Run the Campaign, Protect the Risk: Your Insurance Playbook
With the dust still settling from the most expensive political campaigns in history, many politicians are already eyeing re-election bids, while newcomers are gearing up to enter the race for the first time in the midterms or beyond.
In a landscape where presidential and congressional candidates spent nearly $14 billion during the 2020 election cycle, and projections for 2024 suggest total spending exceeded $16 billion, modern political campaigns and their operations are more complex—and risky—than ever before. From campaign staff facing the potential for bodily injury on the trail to cybercriminals targeting sensitive donor information, the range of exposures is constantly growing. It is crucial for campaigns to secure the right insurance coverage to mitigate these evolving risks.
This post explores the key types of insurance coverage political campaigns should consider, as well as strategies to ensure maximum recovery should a loss occur.
Insurance Coverage Options
General liability (GL) insurance protects the campaign against third-party claims and lawsuits. For example, if a campaign staffer, volunteer, or attendee is injured at an event and seeks compensation for their injuries, GL insurance can help cover those costs. Additionally, some GL policies include liquor liability coverage, which protects the campaign during fundraising or other events where alcohol is served.
Property insurance safeguards the physical assets used by a campaign, including office buildings and their contents, such as furniture. It also covers computers, technological equipment, and campaign materials like posters and signs. Additionally, property insurance protects a campaign’s financial and accounting records.
Commercial auto insurance covers accidents involving a campaign-owned vehicle, including bodily injury and medical expenses for the driver, as well as property damage to the vehicle.
Non-owned and hired auto insurance protects against damages to vehicles used for campaign operations but not owned by the campaign, such as rented, leased, or staff-owned vehicles.
Crime / employee theft insurance covers losses from fraud, embezzlement, robbery, forgery, and other dishonest acts by campaign employees, including expenses associated with a data breach or computer fraud.
Directors and officers (D&O) insurance provides financial protection for campaign directors, officers, managers, and other employees against lawsuits related to alleged mismanagement or errors in campaign operations.
Media liability insurance protects the campaign from defamation, plagiarism, or copyright infringement claims resulting ads or public statements by campaign spokespeople.
Cyber insurance covers costs related to cyber attacks and data breaches. This type of coverage is essential for campaigns storing sensitive donor information. Some cyber policies provide limited media liability coverage as well.
Employment practices liability (EPL) insurance covers legal costs, settlements, and judgments for claims related to actual or alleged employee rights violations such discrimination, wrongful termination, and harassment.
Workers’ compensation coverage is required for campaigns with paid employees, and covers claims related to workplace injuries.
Event cancellation insurance protects against costs incurred if a campaign is canceled, postponed, or relocated for reasons beyond the campaign’s control.
Special events insurance covers specific campaigns events like rallies and conventions.
Bundled insurance packages combine multiple coverages to address key risks associated with modern political campaigns, streamlining protection for a variety of potential exposures.
Steps to Secure Coverage
If a loss occurs, campaign managers must be aware that they may need to file a claim to recover losses and additional costs. To secure coverage, campaigns are well-advised to:
Review all relevant insurance policies to identify applicable coverages;
Notify insurers of the potential insurance claim as soon as possible; and
Maintain thorough, up-to-date records—including accounting records, contemporaneous photos, and videos—detailing damages, costs, and losses, along with any extra expenses.
Takeaways
How insurance responds to the evolving risks of modern political campaigns depends on the structure of the campaign’s insurance program and the specific terms, conditions, and exclusions in each policy. It is imperative for campaigns to carefully review all policy terms—both at the time of purchase and when filing a claim. To ensure comprehensive protection and maximize recovery potential, campaigns should consider consulting with insurance coverage counsel for expert guidance.
The EEOC Retires Guidance Protecting LGBTQ Workers and Others From Discrimination, Continuing the Rapid Remake of Federal Policy Through Presidential Action
As we have noted in recent days[1], upon returning to the Oval Office, the Trump Administration swiftly:
Sent the message that it will pursue an agenda of aggressive enforcement related to immigration and preventing undocumented workers from working in the U.S.;
Ordered federal employees to return to working physically from offices and froze all hiring for civilian employees, suggesting planned stripping of resources for federal agencies and other federal bodies (including those tasked with enforcing Equal Employment Opportunity-related rights (EEO));
Overturned a host of “harmful” executive orders passed during the Biden Administration, including executive orders seeking to protect workers against sexual orientation and gender identity or expression discrimination and to promote greater workplace safety requirements;
Overturned Executive Order 11246 and related amendments, ending a variety of federal policies and related requirements for federal government contractors that had been in place since the Lyndon Johnson Administration and now affirmatively prohibiting them from considering protected characteristics as part of employment decisions; and
Struck executive orders and presidential memoranda relating to equal employment opportunity, diversity, and inclusion efforts applicable to the federal government as an employer.
Notwithstanding the policies and potential future actions they portend, other than with respect to immigration enforcement, none of the foregoing changes summarized above apply to private employers that do not contract with the federal government — and with good reason. A presidential administration cannot on its own rewrite the equal employment opportunity statutory scheme woven through the federal fabric by laws like Title VII, the Americans with Disabilities Act, and the like. Changes to the basic scope of those laws can only come through legislative action (subject to presidential veto) and subsequent court interpretation.
But this certainly is not to say that the new administration is powerless to pursue the same policy bend portended by the changes mentioned above against private employers through its political and extra-statutory powers. And it would appear such indirect efforts to change the federal legal framework for EEO protections is underway.
In late January, the Equal Employment Opportunity Commission (EEOC) made several key removals of content from its online guidance resources — the website location where the EEOC publishes its views on what federal law should be interpreted to mean describing the federal government’s enforcement priorities under the framework of laws administered by the agency. The majority of these first guidance withdrawals pertain to LGTBQ worker protections, including the removal of several pages of resources relating to the United States Supreme Court’s 2020 decision in Bostock v. Clayton County, where the court recognized that Title VII protects employees from discrimination on the basis of sexual orientation and gender identity. While removal of this guidance does not change Bostock’s definitive statement that Title VII covers sexual orientation and gender identity, its withdrawal surely indicates that enforcing Bostock’s mandate will no longer be a priority for the EEOC and for the individuals who control how the agency uses its limited resources.
The new Administration has so far made no official announcement on these changes. Instead, while guidance and other pages on Bostock and protections for LGTBQ workers were still on the EEOC’s website at the end of the Trump Administration’s first week in office, they have subsequently been taken down from the website in an apparent silent retirement.
On the other hand, the administration has not been silent on its recent personnel changes; last week the President removed two Democratic Party-appointed members of the EEOC before the expiration of their five-year terms, along with terminating the services of the Commission’s General Counsel. The move came just hours after the President also fired National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo and removed a Democratic National Labor Relations Board member. Both the EEOC and the NLRB are now presently without a quorum of members, handcuffing the agencies’ ability to undertake certain high-level enforcement functions.
In another development similar to the silent removal of EEOC guidance regarding LGBTQ protections, previously available content on the EEOC website raising concerns about how Artificial Intelligence (AI) tools can result in unlawful employment discrimination have now been removed. This would seem to track with two other executive order actions taken by the Administration shortly after the inauguration (one striking a 2023 order seeking to create federal oversight of AI, another indicating the administration’s plan to take a hands-off approach to use of AI). Two weeks into this new administration have already brought in a sea change in the world of labor employment. It seems a certainty that more is to come — along with state law reaction, legal challenges, and the political and social backlashes that have become the norm in recent years. Foley and our team of counselors will continue monitoring and reporting on these developments while doing our utmost to help navigate these troubled and shifting waters with practical, business-focused advice.
[1] Foley’s robust, cross-disciplinary team has created a “100 Days and Beyond: A Presidential Transition Hub” which will be regularly and swiftly updated to keep you apprised of changes covering not just labor and employment, but also legal areas like Artificial Intelligence, Antitrust & Competition, Environmental, Government Enforcement, Finance, and Technology regulation.
Federal Grant Funding: A Thaw in the Freeze?
Last week was a roller coaster ride for health care providers and other recipients of federal grant funding. Here’s a quick recap of everything that’s happened since our last e-alert:
OMB Memo Rescinded – On January 29, the OMB issued a rescission of the memorandum (M-25-13) that contained the agency directive to review federal grant programs and the corresponding funding pause (the “OMB Memo”). Providers and other outside observers could be forgiven for making the assumption that this would be the end of the story for the time being.
The Story Continues – Shortly after the OMB rescinded the OMB Memo, communication from the White House, including posts on X from the Press Secretary, indicated that the rescission applied to the OMB Memo only and that the White House still intended to freeze federal funds and enforce the Executive Orders.
Normalcy? Returns– Thursday evening into Friday morning, Medicaid agencies reported irregularities in accessing funding portals and drawing down federal funds. We have heard from providers that access to their 330 PHS grant funds has been restored. At the same time, we have reports that some agencies (such as the National Science Foundation) are still reviewing grant programs for compliance with the Trump Administration’s Executive Orders. For now, however, the status quo for grant funding seems largely to have been preserved.
The Legal Battle Continues – A coalition of Democratic Attorneys General filed a lawsuit in Rhode Island earlier this week to oppose the OMB Memo and associated funding freeze.1 The judge in that case held a hearing to determine whether the legal challenge was moot, given the rescission of the OMB Memo. Citing communication from the press secretary, Judge McConnell indicated a willingness to still enter some kind of protective order related to the actions underlying the OMB Memo, even if the OMB Memo itself had been rescinded. Late afternoon on January 31, Judge McConnell issued a temporary restraining order in this case, which will last through a hearing and decision on the states’ motion for a preliminary injunction.2 On the morning of February 3, the DOJ responded with a notice of compliance outlining the Administration’s response to the TRO.
What Now? – Whatever the final legal outcome from the Rhode Island case, it seems clear that the Executive Branch is intent on reviewing federal grant programs for compliance with its policy directives. We know, based on OMB’s rescinded Memo, the initial list of programs on the Administration’s radar. Subject to any final disposition in the AG suit, we expect additional action in the coming weeks and months with respect to these programs, and providers should be aware of the potential impact on their organizations up to and including the inability to access funds previously appropriated and awarded.
Attached to this e-alert is an Excel tool that identifies the grant programs identified in OMB’s rescinded Memo. Providers and other grant recipients should use this tool to inventory their current grant funding streams, assess organizational risk moving forward and make plans in the event of future disruption.
[1] A copy of the states’ request for a temporary restraining order is available here: https://ag.ny.gov/sites/default/files/court-filings/new-york-et-al-v-trump-et-al-complaint-2025.pdf.
[2] A copy of the preliminary injunction is available here: https://storage.courtlistener.com/recap/gov.uscourts.rid.58912/gov.uscourts.rid.58912.50.0_2.pdf.
Grant Review Tool
DOJ Compliance Notice
Healthcare Preview for the Week of: February 3, 2025 [Podcast]
Senate Committee to Vote on RFK Jr. Nomination, House Tries to Move Forward on Budget Resolution
The Senate Finance Committee is set to vote on the confirmation of Robert F. Kennedy (RFK) Jr., President Trump’s nominee for Secretary of the US Department of Health and Human Services (HHS), on Tuesday morning. All eyes are on Senator Cassidy (R-LA), who publicly struggled at the Senate Committee on Health, Education, Labor, & Pensions hearing last week with whether to support RFK Jr. for the role of HHS Secretary. If Senator Cassidy and all Democrats on the Finance Committee vote against RFK Jr.’s confirmation, the committee would need to move him to a full floor vote without the committee’s support.
Last week, House Republicans used a retreat to try to coalesce around the reconciliation process. The House Budget Committee should hold a markup of the budget resolution this week to meet the schedule put forth by Speaker Johnson. However, so far no scheduled meeting has been posted. The House Budget Committee includes Rep. Chip Roy (R-TX) and some other very conservative members who appear to be raising concerns about the committee directives that might appear in the budget resolution – and are seeking to have higher numbers inserted than leadership had intended, because their top concern is lowering federal spending.
Turning to the Administration, there was a lot of activity over the weekend that included shutting down agency websites, Department of Government Efficiency representatives gaining access to closely controlled government databases, and layoffs of government employees.
Also over the weekend, President Trump imposed tariffs on Canada, China, and Mexico, reportedly for their roles in illegal immigration into the United States, and in producing and trafficking fentanyl. President Trump called the flow of contraband drugs into the United States a national emergency and public health crisis. On Monday morning, President Trump paused the new tariffs on Mexico for one month after Mexico agreed to reinforce its northern border with 10,000 National Guard members. Canada and Mexico indicated that they may to impose tariffs on the United States as well.
Today’s Podcast
In this week’s Healthcare Preview, Debbie Curtis and Rodney Whitlock join Julia Grabo to discuss the next steps in Robert F. Kennedy Jr.’s Senate confirmation process, budget reconciliation in the House, and the flurry of recent activity from the White House.
New York Governor Signs Privacy and Social Media Bills
On December 21, 2024, New York Governor Kathy Hochul signed a flurry of privacy and social media bills, including:
Senate Bill 895B requires social media platforms that operate in New York to clearly post terms of service (“ToS”), including contact information for users to ask questions about the ToS, the process for flagging content that users believe violates the ToS, and a list of potential actions the social media platform may take against a user or content. The New York Attorney General has authority to enforce the act and may subject violators to penalties of up to $15,000 per day. The act takes effect 180 days after becoming law.
Senate Bill 5703B prohibits the use of social media platforms for debt collection. The act, which took effect immediately upon becoming law, defines a “social media platform” as a “public or semi-public internet-based service or application that has users in New York state” that meets the following criteria:
a substantial function of the service or application is to connect users in order to allow users to interact socially with each other within the service or application. A service or application that provides e-mail or direct messaging services shall not be considered to meet this criterion on the basis of that function alone; and
the service or application allows individuals to: (i) construct a public or semi-public profile for purposes of signing up and using the service or application; (ii) create a list of other users with whom they share a connection within the system; and (iii) create or post content viewable or audible by other users, including, but not limited to, livestreams, on message boards, in chat rooms, or through a landing page or main feed that presents the user with content generated by other users.
Senate Bill 2376B amends relevant laws to add medical and health insurance information to the definitions of identity theft. The act defines “medical information” to mean any information regarding an individual’s medical history, mental or physical condition, or medical treatment or diagnosis by a health care professional. The act defines “health insurance information” to mean an individual’s health insurance policy number or subscriber identification number, any unique identifier used by a health insurer to identify the individual or any information in an individual’s application and claims history, including, but not limited to, appeals history. The act takes effect 90 days after becoming law.
Senate Bill 1759B, which takes effect 60 days after becoming law, requires online dating services to disclose certain information of banned members of the online dating services to New York members of the services who previously received and responded to an on-site message from the banned members. The disclosure must include:
the user name, identification number, or other profile identifier of the banned member;
the fact that the banned member was banned because, in the judgment of the online dating service, the banned member may have been using a false identity or may pose a significant risk of attempting to obtain money from other members through fraudulent means;
that a member should never send money or personal financial information to another member; and
a hyperlink to online information that clearly and conspicuously addresses the subject of how to avoid being defrauded by another member of an online dating service.
NLRB Shake-Up Continues: Trump Fired Acting General Counsel
On February 1, 2025, five (5) days after President Trump fired NLRB Member Gwynne A. Wilcox, and NLRB General Counsel Jennifer A. Abruzzo, President Trump fired the NLRB’s second-ranked attorney, NLRB Deputy General Counsel Jessica Rutter. Rutter briefly served as the NLRB Acting General Counsel after Abruzzo’s termination on January 27, 2025. As of this posting, it is not clear who will be appointed to serve as the new Acting General Counsel. The Senate must confirm any eventual appointee by President Trump to serve as the NLRB General Counsel.
The Board is now officially without a quorum and, while Regional Offices will continue to operate, without an administrative head of the organization equipped to make major decisions regarding the investigation and prosecution of unfair labor practice cases.
Spurred on by the Steward Health Care Bankruptcy, Massachusetts Adopts Bill Regulating Private Equity and REITs in Health Care, Continuing a National Trend
On January 8, 2025, Massachusetts Governor Maura Healey signed into law House Bill 5159 (the “Bill”). The Bill grants the state new regulatory powers to oversee and review health care transactions involving private equity firms, real estate investment trusts (“REITs”), and management services organizations (“MSOs”). The Bill is the tenth law enacted in recent years to scrutinize health care transactions, and its enactment in Massachusetts highlights the continued expansion of state oversight of health care transactions.
Key Provisions
Expanded Definition of “Material Change Transaction” That Requires Reporting: As further described below, the Bill broadens the scope of what constitutes a material change transaction to include transactions involving private equity firms, REITs, and MSOs, such as changes in ownership, significant asset transfers, and conversions of nonprofit organizations to for‑profit entities.[1]
Additional Annual Reporting Requirements: For providers and facilities that have existing annual reporting obligations to the Center for Health Information and Analysis (“CHIA”), the Bill expands the reporting obligation to require detailed disclosures on ownership structures and finances, including information involving parent entities and affiliates.[2]
Penalties for Non‑Compliance: The Bill increases penalties for entities that fail to comply with reporting obligations to up to $25,000 per week.[3]
Post‑Closing Oversight by the Health Policy Commission (“HPC”): The Bill grants HPC authority to assess the impact of “significant equity investors” on health care costs, and such oversight may be exercised up to five years post‑closing of a transaction.[4]
Massachusetts False Claims Act Liability for Investors: The Bill expands the definition of “knowledge” under the Massachusetts False Claims Act, expanding potential liability to entities with an “ownership or investment interest” (defined below) that are aware of a False Claims Act violation but fail to disclose such violation within 60 days.[5] The expanded definition is presumably intended to target sponsors and investors, who, through transaction‑related diligence activities or post‑closing operational involvement, learn of potential violations of the state’s False Claims Act. Sponsors and investors with substantial exposure to businesses with Medicaid revenue should discuss the impacts of this theory of liability with regulatory and deal counsel.
Expanded Attorney General Involvement: The Bill grants the Attorney General with expanded powers to intervene in HPC hearings, and empowers the Attorney General to compel entities to produce documents or provide testimony under oath with respect to information submitted to CHIA.[6]
Prospective Prohibition on Hospital‑REIT Sale‑Leaseback Arrangements: Under the Bill, the state will not issue an acute‑care hospital license to any facility “if the main campus of the acute‑care hospital is leased” from a REIT.[7] Relationships in effect before April 1, 2024 will be grandfathered and such grandfathered status will be transferrable in a change of ownership.
History and Regulatory Backdrop
History of Regulation of Health Care Facilities
Although the Bill is among the most comprehensive and far‑reaching in the nation, it is not without precedent. As described by Proskauer in a number of recent alerts, publications, and presentations (including for the American Health Law Association and the New York State Bar Association), elected officials in a number of states have reacted to the decade‑old surge in investment in the health care sector with measures that are intended to scrutinize and increase transparency over such transactions.
In addition, transaction review laws build upon existing, and sometimes controversial, regulatory review mechanisms that impact the health care industry, particularly “Certificate of Need” (“CON”) laws. By way of background, and as a result of now‑defunct federal requirements, states in the 1970s adopted CON laws, a form of economic planning intended to avoid over‑supply.[8] State CON laws, many of which remain in effect,[9] regulate health care facilities (e.g., hospitals and ASCs) and typically impose approval or reporting requirements over certain transactions, such as facility renovations, expansions or mergers, or the purchase of complex medical equipment (e.g., CT or MRI).
Despite this backdrop of substantial regulation affecting health care facilities, many states have historically had limited to no regulatory review authority over transactions affected physicians and physician practices. In light of existing regulatory oversight affecting facilities, state legislators may view health care transaction laws as incremental expansions over state regulatory powers. In contrast, investors and their stakeholders are likely to view these laws as material expansions, given that there was historically limited regulatory oversight for these transactions.
The Impact of the Steward Health Care Bankruptcy
The Bill should be viewed as a reaction by Massachusetts elected officials to the bankruptcy of Steward Health Care. The bankruptcy, which was widely reported on and resulted in a number of federal and state‑level legislative hearings, impacted Massachusetts residents, in particular, and resulted in the Massachusetts Department of Public Health establishing a call center dedicated to answering public questions regarding the bankruptcy.
As summarized by the Massachusetts Senate in the first sentence of a press release concerning the Bill, the “Bill helps close gaps that caused the Steward Health Care collapse.”[10]
Expanded Definition of Material Change Transactions
Under existing Massachusetts law, health care providers and organizations with annual net patient service revenue exceeding $25 million are required to submit a Material Change Notice (“MCN”) to HPC, CHIA, and the Office of the Attorney General at least 60 days prior to a proposed material change.
The Bill broadens the scope of what constitutes a material change that requires the submission of an MCN to include the following:[11]
Transactions involving a “Significant Equity Investor” that result in a change of ownership or control of a provider or provider organization. The term “Significant Equity Investor” (which is excerpted, in its entirety, at the end of this post) is defined to include any private equity firm with a financial interest in a provider, provider organization, or MSO, as well as any investor or group holding 10% or more ownership in such entities.
“Significant acquisitions, sales, or transfers of assets, including, but not limited to, real estate sale‑leaseback arrangements.”
“Significant expansions in a provider or provider organization’s capacity.”
Conversion of nonprofit providers or organizations to for‑profit entities.
Mergers or acquisitions leading to a provider organization “attaining a dominant market share in a particular service or region.”
Of note, some of new categories, such as “significant expansion” in “capacity”, are ambiguous and do not adopt firm reporting threshold or parameters, which we expect are likely to be addressed via further rule‑making or guidance.
Implications for Private Equity Investors and REITs
The Bill represents a significant shift in the regulatory landscape for private equity investors and REITs in Massachusetts, and the Bill makes Massachusetts an outlier among the states with respect to the obligations and duties imposed upon investors and REITs.
Notwithstanding the foregoing, the Bill’s requirements represent a significant evolution, the product of ongoing legislative compromise. When introduced in the Massachusetts Senate as Senate Bill 2871 in 2024, the Bill’s precursor included additional statutory restrictions related to the corporate practice of medicine and “Friendly PC” model, maximum debt‑to‑EBITDA requirements for transactions involving providers or provider organizations, and bond requirements for private equity investors.
Stakeholders are advised to closely monitor further guidance and regulations that may be issued by Massachusetts authorities, and should continue to follow Proskauer’s Health Care Law Brief for continuing developments in this space.
Relevant Definitions
“Health care real estate investment trust” means a real estate investment trust, as defined by 26 U.S.C. section 856, whose assets consist of real property held in connection with the use or operations of a provider or provider organization.
“Non‑hospital provider organization” means a provider organization required to register under section 11 of the Bill that is: (i) a non‑hospital‑based physician practice with not less than $500,000,000 in annual gross patient service revenue; (ii) a clinical laboratory; (iii) an imaging facility; or (iv) a network of affiliated urgent care centers.
“Private equity company” means any company that collects capital investments from individuals or entities and purchases, as a parent company or through another entity that the company completely or partially owns or controls, a direct or indirect ownership share of a provider, provider organization, or management services organization; provided, however, that “private equity company” shall not include venture capital firms exclusively funding startups or other early‑stage businesses.
“Significant equity investor” means (i) any private equity company with a financial interest in a provider, provider organization, or management services organization; or (ii) an investor, group of investors, or other entity with a direct or indirect possession of equity in the capital, stock, or profits totaling more than 10% of a provider, provider organization, or management services organization; provided, however, that “significant equity investor” shall not include venture capital firms exclusively funding startups or other early‑stage businesses.
“Ownership or investment interest” means any: (1) direct or indirect possession of equity in the capital, stock, or profits totaling more than 10% of an entity; (2) interest held by an investor or group of investors who engages in the raising or returning of capital, and who invests, develops, or disposes of specified assets; or (3) interest held by a pool of funds by investors, including a pool of funds managed or controlled by private limited partnerships, if those investors or the management of that pool or private limited partnership employ investment strategies of any kind to earn a return on that pool of funds.
[1] Bill, Section 24.
[2] Bill, Section 42.
[3] Bill, Section 43.
[4] Bill, Section 24.
[5] Bill, Section 29.
[6] Bill, Section 49.
[7] Bill, Section 64
[8] See National Health Planning and Resources Development Act of 1974 (P.L. 93‑641).
[9] See, e.g., National Conference of State Legislatures, Certificate of Need State Laws, available at: https://www.ncsl.org/health/certificate‑of‑need‑state‑laws.
[10] Commonwealth of Massachusetts, Senate Press Room, Legislature Passes Major Health Care Oversight Legislation, Regulates Private Equity (Dec. 30, 2024), available at: https://malegislature.gov/PressRoom/Detail?pressReleaseId=164.
[11] See Bill, Section 24.
5 Trends to Watch: 2025 Futures & Derivatives
Regulatory Evolution in Digital Assets. President Donald Trump’s signing of the executive order “Strengthening American Leadership in Digital Financial Technology” revoked the Biden administration’s directives on digital assets and established a federal policy aimed at promoting the digital asset industry. This will likely lead to increased cryptocurrency trading and the creation of new digital assets. The establishment of more exchanges dedicated to these assets could enhance market accessibility and liquidity. Less restrictive regulations may also attract firms that previously operated overseas to establish a presence onshore.
Integration of Crypto with Traditional Finance. The integration of cryptocurrencies and digital assets with traditional financial instruments is expected to gain momentum. This may be characterized by the introduction of additional crypto-based ETFs and other crypto-based derivative products.
Adoption of Decentralized Finance Protocols in Derivatives Trading. The expansion of digital asset exchanges may drive the adoption of decentralized finance (DeFi) protocols in the trading of futures and derivatives. Traditional exchanges and financial institutions are likely to integrate DeFi solutions to provide innovative derivative products. This adoption may expand access to derivatives markets, allowing a broader range of participants to engage in trading activities while maintaining the security and efficiency offered by blockchain technology.
Tax and Legal Framework Reforms. As mentioned above, President Trump’s executive order suggests a less restrictive government approach to regulating digital assets. More favorable tax treatment of cryptocurrency trades could encourage greater participation from both individual and institutional investors. Additionally, potential reforms in legal frameworks may address existing challenges related to crypto mining, possibly overriding local restrictions to promote growth in this sector.
Harmonization of Global Regulatory Standards. As digital asset firms migrate onshore, there may be a push towards harmonizing global regulatory standards for digitally based futures and derivatives. This could emerge from the need to create a cohesive legal framework that accommodates cross-border trading of digital asset derivatives.
Guide to the 119th Congress
The national election produced a historic result in which Donald J. Trump was elected President a second time by winning key battleground states such as Pennsylvania, Wisconsin, Michigan, Georgia, Arizona, Nevada, and North Carolina.
The election will significantly change the power balance of Congress, as Republicans have regained control of the US Senate with 53 Republican Senators following GOP flips in West Virginia, Ohio, Pennsylvania, and Montana. This Senate GOP margin will allow Republicans to control the agenda in the Senate as all the committee chairs and Senate leadership positions will be filled by Republicans.
Republicans have also maintained their majority in the US House, as vulnerable incumbent Republicans largely defended their seats and Republican losses in California and New York were matched with four wins in Democratic-held districts in Colorado, Michigan, and Pennsylvania. This win results in Republicans achieving the long-sought-after governing trifecta, enabling Congress to use a special expedited legislative process called “reconciliation” to advance high-priority budget and tax measures.
To help you assess the 2024 election, we have prepared a comprehensive guide that summarizes the results and their impact on the 119th Congress, which convened in January 2025. The election guide lists all new members elected to Congress, updates the congressional delegations for each state, and provides a starting point for analyzing the coming changes to the House and Senate committees.
Please click here to download the most up-to-date version of the guide.
Key Insights on President Trump’s New AI Executive Order and Policy and Regulatory Implications
In recent days, the Biden administration’s reliance on export controls to curb China’s AI advancements has come under increasing scrutiny, particularly following the release of China’s DeepSeek R1 chatbot. This development raises concerns that prior U.S. restrictions have failed to slow China’s progress while potentially undermining U.S. global competitiveness in AI hardware and computing ecosystems. President Trump’s early actions—rescinding Biden’s AI executive order and emphasizing innovation over risk mitigation—signal a shift away from restrictive policies toward a more pro-innovation, market-driven approach.
In its final days, the Biden administration issued an interim final rule seeking to “regulate the global diffusion” of AI by imposing export licensing restrictions on advanced chips to 150 “middle-tier” countries, while maintaining existing embargoes on China, Russia, and Iran. The rule was widely viewed as an acknowledgment that previous AI export controls, dating back to 2022, had failed to fully prevent China’s access to AI-enabling technologies through third parties. Critics argue that these restrictions will reduce global demand for U.S. chips and incentivize non-U.S. computing ecosystems, weakening America’s long-term AI leadership rather than protecting national security.
Some have called DeepSeek R1’s recent emergence a “Sputnik moment,” highlighting the inadequacy of past U.S. controls and reinforcing calls among some quarters for a strategic overhaul. AI and crypto advisor to President Trump, David Sacks, has framed the chatbot’s release as evidence that Biden’s policies constrained American AI companies without effectively restricting China’s advancements.
Adding to these concerns, DeepSeek’s rapid rise has also triggered significant international regulatory scrutiny. Italy’s data protection authority, the Garante, has formally demanded explanations on how DeepSeek handles Italian users’ personal data, following accusations that its privacy policy violates multiple provisions of the EU General Data Protection Regulation (GDPR). Consumer advocacy groups argue that DeepSeek lacks transparency regarding data retention, profiling, and user rights, while also storing user data in China, raising potential security risks.
Notably, the White House has also begun reviewing DeepSeek over possible national security threats, echoing past scrutiny faced by Chinese tech firms like TikTok. Indeed, Sacks acknowledged evidence that DeepSeek improperly used data from U.S. company models to train its own, stating that leading U.S. AI companies would take further steps to prevent that practice going forward. This aligns with the Trump administration’s broader economic philosophy, which favors deregulation and private-sector empowerment over government-imposed constraints.
At this point, we believe that Trump’s approach to AI export controls may include: (1) repealing or significantly revising Biden-era AI restrictions to avoid isolating U.S. firms from global markets, (2) prioritizing domestic AI and semiconductor growth through deregulation and incentives, (3) refining export control enforcement to focus on targeted national security threats rather than broad-based restrictions, and (4) recalibrating international AI coordination to ensure U.S. competitiveness rather than emphasizing strict regulatory alignment with allies.
This shift could accelerate AI innovation in the U.S., but it also raises concerns about how to balance national security with economic competitiveness. If AI export controls are loosened too aggressively, China may find easier pathways to advanced AI technologies. Additionally, the divergence between the U.S.’s deregulated AI approach and the EU’s AI Act, which prioritizes stringent governance and risk mitigation, may create regulatory challenges for U.S. companies operating in international markets.
The Trump administration’s AI strategy marks a decisive departure from Biden’s risk-focused policies, opting instead for a more aggressive push to strengthen U.S. AI dominance through industry-led growth. While this shift may create opportunities for American companies, it also requires careful navigation of global regulatory landscapes and national security considerations.
McDermott+ Check-Up: January 31, 2025
THIS WEEK’S DOSE
Senate Finance, HELP Committees Hold RFK Jr. Nomination Hearings. The Senate Finance Committee must vote on Robert F. Kennedy (RFK) Jr.’s nomination before it moves to the full Senate for confirmation.
Senate VA Committee Holds Oversight Hearing on Community Care. The hearing followed a House Veterans’ Affairs (VA) Committee hearing on the same issue last week, covering many similar topics.
Senate Aging Committee Holds Hearing on Fiscal Health for Seniors. The hearing focused on the causes of inflation, and health-related discussion centered mostly on prescription drugs and Medicaid.
Trump Issues EOs and Actions Focused on Abortion, Care for Transgender Children. The actions were highly anticipated and follow themes from his campaign.
White House Issues, Rescinds Memo Freezing Funding for Federal Assistance Programs. The original memo, now rescinded, directed agencies to temporarily pause all federal financial assistance funding that could be implicated by Trump’s executive orders (EOs).
Trump Administration Offers Deferred Resignation to All Federal Employees. The offer is in place through February 6 and states that employees who take advantage of this offer would be paid through September 2025.
CONGRESS
Senate Finance, HELP Committees Hold RFK Jr. Nomination Hearings. RFK Jr., nominated for Secretary of Health and Human Services (HHS), testified before the Senate Finance Committee on January 29 and before the Senate Health, Education, Labor, and Pensions (HELP) Committee on January 30. Some senators serve on both committees and therefore were able to question him twice. Republicans largely asked RFK Jr. about his positions and plans for issues such as Medicaid, rural health, food safety, transparency, and abortion. RFK Jr. noted that he would work with Members of Congress on such issues, if confirmed. While some Democrats agreed that the healthcare system was broken, they noted disagreement with several of RFK Jr.’s positions. Democrats on both committees largely questioned his qualifications and alleged that he had inconsistent views on issues such as abortion and vaccines. RFK Jr. defended his past statements and noted his belief that Democrats were misrepresenting his positions.
The next step for RFK Jr.’s nomination is a Senate Finance Committee vote, which has yet to be scheduled. His nomination would then move to the Senate floor. If every Democrat on the floor opposed him, he could only lose three Republican votes and still be confirmed.
Senate VA Committee Holds Oversight Hearing on Community Care. During the hearing, members heard from veterans, family members, and experts about how veterans continue to lack access to timely mental health and healthcare services in the Community Care program. Witnesses unanimously agreed that the VA fell short in providing access to timely and quality care for its veterans, and that the VA often restricted the use of the Community Care program. Democratic members focused on the recent firing of federal inspectors general and how federal funding cuts would impact these health programs, while Republican members focused on accountability and the inappropriate management of the VA.
Senate Aging Committee Holds Hearing on Fiscal Health for Seniors. The hearing included a panel of economic and social security experts to discuss how inflation has affected the lives of seniors. The hearing focused widely on what is causing inflation, and healthcare discussion centered on Medicaid, high prescription drug costs, and the Inflation Reduction Act (IRA). Republicans largely blamed inflation on government spending and welfare programs, while Democrats focused on the impact that inflation will have on housing, prescription drug, and retirement costs for older Americans.
ADMINISTRATION
White House Issues, Rescinds Memo Freezing Funding for Federal Financial Assistance Programs. Late on January 27, the Office of Management and Budget (OMB) released a memo directing federal agencies to pause all activities related to obligations or disbursement of all federal financial assistance and other relevant agency activities that may be implicated by President Trump’s recent EOs. The memo explicitly excluded Medicare and Social Security but caused widespread confusion as to the breadth of programs that could be impacted. Concerns were exacerbated by the release of an internal OMB listing of programs being investigated, which was far broader than the programs many stakeholders considered likely to be impacted by the EOs issued to date.
In the health arena, Medicaid was not given the protection that Medicare and Social Security received and also appeared on the OMB listing. Many organizations dependent on government funding were unable to access their funds on January 28, and the website used to track and disburse Medicaid funding was not operating correctly either. A lawsuit was immediately filed, and OMB released a Q&A factsheet noting that any program providing direct benefits to individuals was exempt from the pause, including Medicaid and the Supplemental Nutrition Assistance Program. OMB’s factsheet also noted that the only programs implicated were those impacted by seven specific Trump EOs, including those that address government diversity, equity, and inclusion programs; the Hyde Amendment; and gender ideology. Despite this communication, it remained unclear who would determine the scope of the temporary pause and how long the pause would last.
These actions from the Trump Administration were met with concern and criticism from impacted stakeholders and congressional Democrats, who noted that Congress approved these funds and that they are not optional. In response to the lawsuit, a federal judge granted an administrative stay that temporarily paused the order until February 3. On January 29, the Trump Administration rescinded the original OMB memo. Confusion remains, however, as Trump Administration officials stated that the rescission only applies to the memo, and that they will continue to proceed with freezing federal funds implicated by the EOs. In response, another federal judge has indicated that he may intervene with a broader action to prohibit the freeze in payments.
Trump Issues EOs and Actions Focused on Abortion, Care for Transgender Children. The anticipated actions provide further insight on the new Administration’s direction in these areas:
Enforcing the Hyde Amendment. This EO directs OMB to issue guidance ensuring that agencies comply with the Hyde Amendment, which is passed by Congress annually and prohibits federal funding for abortion.
Memo on the Mexico City Policy. This memorandum reinstates the so-called Mexico City Policy that prohibits foreign organizations that receive US federal funding from providing or promoting abortions. The policy has consistently been revoked by Democratic presidents and reinstated by Republican presidents, dating back to President Reagan.
Ending Gender-Affirming Care for Children. Entitled “Protecting Children from Chemical and Surgical Mutilation,” this EO states that federal agencies shall not “fund, sponsor, promote, assist, or support the so-called ‘transition’ of a child from one sex to another.” It defines a child as an individual under 19 years of age, and it defines “chemical and surgical mutilation” to include a range of services and medications, including certain applications of puberty blockers, sex hormones, and surgery. The EO directs agencies that provide research or education grants to medical institutions to ensure that grantees do not perform any care that is prohibited under this EO. It directs HHS, TRICARE, and the federal employee health benefits program to not cover this care, and it directs HHS to take action through vehicles such as Medicare or Medicaid conditions of participation, Section 1557, and mandatory drug use reviews.
Reinstating Service Members Discharged Under the Military’s COVID-19 Mandate. This EO reinstates service members who were discharged for refusing to comply with the COVID-19 vaccine mandate that was imposed in August 2021 and rescinded in January 2023.
Additional EOs are reportedly forthcoming as early as today. We will continue to provide updates on EOs impacting healthcare.
Trump Administration Offers Deferred Resignation to all Federal Employees. Federal employees have until February 6 to decide if they would like to accept the offer. The offer states that employees who accept will receive pay and benefits through September 30. The notice has caused widespread confusion and concern among federal employees, and labor representatives are urging federal employees to reject the offer, as it may not be enforceable. The administration subsequently released a frequently asked questions document with further information. The Trump Administration’s goal is to reduce the size of the federal workforce through voluntary means, but officials have indicated an intention to go further in the future, noting in the offer that they cannot provide assurance on the certainty of positions. Reductions in the federal workforce could have implications for federal healthcare programs.
QUICK HITS
Date Set for Trump Address to Joint Session of Congress. On March 4, President Trump will address both chambers for the first time since returning to office.
Trump Administration Removes Inspectors General. The Trump Administration fired 18 inspectors general across federal agencies, including the previous HHS Inspector General Christi Grimm. The action received broad criticism for violating a required 30-day notice to Congress to dismiss inspectors general. Senate Judiciary Chairman Grassley (R-IA) and Ranking Member Durbin (D-IL) issued a joint inquiry seeking “a lawfully-required substantive rationale behind his recent decision to dismiss Inspectors General (IGs) from 18 offices.”
CMS Issues Statement on IRA Medicare Drug Price Negotiations. The brief statement indicates that the Trump Administration is committed to incorporating stakeholder feedback and increasing transparency in the IRA drug price negotiation program.
NEXT WEEK’S DIAGNOSIS
The Senate Finance Committee has yet to schedule a vote on RFK Jr.’s nomination, but it could occur next week, before moving to the full Senate floor. The Senate will be in session all of next week, and the House will be in session starting on Tuesday. The House Energy & Commerce Committee Health Subcommittee will hold a hearing on combatting existing and emerging illicit drug threats. In addition, the House Budget Committee reportedly plans to mark up a budget resolution to formally begin the reconciliation process, although it has not yet been formally announced.
Illinois Ruling on Civil Liability for Employers Confirms Risks to Companies
Since their inception, the Illinois Workers’ Compensation Act (820 ILCS 305/1 et seq.) and Workers’ Occupational Diseases Acts (820 ILCS 310/1 et seq.) (the “Acts” or “Act”) have offered some certainty and predictability with respect to injuries sustained in the course of employment. The Acts provide a clear framework within which injured employees may pursue claims against their employers and ensures they can receive payment of their medical expenses, lost wages associated with their injuries, and compensation for any permanent disabilities and/or disfigurement sustained, without having to prove fault on behalf of the employer. In exchange, the employer pays for these benefits and enjoys some predictability and limitations on the allowable damages under the Acts, assured that the Acts offer the exclusive remedy against the employer, such that no civil lawsuits, where awards may include pain and suffering and be much higher in value, may be brought against them for the same injury. Generally, an employer would be entitled to the exclusive remedies provided under the Acts, assuming that the injury or disease was accidental, arose during and in the course of employment, and is compensable under the Acts. 820 ILCS 310/5(a), 11 (West 2022); 820 ILCS 305/5(a), 11 (West 2022). So, understandably, when an employer is sued in a civil court for a work-related injury, they may look to the protection of the Acts, to defend the claim and argue for dismissal based on the Acts’ exclusivity provisions.
The Acts contain a repose period of 25 years for injury or disability caused by exposure to asbestos. See 820 ILCS 310/1(f) and 820 ILCS 305/1(f). Thus, prior to 2019, no claims could be brought under the Acts more than 25 years after the date of last exposure to asbestos. In the 2015 landmark case of Folta v. Ferro Engineering, 43 N.E. 108 (Ill. 2015), Mr. Folta claimed his mesothelioma was caused, at least in part, from exposure to asbestos while working for his employer, Ferro Engineering, for whom he last worked in 1970. Mr. Folta was diagnosed with mesothelioma over 40 years later in 2011, and filed a civil lawsuit against Ferro (and others) in state court. Ferro moved to dismiss the civil suit, arguing that Mr. Folta’s exclusive remedy was found in the Workers’ Occupational Disease Act, and could not be brought as a civil action against it. However, Mr. Folta argued that because more than 25 years had passed since his exposure to asbestos at Ferro, his claim would be barred by the 25-year repose period and is not “compensable” under the Act, leaving him without any remedy if not allowed to proceed in state court. The Illinois Supreme Court affirmed that the Act’s 25-year statute of repose acts as a complete bar, and yet still held that the Act provided Mr. Folta’s exclusive remedy against his employer. The Court noted the question of “compensability” turned on whether the type of injury sustained would fall within the scope of the Act, not whether there is an ability or possibility to recover benefits under the Act. Given that Mr. Folta’s injury was compensable, the Act provided his exclusive remedy, and his claim under the Act was time-barred by the 25-year statute of repose.
While acknowledging that the outcome may be a harsh result as to the plaintiff, leaving him with no remedy against his employer for his latent disease, the Court in Folta noted its job is not to find a compromise, but to interpret the statutes as written, suggesting if a different balance should be struck, it would be the duty of the legislature to do so. And that is what happened in 2019, when the Illinois Senate and House introduced two new statutes carving out exceptions to the exclusive remedy provisions for both the Workers’ Compensation and Workers’ Occupational Diseases Acts. Under the new statutes, the Acts no longer prohibit workers with latent diseases or injuries from pursuing their claims after the repose period in civil court. The new statute added to the Workers Occupational Disease Act, 820 ILCS 310/1.1, states:
Permitted civil actions. Subsection (a) of Section 5 and Section 11 do not apply to any injury or death resulting from an occupational disease as to which the recovery of compensation benefits under this Act would be precluded due to the operation of any period of repose or repose provision. As to any such occupational disease, the employee, the employee’s heirs, and any person having standing under the law to bring a civil action at law, including an action for wrongful death and an action pursuant to Section 27-6 of the Probate Act of 1975, has the nonwaivable right to bring such an action against any employer or employers.
When Governor J.B. Pritzker signed the bill into law in May 2019, he issued a statement, indicating the purpose of the revised legislation is to allow workers to “pursue justice,” given that in some cases, the 25-year limit is shorter than the medically recognized latency period of some diseases, such as those caused by asbestos exposure. The impact on employers, however, was not addressed. And employers were left with questions, including critically, whether this new change to the law can apply retroactively, when the statute itself is silent as to the temporal scope. Having relied on the provisions of the Acts in place at the time for basic and critical business decisions, including procurement of appropriate insurance and establishment of wages and benefits, employers cannot now go back in time and change those decisions to offset the increased liability which they now face. Further, following Folta, employers have a vested defense in the Acts’ exclusivity and statute of repose provisions. So, retroactive application of the new statutes could impose new liabilities not previously contemplated and could strip defendant employers of their vested defenses, violating Illinois’ due process guarantee. Anticipating plaintiffs’ firms would file latent disease claims against employers in civil court going forward, and with decades of case law to support prospective application only, it was just a matter of time before the issue reached further judicial scrutiny.
And that brings us to the Illinois Supreme Court’s January 24, 2025 decision in the matter of Martin v. Goodrich, 2025 IL 130509. Mr. Martin worked for BF Goodrich Company (“Goodrich”) from 1966 to 2012, where he was exposed to vinyl chloride monomer and vinyl chloride-containing products until 1974. He was diagnosed with angiosarcoma of the liver, a disease allegedly caused by exposure to those chemicals, in December of 2019, passing away in 2020. His widow filed a civil lawsuit against Goodrich alleging wrongful death as a result of his exposure, invoking the new exception found in section 1.1 of the Act to bring the matter in civil court. In response, Goodrich moved to dismiss the case based on the Act’s exclusivity provisions, arguing that section 1.1 did not apply because Section 1(f) was not a statute of repose. Alternatively, Goodrich argued that using the exception to revive Martin’s claim would infringe its due process rights under the Illinois Constitution. The district court denied Goodrich’s motion, and Goodrich asked the court to certify two questions to the US Court of Appeals for the Seventh Circuit for interlocutory appeal: first, whether section 1(f) is a statue of repose for purposes of section 1.1, and second, if so, whether applying section 1.1 to Martin’s suit would violate Illinois’ constitutional due process. Finding the questions impact numerous cases and Illinois’ policy interests, the Seventh Circuit certified the questions, and added a third question: if section 1(f) falls within the section 1.1 exception, what is the temporal reach? Answering these questions, the Illinois Supreme Court held that (1) the period referenced in section 1(f) is a period of repose, (2) the exception in section 1.1 applies prospectively pursuant to the Statute on Statutes, and therefore, (3) it does not violate Illinois’ due process guarantee.
But what did the Court mean when it held that the exception in section 1.1 applies prospectively? Goodrich argued that prospective application would mean that the exception in section 1.1 does not apply to this case, because the last exposure was in 1976, before the amendment was made, and the defendant had a vested right to assert the statute of repose and exclusivity provisions of the Act, which would prohibit the civil suit. The Court pointed out, however, that the amendment did not revive Mr. Martin’s ability to seek compensation under the Act, such that the employer’s vested statute of repose defense would apply. Rather, the amendment gave him the ability to seek compensation through a civil suit outside of the Act. So, the question becomes only whether the employer has a vested right to the exclusivity defense, such that applying section 1.1 would violate due process. The Court held that the exclusivity provisions of the Act are an affirmative defense, such that the employer’s potential for liability exists unless and until the defense is established. And a party’s right to a defense does not accrue until the plaintiff’s right to a cause of action accrues. Applying the new statute prospectively, the Court found the cause of action could be filed in civil court, because the relevant time period for considering applicability of the affirmative defense of the Act’s exclusivity is when the employee discovers his injury. Since Mr. Martin’s cause of action accrued when he was diagnosed in December of 2019, which was after section 1.1 was added, Goodrich did not have a vested exclusivity defense, so Mr. Martin’s claim may proceed without violating due process.
While the court did not apply the new statute retroactively, the effect is essentially the same from the employers’ perspective, as latent injury claims will be allowed to proceed in civil court, as long as the injuries were discovered after expiration of the repose period and after the new statutes went into effect in May of 2019. This was not the outcome defendant employers were hoping to receive, but it is what the Court decided. So, unless or until the legislative tides change again, Illinois employers should be aware of the potential for civil suits for employees’ latent injury or disease claims.