual and group plans.

In fact, however, the ACA does not apply to all health insurance coverage, and does not apply to all health insurance coverage to which it does apply to the same extent.  HIPAA excepted benefit plans, including specific disease and fixed-dollar indemnity plans, and short term individual coverage are not subject to ACA requirements, and many of the provisions of the ACA that apply to individual and small group plans, including the essential benefit package, the risk adjustment program, and the risk pooling, community rating, minimum medical loss ratio, and unreasonable premium increase justification requirements do not apply to self-insured plans.  It is, therefore, important to read the ACA section by section to determine which requirements or prohibitions apply to which types of health insurance.

One particularly important provision that has not received enough attention is section 9010, “Imposition of Annual Fee on Health Insurance Providers” (at 811-815 in the link).   This provision is found in Title IX of the ACA, but was amended both by the December 2009 Managers’ Amendment, which became Title X, and by the Health Care and Education Reconciliation Act, enacted in March 2010.  Section 9010 imposes a fee, beginning in 2014, on a “covered entity’s net premiums written with respect to health insurance for any United States health risk.” The fee is determined by multiplying the fraction determined by dividing the covered entity’s net premiums by the net premiums of all covered entities that are taken into account under the statute times a set annual amount, which begins at $8 billion, but rises to $14.3 billion by 2018.  This fee will be an important revenue source for funding the ACA’s coverage expansions.

The fee imposed by section 9010 does not apply to all insurers equally.  Insurers with annual net premiums of $50 million are fully taxed on their revenues, while insurers with annual net premiums of $25 to $50 million are taxed on only half of their net premium revenues, and insurers with net premiums below $25 million are not taxed at all.  Certain tax-exempt insurers are also taxed on only half of their net premium revenues (after applying the small insurer discount just mentioned).

The fee also only applies to “covered entities.”  Section 9010(c) defines “covered entity” as an entity that “provides health insurance for any United States health risk,” subject to a number of exclusions.  These exclusions include “any employer to the extent that such employer self-insures its employees’ health risks;” government entities; certain non-profit insurers that derive 80% of their revenue from government programs; and VEBAs that are tax exempt under I.R.C. § 501(c)(9).What is the universe of “covered entities,” however, that remain subject to § 9010 after these exclusions are applied?

To answer this question it is necessary to parse the meaning of “health insurance” and “United States health risk.”  Both terms are defined in the section, but only in part.  “United States health risk” is defined to include the health risk of an individual who is a United States citizen, resident, or located in the United States. § 9010(d).  “Health insurance” is defined to exclude certain but not all forms or HIPAA excepted benefits (as defined in I.R.C. § 9832(c)), long-term care insurance, and Medicare supplemental insurance.  Nowhere in § 9010, or indeed anywhere in the Internal Revenue Code, however, are the terms “health insurance” or “health risk” defined.  Section 9010 tells us what “health insurance” is not, but not what it is.

The most interesting question is whether health insurance for a United States health risk includes stop-loss coverage.  The sale of stop-loss coverage to small employer groups is increasing very rapidly.  As noted above, self-insured small groups are not subject to many of the consumer and market protections that the ACA applies to insured small groups.  Self-insured group plans are also not subject to state regulation because of ERISA preemption.  There is thus a great deal of interest in the part of small group plans in self-insuring.  Small groups can only self-insure, however, if they can find generous stop-loss coverage that will assume most of the health risk of employees.  A small employer that fully assumed coverage for its employees without stop-loss coverage would face unacceptable risk.  Some insurers, therefore, are actively marketing stop-loss coverage, often with very low attachment points, to small groups.

Is this stop-loss coverage subject to section 9010?  It certainly is “insurance” and it certainly covers a “health risk.”   It also does not fit within any of the explicit exclusions from the term “health insurance.”  But is “stop-loss insurance” “health insurance”?  The term “health insurance” is nowhere defined in the Internal Revenue Code (which would be the relevant code since the fee is administered by the Secretary of the Treasury and the fee is considered to be an excise tax, see § 9010(f),(h)(1)).  “Health insurance coverage” and “Health insurance issuer” are defined in § 9832, but those are not the terms used in section 9010, presumably intentionally.  By analogy, the term “group health plan” is used throughout the ACA to mean an ERISA plan, but in § 1301(b) the term “health plan” is explicitly defined to not include self-insured ERISA group plans.  Wherever the term “health plan” is used in the ACA without the adjective “group,” therefore, it does not include self-insured ERISA plans, but where it appears with the adjective “group” self-insured plans are included.  Similarly, it must be presumed that Congress used the term “health insurance” to mean something different from the defined terms “health insurance coverage” or “health insurance issuer,” which terms are used throughout the ACA in different contexts.

Is stop-loss insurance that covers health care risks health insurance?  This is certainly a reasonable interpretation of the term.  Moreover, the fact that Congress explicitly excluded from the definition of “covered entity” risk borne by employers in self-insured plans, but not risk that they pass on to stop-loss insurers, indicates that Congress did not intend to exempt stop-loss plans from the fee.

Applying the fee to stop-loss coverage would help to level the playing field between conventional health insurers and health insurers that insure health risk through stop-loss plans, and might help stem the flood of small groups to self-insured status, which in turn threatens to undo the consumer protections extended to employees insured through small groups and the market protections built into the ACA to stabilize the small group market (such as the risk adjustment and risk pooling requirements).

Section 9010(c) tasks the Secretary of the Treasury with providing implementing regulations and guidance.  It is to be hoped that the Secretary will clarify through the regulatory process that the § 9010 fee applies not only to conventional insurance, but also to stop-loss insurance.  Stop-loss insurance increasingly serves as an alternative mechanism for covering the same health risks that are covered by conventional insurance, while at the same time providing a means of evading ACA consumer and market protections.  Section 9010 should be applied to stop-loss insurance just as it is to conventional insurance.

ACO Symposium: Professor John V. Jacobi to Present: Lessons from ACO Implementation in New Jersey

In conjunction with the Center for Health & Pharmaceutical Law & Policy, this year’s Seton Hall Law Review Symposium on October 28, 2011, will explore recent changes in the structure of health care delivery, in particular the rising popularity of Accountable Care Organizations (ACOs). For more information or to register, click here.

The keynote speaker will be Dr. Jeffrey Brenner, founder of the Camden Coalition of Healthcare Providers, and legal scholars and practitioners from around the country will present panel discussions on structural development, public health implications and lessons learned from state ACO programs. One such distinguished presenter is John V. Jacobi , Faculty Director, Center for Health & Pharmaceutical  Law & Policy,Dorothea Dix Professor of Health Law & Policy, Seton Hall University School of Law. Professor Jacobi, who frequently contributes to HRW,  will take part in the panel on “ACOs in Practice: Research on Current Implementation of ACOs,” and will be presenting Lessons from ACO Implementation in New Jersey.

Professor John Jacobi’s work is primarily in the areas of Health Insurance and Access, Mental Health Law, and Disability Law.

Professor Jacobi received his B.A., summa cum laude, from the State University College of New York at Buffalo and his J.D., magna cum laude, from Harvard Law School. He teaches Health Law, Health Finance, Disability Law, Public Health Law, Mental Health Law, and Torts. Professor Jacobi spent five years working for the New Jersey Department of the Public Advocate as Special Assistant to the Commissioner, where he worked on health, civil rights, and disability issues through litigation and advocacy in legislatures and regulatory agencies. He then became a Gibbons Fellow at the law firm of Gibbons, Del Deo, Dolan, Griffinger & Vecchione, where he pursued health, prisoners’ rights, and disability issues. During 2007-2008 he was on leave from the law school, serving as Senior Associate Counsel to N.J. Governor Jon S. Corzine on Health, Human Services, and Chrildren’s Issues.

Professor Jacobi writes and speaks on issues including disability rights, health access and finance, public health, and mental health. His recent and current scholarly projects include examining the improvement of chronic care in health systems, the funding and structure of Early Intervention Services for children with disabilities, examining the obligations of government to provide services to people with serious mental illness, the clash of disability rights and public health interests, and the prospects and social effects of “consumer-driven” health insurance models on health costs and rights of access for the poor and people with disabilities. He served on the Governor’s Task Force on Mental Health, the Board of Advisors of the New Jersey Office of Child Advocacy, the New Jersey Olmstead Advisory Council on disability rights, and on other government and non-profit boards and committees.

ACO Symposium: Professor Sallie Sanford to Present: State-based ACO and Medical Home Pilots: Early Lessons from the Other Washington

In conjunction with the Center for Health & Pharmaceutical Law & Policy, this year’s Seton Hall Law Review Symposium on October 28, 2011, will explore recent changes in the structure of health care delivery, in particular the rising popularity of Accountable Care Organizations (ACOs). For more information or to register, click here.

The keynote speaker will be Dr. Jeffrey Brenner, founder of the Camden Coalition of Healthcare Providers, and legal scholars and practitioners from around the country will present panel discussions on structural development, public health implications and lessons learned from state ACO programs. One such distinguished presenter is Sallie Sanford, Assistant Professor of Law, University of Washington — School of Law & School of Public Health. Professor Sanford will take part in the panel on “ACOs in Practice: Research on Current Implementation of ACOs,” and will be presenting State-based ACO and Medical Home Pilots: Early Lessons from the Other Washington.

Professor Sanford teaches Health Law both at the law school and the School of Public Health. Her research interests include health care delivery systems, health administration law, Medicare and Medicaid, comparative health law, and medical and administrative ethics.

Professor Sanford began her legal career as a law clerk for The Honorable Robert R. Beezer of the United States Court of Appeals for the Ninth Circuit. She then served for six years as an Assistant Attorney General representing the University of Washington Medical Center, Harborview Medical Center and the UW’s health sciences schools. Professor Sanford is a member of the Order of the Coif and is admitted to practice in Washington and the U.S. Court of Appeals for the Ninth Circuit. She is the president of the Washington State Society of Healthcare Attorneys.

ACO Symposium: Hal Teitelbaum, CEO & Managing Partner, Crystal Run Healthcare to Present, The Prospect of Being Hanged: Focusing the Physician Mind on ACOs

In conjunction with the Center for Health & Pharmaceutical Law & Policy, this year’s Seton Hall Law Review Symposium on October 28, 2011, will explore recent changes in the structure of health care delivery, in particular the rising popularity of Accountable Care Organizations (ACOs). For more information or to register, click here.

The keynote speaker will be Dr. Jeffrey Brenner, founder of the Camden Coalition of Healthcare Providers, and legal scholars and practitioners from around the country will present panel discussions on structural development, public health implications and lessons learned from state ACO programs. One such distinguished presenter is Hal Teitelbaum, M.D., MBA, and CEO and Managing Partner, Crystal Run Healthcare; he will take part in the panel concerned with the “Introduction to Accountable Care Organizations,” and will be presenting The Prospect of Being Hanged: Focusing the Physician Mind on ACOs.

Hal Teitelbaum is the managing partner, CEO and founder of Crystal Run Healthcare, among the largest, fastest growing and most technically advanced medical practices in New York State. Dr. Teitelbaum completed his training in Internal Medicine at New York Hospital-Cornell Medical Center, and in Medical Oncology and Hematology at Memorial Sloan-Kettering Cancer Center. After beginning his career in full-time academic practice, Dr. Teitelbaum established a solo practice in Orange County, New York, in 1982.  He established Crystal Run Healthcare in 1996.  He is a 1998 honors graduate of Columbia Business School, where he earned his MBA and is currently enrolled in Columbia Law School, Class of 2012.

Dr. Teitelbaum has served as a trustee of Horton Medical Center and in numerous other capacities for the hospital, medical staff organization, managed care organizations and regulatory agencies.  He is a recipient of the ADL Americanism Award, the Rhulen Award of the Sullivan County Partnership for Economic Development, and the Alliance for Balanced Growth’s ‘Golden Shovel Award’ of the Orange County Partnership. He was recognized by the Medical Group Management Association (MGMA) as the 2006 Physician Executive of the Year. Over the years, Dr. Teitelbaum and Crystal Run Healthcare have been the subjects of numerous articles for health care and business publications.

« Previous Page — Next Page »