May the Coverage Be With You: Navigating CMS’s Changes to the Health Insurance Marketplace
The Department of Health and Human Services (“HHS”) Centers for Medicare & Medicaid Services (“CMS”) recently issued the final “HHS Notice of Benefit and Payment Parameters for 2026” (hereinafter referred to as the “Rule”) setting new and updated standards for Health Insurance Marketplaces and health insurance issuers, brokers, and agents who help connect millions of consumers to health insurance coverage. Effective January 15, 2025,[1] the Rule finalizes additional safeguards for marketplace coverage beginning plan year 2026, protecting consumers from unauthorized changes to their health care coverage, ensuring the integrity of the federally facilitated Marketplaces, and making it easier for consumers to understand their costs and enroll in coverage through HealthCare.gov. The changes in this Rule aim to minimize administrative burden, ensure program integrity, advance health equity, and mitigate health disparities.
Preventing Unauthorized Marketplace Activity Among Agents and Brokers
This Rule expands CMS’s authority to immediately suspend an agent or broker’s ability to transact information with the Marketplace if there is an unacceptable risk to the accuracy of Marketplace eligibility determinations, operations, applicants, enrollees, or Marketplace information technology systems. CMS aims to protect consumers and support the integrity of the Exchange by increasing transparency.
This Rule also allows CMS to hold lead agents accountable for misconduct or noncompliance with HHS Exchange standards and requirements. This update will allow CMS to strengthen compliance reviews and enforcement actions against agencies and their lead agents to ensure that the individuals who are directing and/or overseeing the misconduct or noncompliance are held accountable.
Additionally, CMS has updated its model consent form to help agents, brokers, and web-brokers obtain and document consumer consent for Marketplace enrollments and eligibility applications. The updates also add scripts that agents, brokers, and web-brokers may use to meet the consumer consent and eligibility application review requirements via an audio recording.
Addressing Allowable Cost-Sharing Reduction (“CSR”) Loading
CSR loading practices are allowed when the adjustments are actuarially justified and follow state law, provided the issuer does not otherwise receive reimbursement for such amounts. CSR loading increases premium rates to offset the cost of providing cost-sharing reductions, which lower the amount consumer pay for deductibles, copayments, and coinsurance. Codifying these practices likely will promote market stability and provide greater clarity for issuers.
Advancing Health Equity and Mitigating Health Disparities
The Rule allows issuers to implement fixed-dollar or percentage-based premium payment thresholds, helping consumers who owe small premium amounts to maintain coverage even if they have not paid the full amount owed.
The Rule amends the Medical Loss Ratio (“MLR”) reporting and rebate calculations for qualifying issuers’ plans that focus on underserved communities with high health needs. These plans will have the option to modify the treatment of net risk adjustment receipts for purposes of the MLR and rebate calculations, so that these net receipts impact the MLR denominator rather than the MLR numerator.
CMS will conduct Essential Community Provider (“ECP”) certification reviews to ensure issuers include a sufficient number and geographic distribution of ECPs in their provider networks.
Making It Easier to Enroll in and Maintain Health Care Coverage
The Rule extends consumer notification requirements to two consecutive tax years for failure to file and reconcile. Exchanges are required to send notices to tax filers or their enrollees for the second year in which they have failed to reconcile their advanced payment of the premium tax credit (“APTC”). A notice to the tax filer may specifically explain that if they fail to file and reconcile for a second consecutive year, they risk being determined ineligible for APTC. Alternatively, an Exchange may send a more general notice to the enrollee or their tax filer explaining that they are at risk of losing APTC, without the additional detail that the tax filer has failed to file and reconcile APTC. These notices are intended to educate consumers about the need to file and reconcile to keep health care coverage affordable.
The Rule updates to the Basic Health Program (“BHP”) payment methodology noting that CMS will recalculate the premium adjustment factor if a state is using the premiums from a year in which BHP was only partially implemented as the basis for their federal BHP payments. Also, CMS provided a technical clarification explaining that if there is more than one-second lowest-cost silver plan in a county, a state’s BHP payment will be based on the premiums of the relevant plan in the largest portion of the county, as measured by the county’s total population.
Simplifying Plan Choice and Improving Plan Selection
Issuers on the Marketplaces are required to offer standardized plan options at every product network type, at every metal level, and throughout every service area where they offer non-standardized plan options. (Standardized plan options are Qualified Health Plans (“QHPs”) with standardized cost sharing and coverage for certain benefits.) CMS is updating standardized plan options for plan year 2026 to ensure the plans’ actuarial values (“AVs”) align with the plans’ metal levels and continuity in the plans’ designs. Also, issuers offering numerous standardized plan options within the same product network type, metal level, and service area must distinguish these plans from each other to minimize duplicative offerings (which would make it easier for consumers to select and compare plan options).
The Rule amends the regulations to clarify that issuers have flexibility to determine whether to include coverage for adult dental, pediatric dental, and adult vision benefits within their non-standardized plan options.
Increase Transparency
The Rule includes CMS’s public release of State Marketplace operations data, such as spending on outreach, education, and marketing, and call center metrics to increase transparency, efficiency, and accountability. Beginning January 1, 2026, CMS will also release aggregated, summarized Quality Improvement Strategy (“QIS”) information annually, with an aim to improve the quality of health care coverage.
Further Refining the HHS-operated Risk Adjustment Program
CMS is recalibrating the risk adjustment models beginning in the 2026 benefit year using 2020-2022 data. It will also phase out market pricing adjustment to plan liability associated with Hepatitis C drugs (aligning these drugs with other specialty drugs) and add HIV pre-exposure prophylaxis (PrEP) drugs to the risk adjustment models as another factor for both children and adults (increasing coverage and access to care for these patients).
CMS is making changes to the initial and second validation audit policies required for issuers offering risk adjustment covered plans to improve the precision of these audits and the risk adjustment results.
Issuers of risk adjustment covered plans can appeal second validation audit risk adjustment results or error rate findings if the amount in dispute exceeds the materiality threshold for filing. CMS finalized a second materiality threshold to rerun the results if the appeal is successful. That threshold is met if the financial impact on the issuer is at least $10,000. It is expected that this would reduce administrative costs both to issuers and the government.
Strengthening the Marketplace’s Impact on Consumers
The Rule establishes a user fee rate of 2.5% of monthly premiums for the federal Marketplace, and 2.0% of monthly premiums for state-based Marketplaces on the federal platform. If enhanced premium tax credit subsidies are extended for consumers through the 2026 benefit year by July 31, 2025, then the user fee rates would be reduced to 2.2% and 1.8% of total monthly premiums, respectively.
The Rule finalizes a $0.20 per member per month risk adjustment user fee for the 2026 benefit year.
CMS revised its methodology to update its Actuarial Value Calculator to calculate an issuer’s level of coverage (i.e., metal tier) so that only a single, final version of it is published each year.
The Rule includes guidance for State Marketplaces to review and resolve data inaccuracies and send them to HHS within 60 days of receipt of completed submissions from issuers. This would help efficiently resolve issues with accurate and timely payments of APTC to consumers and increase their access to health care coverage.
The Rule adds the clarification that the Marketplace may deny QHP certification to any plan failing to meet certain criteria. Issuers may request reconsideration of a denial, provided that they submit a written request of reconsideration with clear and convincing evidence that the denial was in error.
FOOTNOTES
[1] The Rule is not impacted by President Trump’s pause of agency action since the Rule’s effective is before the Executive Order was issued on January 20, 2025.
Saint Paul, Minnesota Enacts “Wage Theft” Ordinance
Beginning January 1, 2025, the City of St. Paul, Minnesota’s Wage Theft Ordinance went into effect. The Ordinance largely incorporates the State of Minnesota’s existing wage theft legislation. However, similar to the Minneapolis Wage Theft Prevention Ordinance, effective in 2020, the City of St. Paul’s new Ordinance contains additional employer obligations for employers with employees working within the geographic boundaries of the City of St. Paul.
Employee Notice Information Required
Minnesota state law requires employers to provide detailed information, in writing, to Minnesota employees at the start of their employment and provide written notice of related changes to employees during employment. As of January 1, 2025, pursuant to Ordinance the notice for covered St. Paul employees must contain the following additional information:
The date on which employment is to begin;
A notice of the City of St. Paul’s minimum wage rates and an employee’s entitlement to such rates;
If applicable to the employee, a statement that the sharing of gratuity is voluntary; and
The overtime policy applicable to the employee’s position, if any, including when overtime must be paid and at what rate[s].
Under the Ordinance, employers may provide the information in the notice by reference to an employee handbook, collective bargaining agreement, or similar document, provided the employee is directed to the specific sections in which such information is contained.
In addition to providing the notice to all new hires, employers must provide the notice to all current, covered employees starting January 1, 2025, if the employer has not already provided the information contained in the notice to the employee. Similar to the state notice, the St. Paul notice must be signed by the employee and any change must be provided to the employee in writing before the change takes effect. Per the Ordinance, however, employers must additionally retain a copy of the initial notice as well as any written changes and records of when the employee received the notice(s).
Employers must provide employees with the notice in the language previously used for communication, or in a different language if the employer is aware the employee prefers it, as long as the Department has published notices in that language.
New Notice Poster Requirements
Annually, employers are required to notify employees of their right under the Ordinance. Employers are also required to post a notice of employees’ rights at the workplace/jobsite, in English and any language spoken by employees at the workplace/jobsite. Where the notice cannot be placed at the workplace/jobsite, employers may satisfy their obligations under the Ordinance by providing physical or electronic copies to each employee or posting the notice of rights on a web or app-based platform.
Additionally, employers must include a notice of employee rights in any handbook provided to employees.
Employers should assess their compliance obligations under the Ordinance and revise any existing handbooks and notices accordingly.
The Copyright Office’s Latest Guidance on AI and Copyrightability
The U.S. Copyright Office’s January 2025 report on AI and copyrightability reaffirms the longstanding principle that copyright protection is reserved for works of human authorship. Outputs created entirely by generative artificial intelligence (AI), with no human creative input, are not eligible for copyright protection. The Office offers a framework for assessing human authorship for works involving AI, outlining three scenarios: (1) using AI as an assistive tool rather than a replacement for human creativity, (2) incorporating human-created elements into AI-generated output, and (3) creatively arranging or modifying AI-generated elements.
A key takeaway from the report is that text prompts alone – even detailed ones – cannot currently provide sufficient human control over their execution to attribute authorship rights in the resulting output to the user. While highly detailed, iterative prompts may describe the user’s desired expressive elements, the same prompt can generate widely different results each time, demonstrating a lack of meaningful human control over the AI’s internal “black box” processes, at least as the technology stands now. The Office acknowledged that this conclusion could change if future AI tools offer users a higher degree of direct control over the expressive aspects of the final output.
To illustrate its stance, the Office points to Jackson Pollock’s paintings as examples of copyrightable works even where the output of the creative process appears random or unpredictable. While the final arrangement of paint in a Pollock piece may not have been fully predictable, Pollock himself chose the colors, number of layers, texture, and used his own body movements to physically execute these choices. By contrast, AI-generated works often involve an algorithmic process largely outside the user’s direct control. Pollock’s work, the Office notes, came from tangible and deliberate human decisions—rather than from a system where the user simply prompts and then observes. The key issue is the degree of human control over the creative process, rather than the predictability of the result.
The Office distinguishes between simple text prompts and other forms of creative input provided by a user to an AI system (such as a photograph or drawing). If the user’s creative input is perceptible in the AI-generated output, or the user makes creative modifications to AI-generated material, those portions of the work may be eligible for copyright protection. Similarly, where AI is used to augment or enhance human-created works (like films using AI visual effects), the overall work may remain copyrightable as a whole, even if the AI-generated components would not be individually protectable.
Many AI platforms now allow users to select, edit, and re-arrange individual elements of AI-generated content, offering a greater level of human engagement than text prompts alone. The Office reiterates that a case-by-case analysis of the creation process is necessary to determine whether the human contributions are sufficient for copyright protection, leaving it to the courts to provide further guidance on the extent of human authorship required in specific contexts.
The Office believes the existing legal frameworks are flexible enough to address emerging AI-related copyright issues, and that enacting new regulations would not provide the desired clarity given the inherently fact-specific nature of the analysis and AI’s wide and evolving role in creative processes. The Office also raises policy concerns that extending blanket copyright protection to AI-generated works could flood the market with AI-generated content, potentially devaluing or disincentivizing human-created works.
In light of this guidance, it is essential for creators and businesses to document their creative process, including human-created elements, modifications, and arrangements of AI-generated outputs, and how the AI tool is being used—whether as an assistive technology or as the principal decision-maker in shaping the creative elements of the final output. This documentation may be required or helpful during the copyright application process and in potential ownership or infringement disputes.
While AI continues to transform creative industries, the Office’s guidance is a reminder of the fundamental role of human creativity in works seeking U.S. copyright protection. Notably, the Office’s position largely aligns with emerging international consensus—jurisdictions including Korea, Japan, and EU member states have similarly reaffirmed that meaningful human creative contribution is a prerequisite for copyright protection. Looking ahead, Part 3 of the report will address the training of AI models on copyrighted works, licensing considerations, fair use, and allocation of liability. These topics are among the most complex and closely watched issues at the intersection of AI and copyright.
LOW INTEGRITY?: Integrity Marketing Stuck in TCPA Class Action After Declaration Fails to Move the Court
Always fascinating the arguments TCPA defendants make.
Consider Integrity Marketing’s effort in Newman v. Integrity, 2025 WL 358933 (N.D. Ill Jan. 31, 2025).
There Integrity argued it could not be liable for calls violating the TCPA made by its network of lead generators because it was just a middle man who was not actually licensed to sell insurance itself.
Huh?
Apparently Integrity believed that if it wasn’t selling anything itself it couldn’t be liable for telephone solicitations it was brokering. (This is similar to the argument Quote Wizard made and, yeah, it didn’t work out so well for them.)
Integrity also argued that it couldn’t be sued directly for calls made by third-parties unless the Plaintiff pierced the corporate veil.
Double huh?
That’s not even close to accurate. Vicarious liability principles apply when dealing with fault for third-party conduct, not corporate formality law. That argument doesn’t even make logical sense.
Regardless, the Court had little trouble determining Integrity was potentially liable for the calls.
On the corporate veil argument the Court quickly rejected the (totally wrong) alter ego approach and properly applied agency law. The Court determined the Complaint’s allegations Integrity hired a mob of of affiliates, insurance agents, and (sub)vendors to telemarket insurance and other products to consumers was sufficient to state a claim since Integrity allegedly “controlled” these entities. In the Court’s eye the ability to “dictate which telemarketing or lead-generating vendors may be used” was particularly damning.
On the “we don’t actually sell insurance” argument the Court rejected the Defendant’s declaration– you can’t submit evidence on a 12(b)(6) motion folks– but found that even if the evidence were accepted Integrity would still lose:
However, even if the Court were to take the declaration into account, it does not refute the inferences drawn that Defendant has a network of agents encouraging the purchase of insurance, that Defendant controls or facilitates the telemarketing calls Plaintiff received which encouraged Plaintiff to purchase insurance, or that the telemarketing calls were done on behalf of Defendant. In other words, even if it is not selling insurance directly, the complaint plausibly alleges Defendant is using its network of subsidiaries and agents to engage in telemarketing and to facilitate and control the purchase of insurance using impermissible means.
So, yeah.
Motion to dismiss denied. Integrity stuck in the case.
CJEU Upholds EDPB’s Authority to Order Broader Investigations in Cross-Border Cases
In a landmark judgment delivered on 29 January 2025, the General Court of the European Union has affirmed the European Data Protection Board‘s (EDPB) authority to require national supervisory authorities to broaden their investigations in cross-border data protection cases.
The case arose from the Irish Data Protection Commission’s (DPC) challenge to three EDPB binding decisions concerning Meta’s data processing practices for Facebook, Instagram, and WhatsApp. The EDPB had instructed the DPC to conduct new investigations into Meta’s processing of special categories of personal data and issue new draft decisions.
The Court’s ruling emphasizes that the EDPB’s power to order broader investigations is subject to specific safeguards. Such orders can only be issued following a “relevant and reasoned objection” from another supervisory authority that demonstrates significant risks to data subjects’ rights. Additionally, these decisions require approval from a two-thirds majority of EDPB members.
Notably, the Court rejected the DPC’s argument that this authority undermines national supervisory authorities’ independence. Instead, it found that the EDPB’s role supports the consistent application of the GDPR across the EU while respecting national authorities’ operational autonomy in conducting investigations.
This decision reinforces the EDPB’s role as a central authority in ensuring comprehensive data protection investigations, particularly in cases involving major tech platforms. It clarifies that while the one-stop-shop mechanism aims for procedural efficiency, this cannot override the fundamental right to data protection.
The ruling sets a significant precedent for future cross-border enforcement actions, emphasizing that national supervisory authorities must be prepared to expand their investigations when legitimate concerns are raised by their counterparts in other EU member states.
New Tariffs on U.S. Imports from Canada, Mexico, and China
UPDATE (as of Feb. 3, 2025, at 10:45 AM ET): President Trump announced on TruthSocial an agreement with President Claudia Sheinbaum of Mexico to “immediately pause the anticipated tariffs for a one-month period during which we will have negotiations.” No similar such agreement has been announced with regard to Canada or China.
On February 1, 2025, President Trump utilized emergency powers to impose 25% tariffs on U.S. imports of goods from Mexico and most goods from Canada, and 10% tariffs on U.S. imports of goods from China and energy resources from Canada, effective Tuesday, February 4th.1 These tariffs are in addition to any other duties, fees or charges applicable to the imported products. Specific U.S. Harmonized Tariff Schedule classifications impacted will be identified in a forthcoming Federal Register notice, but no product exemptions are identified in the February 1st actions. In retaliation for these new actions, also on February 1st, Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum announced plans to implement retaliatory trade measures against U.S. exports to those countries.
The February 1st Executive Orders imposed an array of tariffs:
25% tariffs on all goods from Mexico.2
25% tariffs on all goods from Canada, except for “energy resources” from Canada. “Energy resources” will be subject to a 10% tariff. For purposes of these tariffs, “energy resources” from Canada are defined as: “crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water and critical minerals, as defined by 30 U.S.C. 1606 (a)(3).”3
10% tariffs on all goods from China.4
The tariffs are effective Tuesday, February 4, 2025, with respect to all goods entered for consumption or withdrawn from warehouse for consumption, on or after 12:01 AM Eastern Time. There is a limited exception for goods on the water or in the air at the time the tariffs were imposed: goods that were loaded onto a vessel at the port of loading or in transit on the final mode of transport for entry into the United States before 12:01 AM Eastern Time on February 1, 2025, will not be subject to the additional duties if the importer certifies as much to U.S. Customs and Border Protection (CBP) in accordance with forthcoming procedures.
Goods subject to these additional tariffs are ineligible for duty-free treatment under de minimis provisions (19 U.S.C. 1321), consistent with proposed regulations from U.S. Customs and Border Protection exempting other items subject to special duties from de minimis benefits. In addition, no drawback shall be available with respect to the duties imposed by these Orders. Goods subject to these tariffs that are admitted to a Foreign Trade Zone must be admitted in Privileged Foreign Status, as defined in 19 CFR 146.41.
U.S. import tariffs will be implemented through a Federal Register notice to be issued by DHS modifying the Harmonized Tariff Schedule of the United States (HTSUS) as needed “in order to effectuate this order consistent with law[.]”5 The forthcoming notice may identify narrow products or import classifications exempt from the actions, but the Executive Orders do not signal any products or sectors outside of the scope – nor do the Orders direct any agency to establish an exclusion process through which companies could request to be exempt.
The White House Fact Sheet accompanying President Trump’s Executive Orders focuses on the role of China, Canada and Mexico in “the sustained influx of illegal aliens and illicit opioids and other drugs”6 into the United States. The tariffs will remain in place until the President determines that sufficient action has been taken to alleviate the crisis. The Secretary of Homeland Security, in coordination with the Secretary of State, the Attorney General, the Assistant to the President for National Security Affairs and the Assistant to the President for Homeland Security, are tasked with monitoring the situation and informing the President when the governments of the subject countries have taken adequate steps to alleviate the public health crisis through cooperative enforcement actions.
The Executive Orders also reserve the ability of the President to “increase or expand in scope the duties imposed under [each] order” should the countries retaliate against the U.S. in response to this action through import duties on U.S. exports to those countries. Canada and Mexico are both poised to take countermeasures against the U.S. Prime Minister Trudeau announced that Canada would impose 25 percent tariffs on US $107 billion (C $125 billion) worth of U.S. goods, with a portion of those tariffs effective on February 4th, contemporaneous with the effective date of the U.S. tariffs, and the rest phasing in after a 21-day public comment period.7 The initial measures are expected to impact US $20 billion in exports of U.S. beer, wine and bourbon, fruits and fruit juices, vegetables, perfume, clothing, shoes, household appliances, furniture, sports equipment, lumber and plastics.8 A second wave on another US $85 billion of goods would include tariffs on cars and trucks, agricultural products, steel and aluminum and aerospace products.9 Non-tariff measures are also apparently being considered. President Sheinbaum also stated that Mexico would take retaliatory tariff and non-tariff measures.10 Although her statements did not include details, reporting suggests that Mexico’s government is considering “so-called carousel retaliation, which would periodically rotate the U.S. products subject to retaliatory tariffs.”11 China’s reaction was more muted. China’s Ministry of Commerce issued a statement that “the Chinese government would file a complaint with the World Trade Organization and take unspecified ‘corresponding countermeasures to firmly safeguard its own rights and interests.”12
We expect a rapidly changing trade and tariff environment during the duration of the Trump Administration.
[1] Imposing Duties to Address the Flow of Illicit Drugs across Our Northern Border, Exec. Order (Feb. 1, 2025) (“Canada EO”), available at https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-flow-of-illicit-drugs-across-our-national-border/; Imposing Duties to Address the Situation at Our Southern Border, Exec. Order (Feb. 1, 2025) (“Mexico EO”), available at https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-situation-at-our-southern-border/; Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China, Exec. Order (Feb. 1, 2025) (“China EO”), available at https://www.whitehouse.gov/presidential-actions/2025/02/imposing-duties-to-address-the-synthetic-opioid-supply-chain-in-the-peoples-republic-of-china/.
[2] See Mexico EO at Sec. 2(a).
[3] See Canada EO at Sec. 2(a)-(b).
[4] See China EO at Sec. 2(a).
[5] See Canada EO at Sec. 2(e); see also Mexico EO at Sec. 2(d); China EO at Sec. 2(d).
[6] The White House, Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China (Feb. 1, 2025), available at https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/.
[7] Department of Finance Canada: Government of Canada announces next steps in its response plan to unjustified U.S. tariffs (Feb. 2, 2025), available at https://www.canada.ca/en/department-finance/news/2025/02/government-of-canada-announces-next-steps-in-its-response-plan-to-unjustified-us-tariffs.html.
[8] Department of Finance Canada: List of products from the United States subject to 25 per cent tariffs effective February 4, 2025 (Feb. 2, 2025), available at https://www.canada.ca/en/department-finance/news/2025/02/list-of-products-from-the-united-states-subject-to-25-per-cent-tariffs-effective-february-4-2025.html.
[9] Department of Finance Canada: Canada’s response to U.S. tariffs on Canadian goods (Feb. 2, 2025), available at https://www.canada.ca/en/department-finance/programs/international-trade-finance-policy/canadas-response-us-tariffs.html.
[10] President Claudia Sheinbaum Pardo (@Claudiashein), X (Feb. 1, 2025, 8:07 PM), available at https://x.com/claudiashein/status/1885857655094415528?s=46.
[11] Santiago Pérez, Vipal Monga and Anthony Harrup, Canada, Mexico Want America to Feel the Pain of Tariffs Too, The Wall Street Journal (Feb. 2, 2025), available at https://www.wsj.com/economy/trade/canada-mexico-want-america-to-feel-the-pain-of-tariffs-too-f8119ccd (subscription required).
[12] Zia Weise, China to Retaliate after Trump Fires First Salvo in Trade War, Politico (Feb. 2, 2025), available at https://www.politico.eu/article/china-vows-retaliation-after-donald-trump-likely-trade-war-tariffs-chinese-imports/ (quoting the statement of China’s Ministry of Commerce from the Ministry’s website, available at https://www.mofcom.gov.cn/xwfb/xwfyrth/art/2025/art_a4a4f6e20b034cc78d506731007f1c1f.html).
Love Actually (Might Cause Legal Troubles for Employers)
Valentine’s Day is around the corner, so the time is right to consider the legal pitfalls of office romances.
Quick Hits
A romantic entanglement between coworkers that ends badly could provoke a harassment or retaliation lawsuit.
Many employers discourage or prohibit dating between supervisors and employees.
A number of strategies can help employers reduce the legal risk of workplace romances.
While love can be a “many splendored thing,” workplace romances may sometimes lead to harassment lawsuits, retaliation lawsuits, workplace disruptions, or loss of valuable talent. While workplace romances are not per se illegal, relationship problems sometimes lead to unwanted attention, misunderstandings, or even unprofessional behavior in the workplace. Because employers are required to ensure that their employees aren’t subject to sexual harassment or retaliation at work, these situations, while ostensibly personal, can lead to company involvement.
While employers certainly don’t have a direct say in personal relationships, employers can implement policies that discourage or prohibit romantic relationships at the workplace, especially those between supervisors and supervisees. Such policies aim to prevent favoritism and conflicts of interest, especially where a supervisor would be in a position to help or harm their sweetheart’s (or ex-sweetheart’s) career either during a relationship or after the relationship has ended.
Finally, employers can direct employees to inform HR about workplace relationships to confirm that those relationships are consensual. Some employers ask dating employees to sign a “love contract,” asserting that their relationship is consensual and not sexual harassment. Such documentation protects both the company and the participants in the relationship.
Next Steps
To mitigate the legal risk of office romances, employers may want to consider:
reminding employees about written policies against harassment that occurs in person or online;
requiring professional behavior at the workplace, communicating this policy clearly with specific examples of what is (and is not) considered professional behavior, and stating the specific consequences for those who display unprofessional behavior at the workplace or work-related events;
providing anti-harassment training during work hours, and reminding workers that emails, texts, and other communications sent on the employer’s devices and networks may be monitored by the employer; and
requiring workers to report sexual harassment or retaliation to HR, a manager, or a confidential hotline, and reminding managers that it’s illegal to retaliate against an employee for reporting harassment.
EDPB Release Pseudonymization Guidelines to Enhance GDPR Compliance
On Jan. 16, 2025 the European Data Protection Board (EDPB) published guidelines on the pseudonymization of personal data for public consultation. The Berlin Data Protection Commissioner (BlnBDI) played a leading role in drafting these guidelines (see the German-language BlnBDI press release). The consultation is ongoing, and comments can be submitted until Feb. 28, 2025, via the EDPB form.
Pseudonymization v. Anonymization
The proposed guidelines provide an overview of pseudonymization techniques and their benefits in business. Under the General Data Protection Regulation (GDPR), pseudonymization means processing personal data so that it can’t be attributed to a specific person without the use of additional information. Unlike anonymization, where data can’t be traced back to an individual even with additional information, pseudonymized data is still considered personal and subject to GDPR.
Advantages of Pseudonymization
The guidelines emphasize that the GDPR does not mandate pseudonymization. Nevertheless, using pseudonymization techniques can enhance GDPR compliance and lower data breach risks. It also supports using legitimate interests as a legal basis for data processing and ensures compatibility with original data collection purposes. Accordingly, companies can use pseudonymization to develop privacy-enhancing applications for data use and analysis that appropriately considers the rights of data subjects. This is particularly relevant in data-heavy sectors like finance, human resources, and health care.
Pseudonymization Procedures
According to the guidelines, effective pseudonymization involves three steps:
1.
Transform personal data by removing or replacing identifiers using methods like cryptographic algorithms (e.g., message authentication codes or encryption algorithms) or lookup tables, where pseudonyms are matched with identifiers.
2.
Store separately and protect additional information, such as cryptographic keys or lookup tables, for subsequent re-identification (“pseudonymization secrets”). Information beyond the controller’s immediate control, which can reasonably be expected to be available to the controller, should be considered when assessing the effectiveness of pseudonymization.
3.
Implement technical and organizational measures (TOMs) to safeguard against unauthorized re-identification. TOMs include access restrictions, decentralized storage of pseudonymization secrets, and random generation of pseudonyms.
These measures enhance data security and reduce data breach risks. The guidelines provide practical scenarios to illustrate these procedures.
Outlook
Although not legally binding, the EDPB guidelines often influence courts and regulators. They help interpret the GDPR and guide companies in developing compliant processes for data protection. Companies should view these guidelines as important advice for designing their privacy practices, which can minimize legal risks and support arguments during official audits or legal disputes.
The guidelines assist businesses in balancing data protection with operational needs. Pseudonymization can offer competitive advantages by safeguarding customer data and boosting customer trust through privacy-focused practices.
European Commission’s Competitiveness Compass – Is It the Roadmap for Simplification of EU Sustainability Regulations?
On 29 January 2025, the European Commission published a communication on its Competitiveness Compass for the EU (COM(2025) 30). The Competitiveness Compass outlines the European Commission’s proposed initiatives for the next five years as part of its aim to support the EU’s competitiveness and to promote economic growth. In particular, the Competitiveness Compass sets out the European Commission’s key projects to address the following three ‘‘transformational imperatives’’ to support with EU competitiveness (as identified in the European Commission’s Competitiveness report prepared by Mario Draghi in 2024):
closing the innovation gap;
encouraging decarbonisation and competitiveness; and
reducing the EU’s excessive dependencies and increasing security.
One of the ways in which the European Commission seeks to address these three pillars is through simplification of the EU’s current complex regulatory policies. The European Commission’s key project to achieve this simplification is the introduction of its first simplification omnibus package, which will be published on 26 February 2025 (‘‘Omnibus Simplification Package’’). The Omnibus Simplification Package is expected to, among other things, introduce simplification measures for sustainable finance reporting, sustainability due diligence and the sustainable finance taxonomy by simplifying the following sustainability regulations:
Corporate Sustainability Reporting Directive (‘‘CSRD’’);
Corporate Sustainability Due Diligence Directive (‘‘CS3D’’); and
Green Taxonomy Regulation (‘‘Taxonomy Regulation’’).
The aim of these simplification measures is set out to better align the regulatory requirements with investors’ needs and to ensure the proportionality of timelines and regulatory requirements against the activities of different companies.
The Omnibus Simplification Package forms part of the European Commission’s work towards meeting its target of reducing reporting burdens by ‘‘at least 25% for all companies and at least 35% for SMEs’’. To this extent, the Competitiveness Compass and the Omnibus Simplification Package have the potential to contribute to significant change in the EU sustainability regulatory framework.
Whilst the Competitiveness Compass is not legally binding, it is very useful insight on the direction of travel for sustainability-related reporting and compliance requirements in the EU under CSRD, CS3D and the Taxonomy Regulation.
The Trade War Begins with Canada, China, and Mexico
On February 1, 2025, President Trump declared a national emergency based upon the threat posed by undocumented foreign workers and drugs entering the United States. The White House has published a fact sheet outlining steps to address the threat by implementing (i) a 25% additional tariff on imports from Canada and Mexico, (ii) a 10% additional tariff on imports from China, and (iii) a carveout for a lower 10% tariff for energy resources from Canada (see Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China – The White House).
President Trump declared the national emergency pursuant to the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act. This action marks the first time a President has used the IEEPA to impose tariffs. President Nixon had used a precursor law to impose 10% tariffs on all imports in 1971 in order to avoid a balance of payments crisis resulting from ending the U.S. dollar’s gold standard (see prior alert Can the President Impose Tariffs Without Congressional Approval?).
President Trump issued Executive Orders imposing these additional tariffs on Canada, China, and Mexico (see link to Canada EO, China EO (unpublished), and Mexico EO (unpublished)).[1] The Executive Orders generally provide that the IEEPA national security tariffs may be removed if Canada and Mexico demonstrate adequate steps have been undertaken to alleviate the illegal migration and illicit drug crisis through cooperative actions, and China demonstrates adequate steps have been taken to alleviate the opioid crisis through cooperative actions.
A quick overview of five key initial questions:
1. When do the IEEPA national security tariffs take effect?
These IEEPA national security tariffs will be collected at the ad valorem rate of duty beginning 12:01 am ET, Tuesday, February 4, 2025.
2. How do I know if my import is subject to the IEEPA national security tariffs?
The Executive Orders reference “all articles” suggesting that the IEEPA national security tariff will apply to all merchandise imported from Canada, China, and Mexico; excepting that, there will be a carveout for energy from Canada, with the definitions based upon section 8 of Executive Order 14156 of January 20, 2025 (Declaring a National Energy Emergency). The necessary modifications to the Harmonized Tariff Schedule of the United States will be updated by the Department of Homeland Security and published in the Federal Register.
3. How is the IEEPA national security tariff rate calculated and applied?
The IEEPA national security tariff will be collected at an ad valorem rate based upon the entered value of the merchandise, meaning that the IEEPA national security tariff will be calculated on the entered value of the merchandise and simply added to any other duty applicable on the subject merchandise.
4. Who is responsible for paying the IEEPA national security tariff?
The importer of record is responsible for paying all duties to U.S. Customs and Border Protection. There is no change to this requirement.
5. Is there a process to apply for exclusions from IEEPA national security tariffs?
There have been no stated exemptions or processes for exclusions from the IEEPA national security tariffs, but importers may continue to review mitigation strategies for application (see prior alert Preparing for Tariff Increases – Mitigation Strategies: Miller Canfield).
In addition, the Executive Orders further provide that:
There is no duty drawback available for the covered merchandise, i.e. the refund of duties, taxes, and fees paid on imported merchandise subsequently exported or destroyed;
Merchandise must be admitted as “privileged foreign status,” meaning the merchandise remains subject to the tariff based upon its imported state, regardless of whether the classification changes in a Free Trade Zone, i.e. no avoiding the tariff by importing the merchandise into a Free Trade Zone;
There is no de minimis treatment available under Section 321, i.e. duty free treatment for shipments below $800; and
The President may increase or expand in scope the tariffs imposed under the Executive Orders upon retaliation against the United States by Canada, China, or Mexico through the application of tariffs or similar.
Because the imposition of additional IEEPA national security tariffs remains in flux, importers should carefully monitor this situation. For up-to-date advice and assistance on mitigation options to tariff exposure applicable to your business, please contact your Miller Canfield attorney or one of the authors of this alert.
[1] Press reports indicate that the China EO and Mexico EO have been signed and are similar in form, but as of the time of this publication the China EO and Mexico EO have not yet been posted to www.whitehouse.gov.
FDA & OHRP Draft Guidance: Including Tissue Biopsies in Clinical Trials
The U.S. Food and Drug Administration (FDA), and the Office of Human Research protections (OHRP) released draft guidance titled, “Considerations for Including Tissue Biopsies in Clinical Trials.” Although non-binding, the guidance document reflects FDA’s and OHRP’s current view on the inclusion of biopsies in clinical trials and is informative for sponsors.
Background
The draft guidance acknowledges that biopsies involve some inherent risk, and sponsors must consider whether the risk of including biopsies in a trial are reasonable in relation to the anticipated benefits and resulting knowledge. Within clinical trials, there are two types of biopsies — mandatory biopsies (which are required as a condition of trial participation) and optional biopsies (which are not required as a condition of trial participation).
Consideration for Conducting Tissue Biopsies in Clinical Trials
Generally, the following three factors should be considered when deciding whether to include biopsies (mandatory or optional) as part of a clinical trial: the purpose of the biopsy, the reason for its inclusion, and the associated risks. Because biopsies of different tissue types can have dramatically different levels of risk, the associated risks can vary greatly depending on the trial. Whenever biopsies are included in a clinical trial, the trial protocol should state the relevant rationale and scientific justification for the decision.
The draft guidance notes that use of biopsy tissue in a trial may be reasonable, and thus mandatory, if the information from the biopsy is necessary to:
Evaluate the primary endpoint(s) or key secondary endpoint(s) of the clinical trial;
Identify participants who may derive clinical benefit from the investigational medical product or other study interventions;
Identify participants who should not be enrolled in the study due to the risk of certain side effects or toxicities associated with investigational medical products;
Identify participants whose current disease state would render it unlikely for them to derive benefit from the investigational medical product or other study interventions; and
Evaluate treatment response.
Conversely, the draft guidance states that use of biopsy tissue in a trial should be optional in clinical trials when:
Information from the biopsy will be used to evaluate non-key secondary and exploratory endpoints; and
The purpose of the biopsy is solely to obtain specimens that will be stored and used for future unspecified research.
Regardless of whether the biopsy is mandatory or optional in the trial, trial participants always retain the right to withdraw consent to undergo a biopsy. In the case of mandatory biopsies, a participant’s decision to withdraw consent for a biopsy may impact the participant’s ability to continue participating in the trial.
Considerations for Conducting Tissue Biopsies in Children in Clinical Trials
Although the above considerations are relevant for trials that involve children, the draft guidance provided that, with respect to children, any biopsy conducted for research purposes needs to be evaluated to determine if there is a direct benefit to the enrolled child. In circumstances where biopsies do not offer a direct benefit, the risk of the biopsy must be limited to “minimal risk” or a “minor increase over minimal risk.” Finally, a child’s parent or guardian must give consent to trial participation and the performance of the biopsy. There must also be adequate provisions for soliciting the assent of the children, based on the child’s age, maturity, and psychological state, when the child can provide assent.
Conclusion
Clinical trial industry sponsors and stakeholders should take note of guidance and considerations discussed in the draft guidance and implement recommendations as needed. When sponsors are considering inclusion of biopsies, whether optional or mandatory, in a clinical trial, the draft guidance is helpful in outlining risk factors that should be evaluated, considered, and addressed, in the clinical trial design. Adherence to the draft guidance could assist sponsors in expediting the reviews required to initiate clinical trials.
Federal Court Applies Antitrust Standard of Per Se Illegality to “Algorithmic Pricing” Case
A federal district court in Seattle recently issued an important antitrust decision on “algorithmic pricing.” Algorithmic pricing refers to the practice in which companies use software to help set prices for their products or services. Sometimes this software will incorporate pricing information shared by companies that may compete in some way. In recent years, both private plaintiffs and the government have filed lawsuits against multifamily property owners, hotel operators, and others, claiming their use of such software to set prices for rentals and rooms is an illegal conspiracy under the antitrust laws. The plaintiffs argue that, even without directly communicating with each other, these companies are essentially engaging in price-fixing by sharing pricing information with the algorithm and knowing that others are doing the same, which allegedly has led to higher prices for consumers. So far, these cases have had mixed outcomes, with at least two being dismissed by courts.
Duffy v. Yardi Systems, Inc.
Previously, courts handling these cases have applied, at the pleadings stage, the “rule-of-reason” standard for reviewing the competitive effects of algorithmic pricing. Under the rule-of-reason standard, a court will examine the algorithm’s actual effects before determining whether the use of the algorithm unreasonably restrains competition. In December, however, the U.S. District Court for the Western District of Washington in Duffy v. Yardi Systems, Inc., No. 2:23-cv-01391-RSL (W.D. Wash.) held that antitrust claims premised on algorithmic pricing should be reviewed under the standard of per seillegality, meaning the practice is assumed to harm competition as a matter of law. Under the per sestandard, an antitrust plaintiff need only prove an unlawful agreement and the court will presume that the arrangement harmed competition. This ruling is significant because it departs from prior cases and could ease the burden on plaintiffs in future disputes.
In Yardi, the plaintiffs sued several large, multifamily property owners and their management company, Yardi Systems, Inc., claiming these defendants conspired to share sensitive pricing information and adopt the higher rental prices suggested by Yardi’s software. The court refused to dismiss the case, finding the plaintiffs had plausibly shown an agreement based on the defendants’ alleged “acceptance” of Yardi’s “invitation” to trade sensitive information for the ability to charge increased rents. See Yardi, No. 2:23-cv-01391-RSL, 2024 WL 4980771, at *4 (W.D. Wash. Dec. 4, 2024). The court also found the defendants’ parallel conduct in contracting with Yardi, together with certain “plus factors,” were enough to allege a conspiracy. The key “plus factor” was defendants’ alleged exchange of nonpublic information. The court noted the defendants’ behavior — sharing sensitive data with Yardi — was unusual and suggested they were acting together for mutual benefit.
The court decided the stricter per serule should apply to algorithmic pricing cases, rather than the rule-of-reason. The court emphasized that “[w]hen a conspiracy consists of a horizontal price-fixing agreement, no further testing or study is needed.” Id. at *8. This decision diverged from an earlier case against a different rental-software company, where the court thought more analysis was needed because the use of algorithms is a “novel” business practice and thus not one that could be condemned as per seillegal without more judicial experience about the practice’s competitive effect. The Yardi case also stands apart from others that have been dismissed, like a prior case involving hotel operators, where there was no claim that the companies pooled their confidential information in the dataset the algorithm used to suggest prices. The court in that case decided that simply using pricing software, without sharing confidential data, did not necessarily mean there was illegal collusion. Future cases may thus depend in part on whether the software uses competitors’ confidential data to set or suggest prices.
It is unclear if other courts will adopt the same strict approach as the Yardi case when dealing with claims involving algorithmic pricing. It is clear, however, that more cases are on the horizon, likely spanning a variety of industries using pricing software.
Regulatory Efforts
Beyond private lawsuits, government agencies and lawmakers also are paying close attention to algorithmic pricing. Last year, for example, the U.S. Department of Justice (DOJ) and a number of state attorneys general sued a different rental-software company. The DOJ also has weighed in on several ongoing cases. Meanwhile Congress, along with various states and cities, has introduced laws to regulate algorithmic pricing, with San Francisco and Philadelphia banning the use of algorithms in setting rents. And just last month, the DOJ and Federal Trade Commission raised concerns about algorithmic pricing in a different context — exchanges of information about employee compensation — in the agencies’ new Antitrust Guidelines for Business Activities Affecting Workers. The new guidelines note that “[i]nformation exchanges facilitated by or through a third party (including through an algorithm or other software) that are used to generate wage or other benefit recommendations can be unlawful even if the exchange does not require businesses to strictly adhere to those recommendations.” Expect more legal and legislative action on this front in 2025 and beyond.