Health Law & Managed Care – Page 17

2026 Inflation-Adjusted Health and Welfare Plan Limits

On May 1, 2025, the IRS released Rev Proc 2025-19 which updated for 2026 the limits applicable to certain health and welfare plans, including the following key limits:

2026 Limit
2025 Limit

Health FSA – Maximum contributions

$4,400 (self-only)
$8,750 (family)

$4,300 (self-only)
$8,550 (family)

HDHP – Minimum Deductible

$1,700 (self-only)
$3,400 (family)

$1,650 (self-only)
$3,300 (family)

HDHP – Maximum Out of Pocket

$8,500 (self-only)
$17,000 (family)

$8,300 (self-only)
$16,600 (family)

Maximum employer excepted benefit HRA contribution
$2,200
$2,150

These 2026 limits are effective for HSAs for calendar year 2026, and for excepted benefit HRAs for plan years beginning in 2026.

Similar Language But a Different Outcome: Medicare DSH Payments after Advocate Christ Medical Center v. Kennedy

Hospitals that serve a high number of indigent patients are faced with a dilemma: they must provide high-quality care but fixed Medicare reimbursement rates often do not take into account the higher operating costs that they incur when treating certain low-income patients.
That problem was made more difficult when the Supreme Court ruled 7-2 in favor of the Secretary of HHS in an appeal brought by over 200 hospitals that depend on disproportionate share hospital (“DSH”) payments. Advocate Christ Medical Center v. Kennedy, No. 23-715 (Apr. 29, 2025).
Congress recognized that hospitals that serve a high number of low-income or indigent patients may incur additional costs that are not captured in the regular Medicare inpatient prospective payments. Congress provided a remedy for these hospitals in the form of a complex formula that sums two fractions. The first fraction, known as the Medicare fraction, is the total of all of the hospital’s inpatient days attributable to “patients who (for such days) were entitled to benefits under part A of [Medicare] and were entitled to supplementary security income [SSI] benefits[under Title XVI of the Social Security Act]” and the denominator is the number of all inpatient days attributable to all Medicare beneficiaries. The DSH payment is made as a supplement to the Medicare DRG bundled payment for each discharge. The larger the numerator of the fraction, the larger the DSH payment.
These two elements use similar language, but what it means to be entitled to Medicare Part A or SSI for purposes of the DSH statute has generated considerable litigation. In Becerra v. Empire Health Foundation, 597 U.S. 424 (2022), the Supreme Court ruled that the phrase “entitled to [Medicare Part A] benefits” meant all Medicare Part A beneficiaries who were inpatients at a hospital, whether or not the Medicare program paid the hospital for that inpatient discharge. The Court did not address the second element in the numerator at that time.
The second element of the numerator did reach the Supreme Court in Advocate Christ. The Court found that the entitlement language did not have a single meaning; it agreed with the Secretary of HHS and lower courts that the Medicare Part A and SSI programs were distinct. Although Medicare Part A is an insurance program where eligibility is continuous once an individual is over age 65, blind, or disabled, SSI is a supplemental income program where an individual is eligible for a cash payment only during those months when their income and resources fall below a threshold. As a result, the Court ruled that SSI days that can be included in the numerator of the Medicare fraction are limited to those days during a month in which an individual received a SSI payment. The Court rejected the hospitals’ arguments that all inpatient days attributable to individuals entitled to SSI benefits should be counted, just like all of the Medicare Part A beneficiary days.
The Advocate Christ decision does not come as welcome news to hospitals that depend on DSH funds to close the gap between the cost of caring for patients without regard to their resources and the revenue that they receive from third parties. In many cases, it will result in a smaller numerator in the Medicare fraction and therefore smaller DSH payments. For some hospitals, the DSH payments are needed to avoid a negative operating margin based on the mix of payors.
The Court’s decision was rooted in a close textual reading of the DSH statute. Nevertheless, the decision highlights a tension between the text as interpreted by the Court and Congress’s intent to compensate hospitals that serve a high number of low-income patients. This was noted by the majority, but they concluded that they do not have the authority to amend the DSH statute. The remedy will lie with Congress.

Medicare Drug Price Negotiation Program: The Inflation Reduction Act “Pill Penalty” and Other IRA Reforms on the Horizon for 2026

When Congress adopted the Inflation Reduction Act (IRA) in 2022, creating the Medicare Drug Price Negotiation Program (MDPNP), the bill did not receive support from any Republican senators.
In 2025, the question remains what Congress and the current administration will do with the MDPNP, and we are starting to find out.
On April 15, 2025, President Trump issued Executive Order 14273, entitled “Lowering Drug Prices by Once Again Putting Americans First.” This comes on the heels of the release of the Final CY 2026 Part D Redesign Program Instructions (“Program Instructions”) by the Centers for Medicare and Medicaid Services (CMS) on April 7—concurrent with the CY 2026 Announcement of Medicare Advantage Capitation Rates and Part C and D Payment Policies (see our recent blog post on the latter.)
Executive Order 14273 includes a number of provisions addressing the IRA, including:

Within 60 days, the Secretary of the Department of Health and Human Services (HHS) shall propose and seek guidance on the MDPNP for 2028 and manufacturer effectuation of the Maximum Fair Price (MFP) under the program in 2026, 2027, and 2028.
HHS is also directed to work with Congress (no specified time frame) to align the treatment of small molecule prescription drugs, which are subject to an earlier negotiation time period, with that of biological products. This will end the so-called “pill penalty”, “ending the distortion that undermines relative investment in small molecule prescription drugs,” the executive order states.
Within one year, the Secretary is to develop a rulemaking plan and select for testing a payment model to obtain better value for high-cost prescription drugs and biologicals covered by Medicare, including those not subject to the MDPNP.

In an April 15 Fact Sheet, the White House says that the order “delivers lower drug prices for Medicare and the seniors who rely on it by…[improving] the Medicare Drug Pricing Negotiation Program in order to eclipse the 22 [percent] in savings achieved in the program’s first year.”
We discuss Executive Order 14273 and the Part D Redesign Program Instructions as they relate to the IRA, below.
Room for Improvement?
As a result of the IRA, Medicare negotiates directly with drug companies to improve access to Medicare Part B (medical benefit) and Part D (prescription drug benefit) covered drugs. Prices negotiated for the initial ten drugs are slated to go into effect on January 1, 2026. CMS announced in March that it has signed agreements with drug manufacturers for the next 15 drugs in the MDPNP, effective January 1, 2027.
While keeping the program in place, Executive Order 14273 requires that the guidance developed by the Secretary 1) improve MDPNP transparency; 2) prioritize the selection of prescription drugs with high costs to the Medicare program; and 3) minimize any negative impacts of the MFP on pharmaceutical innovation within the United States. The overarching policy is to optimize federal health care programs, intellectual property protections, and safety regulations “to provide access to prescription drugs at lower costs to American patients and taxpayers.”
The directive for the Secretary to work with Congress to end the pill penalty comes from a differential in the IRA’s price-fixing model: Small molecule drugs are eligible for selection to the MDPNP seven years after Food and Drug Administration (FDA) approval, and the price control goes into effect at year nine. Biologics, meanwhile, are eligible for selection 11 years after FDA approval, and the price control goes into effect at year 13.
Congressman Gregory F. Murphy, M.D. (R-NC) has already introduced bipartisan, bicameral legislation to address the problem. H.R. 1492, the “Ensuring Pathways to Innovative Cures (EPIC) Act” simply equalizes the negotiation period in the Social Security Act so that both small molecule drugs and biologics are eligible for selection after 11 years.
“According to a University of Chicago policy brief, due to the 9-13 disparity, 188 fewer small molecule medicines will come to market,” Murphy’s press release states, adding that small molecule funding has dropped by 70 percent since the IRA was introduced in 2021.
Even if the directive for the Secretary and Congress to work together to modify the MDPNP is a simple task, this work will be “coupled with other reforms to prevent any increase in overall costs to Medicare and its beneficiaries,” according to E.O. 14273.
Part D Redesign Program Instructions
The Final CY 2026 Part D Redesign Program Instructions provide guidance regarding 1) the implementation of IRA changes to the defined standard Medicare Part D drug benefit and 2) the successor regulation exception to the IRA that permits formulary substitutions for selected drugs, which relates to both the Part D program and the MDPNP.
The former includes, for 2026, an increased annual out-of-pocket (OOP) threshold of $2100 (up from $2000 in 2025); changes to the liability of enrollees, sponsors, manufacturers, and CMS; and the establishment of the selected drug subsidy program, which lowers Part D sponsor liability on the negotiated price of the selected drug. The IRA allows Part D sponsors to remove a selected drug from their formularies if removal would be permitted under § 423.120(b)(5)(iv) or any “successor regulation”; the Program Instructions identify updated provisions at §423.120(e)(2)(i), (f)(2), (3), and (4) as the “successor regulation.”
CMS has highlighted other key policies of the Program Instructions—including Prescription Drug Plan (PDP) meaningful difference thresholds (10 to 15 percent); a simplified creditable coverage determination methodology, and more—in a summary of key changes preceding the instructions and in a Fact Sheet of April 7, 2025.
Takeaways
The current administration’s defense of the MDPNP in a brief filed in February indicated a likelihood that President Trump was going to maintain the MDPNP while aiming to achieve even higher savings, to outshine the Biden administration. This has proven to be largely true. Interested parties should remain on the lookout for Secretary Robert F. Kennedy’s rulemaking seeking public comment on the MDPNP by June 15 and be prepared to comment if impacted.

McDermott+ Check-Up: May 2, 2025

THIS WEEK’S DOSE

House Committees Begin Reconciliation Markups. Non-health-related committees moved forward this week, with the House Energy and Commerce Committee tentatively scheduled to mark up its legislative text in the coming weeks.
House Energy and Commerce Committee Advances Health Bills. The bills include the SUPPORT Act reauthorization and other public health legislation.
Senate Appropriations Committee Examines Biomedical Research. Senators voiced broad bipartisan support for federal research funding.
House Oversight and Government Reform Subcommittee on Cybersecurity, IT, and Government Innovation Holds Hearing on IT Modernization. The hearing examined how information technology (IT) modernization could impact the efficiency and functionality of the federal government.
Administration Releases FY 2026 “Skinny” President’s Budget. The fiscal year (FY) 2026 budget request is abbreviated, or “skinny,” which is common in a new administration and will be followed by a full budget request at a later date.
Administration Publishes Report on Gender-Affirming Care. The report outlines action taken to comply with an executive order and was followed by a published review of evidence for the treatment of gender dysphoria and the associated ethical considerations.
SCOTUS Rules Against DSH Hospitals. The Supreme Court of the United States (SCOTUS) sided with the administration in a challenge to how Medicare disproportionate share hospital (DSH) payments are calculated.

CONGRESS

House Committees Begin Reconciliation Markups. Multiple committees in the House – although none in the healthcare space – advanced their “committee prints” this week, which include the provisions within their jurisdiction for the House’s budget reconciliation package. This process will continue into the week of May 12, when the House Energy and Commerce Committee is tentatively scheduled to hold its markup to finalize the $880 billion in savings across Medicaid, the Children’s Health Insurance Program, and Medicare. The Ways and Means Committee is also signaling that it may be ready to move a tax package forward the same week.
Several Republicans representing competitive seats have been discussing with committee and House Republican leadership their concerns about policies that they perceive as cutting Medicaid. Rep. Bacon (R-NE) has publicly stated that he will not support more than $500 billion in Medicaid savings. The components most widely expected to be included in the Energy and Commerce Medicaid package include work requirements, more stringent and frequent eligibility verifications, and repeal of Biden-era Medicaid eligibility regulations. In recent days, focus also has been on Medicaid provider tax changes and potentially converting the Medicaid expansion population to a per capita cap. The challenge facing Energy and Commerce is the need to get to $880 billion in savings across its jurisdiction. While the committee is expected to get some savings out of energy policy changes and spectrum auction, Medicaid is its largest target. Meanwhile, Energy and Commerce Democrats released a report showing how many individuals would lose coverage if national work requirements were implemented.
Once all House committees have passed their packages, the House Budget Committee will combine the legislative texts and vote on the entire package, followed by a vote on the House floor. (Note that the Budget Committee’s package does not need to directly resemble the packages passed out of each committee.) Then, it will be the Senate’s turn to act. Speaker Johnson’s (R-LA) goal is for the House to pass the package before Memorial Day, and to have it signed into law by July 4, 2025, although that timeline is not guaranteed. The biggest factor that would enforce a real deadline is if the US Department of the Treasury were to announce an earlier date than anticipated for the United States hitting the debt ceiling. That pronouncement was expected this week but appears to have slipped. There is no indication that the date will be earlier than late summer or early fall. This is directly relevant to reconciliation because Republicans hope to address the debt limit increase as part of that process.
House Energy and Commerce Committee Advances Health Bills. This week’s markup considered six pieces of healthcare legislation largely related to public health. All passed with broad bipartisan support, although two had some Democratic pushback:

H.R. 2483, the SUPPORT Reauthorization Act of 2025, would reauthorize certain programs that provide for opioid use disorder prevention, treatment, and recovery.

The bill passed 36 – 13. All Republicans voted aye. Democrats were almost evenly split, with opponents citing concerns about workforce cuts at the Substance Abuse and Mental Health Services Administration, the agency responsible for administering the legislation’s programs.

H.R. 2484, the Seniors’ Access to Critical Medications Act of 2025, would establish an exception to the physician self-referral prohibition for certain outpatient prescription drugs furnished by a physician practice under the Medicare program.

The bill passed 38 – 7. All Republicans and most Democrats voted aye. The seven Democrats who voted against the bill stated their concerns that the policy would increase healthcare consolidation.

For more information about the bills, view the markup memo.
Senate Appropriations Committee Examines Biomedical Research. During the hearing, members from both parties voiced their support for biomedical research. Democrats expressed concern over the implications of federal cuts and mass firings on future research, and Republicans acknowledged the importance of federal funding for lifesaving research.
House Oversight and Government Reform Subcommittee on Cybersecurity, IT, and Government Innovation Holds Hearing on IT Modernization. During the hearing, Democrats emphasized the essential role of a qualified modern IT workforce for the security, efficiency, and effectiveness of federal systems, and highlighted the negative impacts of replacing federal workers with artificial intelligence. Republicans focused on identifying the biggest barriers to change, such as procurement requirements, hiring processes, budget limitations, and bureaucratic hurdles. They stressed the importance of modernizing federal IT to improve overall government efficiency.
ADMINISTRATION

Administration Releases FY 2026 “Skinny” President’s Budget. The abbreviated budget request only includes discretionary items and, ultimately, is a document that sets forth the administration’s policy priorities. While the budget request is expected to provide guidance to Congress as it begins the FY 2026 appropriations process, the priorities and funding levels included in the document will not necessarily be the final levels that are approved by Congress. The budget requests a 22% cut to domestic spending overall, including large cuts to the US Department of Health and Human Services (HHS). Health-related highlights include:

$93.8 billion for HHS, a 26.2% decrease from the FY 2025 level of $127 billion. This includes cuts to various agencies, such as:

$3.6 billion from the Centers for Disease Control and Prevention
$18 billion from the National Institutes of Health
$674 million from the Centers for Medicare & Medicaid Services (CMS)

$500 million to support the Making American Healthy Again Commission.
The full elimination of several programs, including the Administration for Strategic Preparedness and Response Hospital Preparedness Program and the Community Services Block Grant.

The administration also released other facts sheets and supporting documents here.
Administration Publishes Report on Gender-Affirming Care. The report provides updates on actions taken by the administration to implement executive order (EO) 14187, “Protecting Children from Chemical and Surgical Mutilation.” Cited actions include:

HHS:

Began work on the required literature review of best practices to treat children with gender dysphoria. The report was also published this week.
Began reviewing data tools to ensure that federal data collection aligns with the administration’s definition of medically useful information.
Eliminated 215 grants to medical institutions that provide gender-affirming care.

CMS issued a quality and safety special alert memo entitled “Protecting Children from Chemical and Surgical Mutilation.”
The US Department of Defense and Office of Personnel Management have taken steps to exclude coverage of gender-affirming care for minors.
The US Department of Justice:

Prepared guidance to enforce laws outlawing female genital mutilation.
Initiated investigations of multiple entities that allegedly misled the public about long-term side effects of gender-affirming care.
Drafted and submitted for review legislation creating a private right of action for children who have received gender-affirming care and their parents.
Prepared to establish a Parental Rights Task Force.

COURTS

SCOTUS Rules Against DSH Hospitals. The 7 – 2 ruling sided with HHS in a case about how DSH payments are calculated. CMS only counts Medicare enrollees who received supplemental security income (SSI) cash payments during the same month they received hospital care as low-income patients for the purposes of DSH payment. The plaintiff hospitals argued that CMS should include all patients in the SSI system at the time of their hospitalization. SCOTUS found that CMS’s formula was adequate, meaning that DSH hospitals will receive lower payments than they believe they are entitled to.
QUICK HITS

Ways and Means Republicans Outline Priorities for CMS Innovation Center. In a letter led by House Ways and Means Committee Chair Smith (R-MO) and Health Subcommittee Chair Buchanan (R-FL), 25 Republican committee members asked CMS Administrator Oz and CMS Innovation Center Director Sutton to focus on payment models that save money and improve transparency, ensure solicitation of stakeholder feedback, and renew attention on improving rural healthcare.
CBO Explains Its Role in Budget Reconciliation Process. In a blog post and a letter to Reps. Pfluger (R-TX) and Westerman (R-AR), the Congressional Budget Office (CBO) outlined how it develops cost estimates during reconciliation and how CBO and the Joint Committee on Taxation collaborate during that process.
ASTP/ONC Takes Deregulation Actions. The Assistant Secretary for Technology Policy/Office of the National Coordinator for Health IT (ASTP/ONC) clarified that it is using its nonenforcement discretion in relation to insights condition and maintenance of certification reporting requirements and USCDI v3 data elements related to sexual orientation and gender identity.
HHS Announces Universal Vaccine Technology. Generation Gold Standard was developed by the National Institute of Allergy and Infectious Diseases and aims to protect against multiple strains of the same virus, including influenza and coronaviruses.
GAO Releases Reports on Prescription Drugs. In a statutorily required report, the US Government Accountability Office (GAO) described CMS’s implementation of the Inflation Reduction Act Medicare drug negotiation program and inflation rebate program. An additional report included findings on the market presence of nonprofit drug companies.
GAO Releases Additional Reports on Human Genomic Data, Nursing Homes. GAO urged HHS to systemically track the use of foreign testing labs and strengthen oversight of security measures, and recommended that the US Department of Veterans Affairs identify additional enforcement actions to ensure that nursing homes comply with quality standards.
Senators Introduce Resolution to Reinstate Richardson Waiver. Sens. Wyden (D-OR), Markey (D-MA), and King (I-ME) led 16 senators in introducing a resolution to reinstate the Richardson Waiver, which directed government agencies to use the more formal rulemaking process for rules regarding “public property, loans, grants, benefits, or contracts.” In February, HHS issued a policy statement rescinding the waiver. Read the senators’ press release here.

NEXT WEEK’S DIAGNOSIS

Both chambers will be in session next week, with healthcare activity expected at the committee level, including:

A House Oversight and Government Reform Committee hearing on the welfare state.
Senate Finance Committee and Senate Health, Education, Labor, and Pensions (HELP) Committee nomination hearings for James O’Neill to be deputy HHS secretary (both committees), Gary Andres to be an assistant HHS secretary (Finance Committee), and Janette Nesheiwat to serve as Medical Director in the Regular Corps of the Public Health Service and Surgeon General of the Public Health Service (HELP Committee).

The House Energy and Commerce Committee will tentatively hold a markup of their reconciliation package the week of May 12.

Constitutional Reform Initiative Regarding Pharmaceutical Sovereignty and Safety

On April 22, 2025, a proposal was submitted to the Deputies Chamber proposing to reform articles 4, 25 and 28 of the Mexican Constitution, regarding pharmaceutical sovereignty and security.
The proposal appoints the modification of the legal framework at the constitutional level so that the State is required to guarantee pharmaceutical sovereignty and security, which in turn is intended to allow the subsequent adaptation of secondary laws, programs and budgets with a long-term vision.
This reform mainly states the following:

The State will guarantee access to biological medicines, vaccines and medical devices by promoting the national production, storage and distribution of essential health products.
Pharmaceutical sovereignty and security will be fundamental principles to ensure the timely supply of such products, especially those of public interest and high impact on health.
The State will promote the development and strengthening of the national pharmaceutical industry, through public policies that encourage research, production and distribution of medicines recognized by law and that are strategic for the population, guaranteeing the reduction of external dependence in the acquisition of critical products for health.
It defines as functions of strategic areas the production, storage and distribution of medicines, biologicals, vaccines and medical devices essential for public health and therefore exempts them from being considered as monopolies, with the objective of guaranteeing universal access to indispensable treatments.

If approved, this initiative would undoubtedly have an impact on Mexican health legislation and, of course, would imply the modification of processes for the evaluation and approval of health products, as well as the authorization of activities in establishments focused on the production, manufacture, storage and distribution of health products.
In other words, the effects of this proposal translate into drastic changes in the system of production of health products that are known today, so that if it is not analyzed harmoniously with the applicable legislation and the international treaties, in cooperation with the institutions and entities involved in the corresponding processes, as well as the subjects involved in the health system, it could complicate the due access to health products to the detriment of the patients.

OCR Reaches Settlement with Health Care Network Health Over HIPAA Violations Stemming from Phishing Attack

On April 23, 2025, the Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced a HIPAA enforcement action against PIH Health, Inc. (“PIH”), a California-based health care network, following a phishing attack that exposed patients’ electronic protected health information (“ePHI”). The settlement highlights OCR’s continued focus on ensuring that covered entities implement robust security programs capable of identifying and mitigating threats to ePHI.
The investigation stemmed from a breach report submitted by PIH in January 2020, which disclosed that in June 2019, a phishing attack had compromised the email accounts of 45 employees. The attack resulted in the unauthorized disclosure of unsecured ePHI belonging to 189,763 individuals, including names, addresses, dates of birth, driver’s license numbers, Social Security numbers, medical diagnoses, lab results, medications, treatment and claims information, and financial data.
OCR’s investigation uncovered multiple potential violations of the HIPAA Privacy, Security and Breach Notification Rules, including PIH’s failure to (1) use or disclose PHI as required by the Privacy Rule, (2) conduct an accurate and thorough risk analysis of security vulnerabilities affecting ePHI, and (3) provide timely breach notification to affected individuals, HHS, and the media.
To resolve the matter, PIH agreed to a $600,000 monetary settlement and to implement a two-year corrective action plan. Under the corrective action plan, PIH is required to conduct a comprehensive HIPAA risk analysis, develop and implement a risk management plan to address identified vulnerabilities, revise and maintain HIPAA-compliant policies and procedures, and provide workforce training on HIPAA requirements for safeguarding PHI.
This enforcement action underscores OCR’s expectation that covered entities proactively assess and strengthen their HIPAA compliance programs to address evolving cybersecurity threats such as phishing attacks. It also follows two recent additional settlements announced by OCR involving failures to implement basic safeguards under the HIPAA Security Rule, reinforcing the agency’s continued emphasis on holding regulated entities accountable for cybersecurity-related compliance lapses.

Video: Federal Court Strikes Down FDA Rule on LDTs – Thought Leaders in Health Law

From our Thought Leaders in Health Law video series: On March 31, 2025, the U.S. District Court for the Eastern District of Texas ruled that the Food and Drug Administration (FDA) lacks the statutory authority to regulate laboratory-developed tests (LDTs).
The court’s judgment vacates the agency’s controversial final rule of May 6, 2024 (the “Final Rule”), regulating LDTs as medical devices, just weeks before the Final Rule’s initial implementation deadline and remands the issue back to the FDA for further consideration.
Key Takeaways

Implementation of the Final Rule would have imposed major burdens on many laboratories that will now no longer apply.
Manufacturers and distributors of laboratory reagents and equipment may be subject to FDA enforcement.
The FDA and the Centers for Medicare & Medicaid Services have collaborated to align their roles in the regulation of LDTs, as highlighted in their joint statement.
Despite recent developments, questions persist regarding whether updates or revisions to the current regulatory framework for LDTs will be issued.
Any regulatory updates could have significant implications for stakeholders in the diagnostics and health care sectors, emphasizing the need for continued vigilance and compliance. Epstein Becker Green is dedicated to keeping clients informed and equipped to navigate potential changes in the regulatory landscape for LDTs.

For more information on the Final Rule, read “The LDT Final Rule Bites the Dust: Examining the Repercussions of the Federal Court’s Vacatur and What the Future May Hold.”

OSHA Extends Heat Hazard Program: Employers Should Act Before Summer Sets In

Takeaways

OSHA recently extended its National Emphasis Program on outdoor and indoor workplace heat-related hazards to 04.08.26.
Employers should take this opportunity to review and update their workplace safety and heat illness prevention programs.
Taking proactive steps can help employers reduce risks, demonstrate good faith compliance and prepare for potential OSHA inspections.

Federal Court Strikes Down FDA Rule on LDTs

On March 31, 2025, the U.S. District Court for the Eastern District of Texas ruled that the Food and Drug Administration (FDA) lacks the statutory authority to regulate laboratory-developed tests (LDTs).
The court’s judgment vacates the agency’s controversial final rule of May 6, 2024 (the “Final Rule”), regulating LDTs as medical devices, just weeks before the Final Rule’s initial implementation deadline and remands the issue back to the FDA for further consideration.
Key Takeaways

For more information on the Final Rule, read “The LDT Final Rule Bites the Dust: Examining the Repercussions of the Federal Court’s Vacatur and What the Future May Hold.”

PIH Health Settles HIPAA Violations for $600,000

PIH Health, a health care entity located in California, suffered a data breach in June 2019 when 45 employee email accounts were compromised in a targeted phishing campaign. The accounts contained the protected health information (PHI) of 189,763 individuals, including their names, social security numbers, driver’s license numbers, diagnoses, lab tests, medications, treatment, claims, and financial information.
PIH notified the individuals and the Office for Civil Rights (OCR) of the incident in January 2020. OCR launched an investigation and found alleged violations of HIPPA’s privacy, security and breach notification rules.
In addition to the $600,000 settlement payment, PIH entered into a resolution agreement with OCR that required it to:

Conduct an accurate and thorough risk analysis of the potential risks and vulnerabilities to the confidentiality, integrity, and availability of its ePHI.
Develop and implement a risk management plan to address and mitigate security risks and vulnerabilities identified in its risk analysis.
Develop, maintain, and revise, as necessary, its written policies and procedures to comply with HIPAA rules.
Train its workforce members who have access to PHI on HIPAA policies and procedures.

These requirements are essential to a HIPAA compliance program, and this settlement is a reminder for covered entities to update and maintain security risk assessments, analyses, and risk management plans to address risks and vulnerabilities on an ongoing basis.

Senior NIH Researcher and Leading Expert on Ultra-processed Foods Accuses Administration of Interference and Resigns

Kevin Hall, Ph.D, a senior NIH researcher involved in food and metabolism research, including the effects of ultra-processed foods (UPF), resigned earlier this month, alleging that he had experienced censorship regarding his recent research which he said “did not appear to fully support preconceived narratives of my agency’s leadership about ultra-processed food addiction.” He stated that while he had hoped to expand his research on the connection between food and chronic disease, recent events had made him “question whether NIH continues to be a place where I can freely conduct unbiased science.”
In 2019 Dr. Hall had authored a paper which linked consumption of UPF to greater energy consumption and weight gain. However, a paper he recently published suggested that UPF are not addictive, at least not in the way that many drugs are addictive (the study found that dopamine response to a UPF milkshake was not significant, highly variable, and not related to adiposity).
He also alleged to CBS News that the administration had prevented him from discussing his research, had edited written answers to the media, and had threatened to remove him as an author to the paper if he did not comply with their demands. The administration has denied these accusations.

Attorney General Issues Guidance to U.S. Department of Justice Regarding Transgender Healthcare for Children

On April 22, 2025, U.S. Attorney General Pam Bondi issued a memorandum entitled “Preventing the Mutilation of American Children” (“the AG Memorandum”).
Directed to all Justice Department employees, the AG Memorandum sets forth steps that the Department will take to counteract gender affirming care to treat gender dysphoria. This is the most recent step in a series of actions that the Administration has taken targeting care for transgender children and represents a significant escalation in the Administration’s enforcement efforts.
Background
On January 20, 2025, as one of his first official acts, the president signed Executive Order 14168 entitled “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government” (the “Gender Ideology EO”). Eight days later, the president issued Executive Order 14187, entitled “Protecting Children from Chemical and Surgical Mutilation” (the “Surgical Mutilation EO”) Broadly, the two Executive Orders (EOs) target laws and practices related to the role of transgender individuals in American society. The Surgical Mutilation EO specially addresses medication and surgical treatment for gender dysphoria and states, “[I]t is the policy of the United States that it will not fund, sponsor, promote, assist, or support the so-called ‘transition’ of a child from one sex to another, and it will rigorously enforce all laws that prohibit or limit these destructive and life-altering procedures.”
Notably, the Surgical Mutilation EO defines “child” as “an individual…under 19 years of age.” This is unusual because in all but two states, eighteen years is the age of adulthood.
Section 8 of the Surgical Mutilation EO includes a set of directives to the Department of Justice that are carried forward in the AG Memorandum. In addition, both Executive Orders include directives to all federal agencies.
Section 8(a) of the Surgical Mutilation EO calls on the attorney general to review enforcement of 18 U.S. Code § 116, an existing federal criminal law intended to prevent “female genital mutilation” on someone who has not attained the age of 18 years, defined in part as “any procedure performed for non-medical reasons that involves partial or total removal of, or other injury to, the external female genitalia.” When enacted, this statute was intended to prevent certain cultural practices and specifically exempts surgeries “necessary to the health of the person;” however, the administration is utilizing this law to bolster its efforts to prohibit or limit gender affirming care.
Preliminary Injunctions
Both the Gender Ideology EO and Surgical Mutilation EO were the subject of almost immediate litigation in federal district courts in Maryland and the state of Washington. Following entry of temporary restraining orders, both courts issued preliminary injunctions after a round of briefing. The District of Maryland court issued a nationwide injunction. The District of Washington’s preliminary injunction was limited to the states of Washington, Oregon, California, and Colorado.
Both courts enjoined various provisions of the two Executive Orders, but did not enjoin them in their entirety. And both courts then stayed the cases when the government filed notices of appeal to the Fourth Circuit Court of Appeals and Ninth Circuit Court of Appeals. The stay orders left the injunctions in place during the appeals, which are expected to take months, and allowed for further trial court proceedings if the injunctions were violated.
There were two notable developments relevant to this article in the Washington federal court case before the stay was entered. First, the government persuaded the court not to include Section 8(a) of Surgical Mutilation EO within the scope of its injunction, arguing that there was no evidence of a credible threat of prosecution under 18 U.S. Code § 116. However, the stay order specifically held that it would not apply if there was a credible threat.
Second, a contempt motion was filed alleging that the government was moving to implement provisions of the executive orders under the guise of following new policies: grant funding had been cut off for a research project in Washington state. The court denied the contempt motion but allowed expedited discovery to take place—after which the grant funding was restored. In its stay order, the court noted that the government had “seriously misrepresented” facts in its briefing and had adopted a “manifestly unreasonable” interpretation of the preliminary injunction. The court expressed concern that the government might “attempt to skirt” the injunction.
The AG’s Memorandum
Citing the Surgical Mutilation EO, the AG’s Memorandum has five directives:

Enforcement of 18 U.S. Code § 116. The AG Memorandum puts “medical practitioners, hospitals, and clinics on notice” that female genital mutilation is a felony, instructs the FBI to investigate potential criminal acts, and directs U.S. Attorneys to prosecute such acts.
Investigation of Food, Drug, and Cosmetic Act (“FDCA”) and False Claims Act (“FCA”) violations. The Consumer Protection Branch of DOJ is tasked with investigating violations of the FDCA by manufacturers and distributors for alleged misbranding of “puberty blockers, sex hormones, or any other drug” used for a child’s “gender transition.” The Civil Division’s Fraud Section is instructed to conduct FCA investigations of “false claims submitted to health care programs for any non-covered services related to radical gender experimentation,” and cites an example of a prescription for puberty blockers for gender dysphoria being billed as prescribed for early onset puberty. Further, qui tam whistleblowers are notified that DOJ is “eager to work with” them.
“Ending Reliance on Junk Science.” World Professional Association for Transgender Health (WPATH) Guidelines are eradicated from use by the DOJ at multiple levels.
Federal and State Coalition. The AG Memorandum offers a partnership with states to “identify leads, share intelligence, and build cases against hospitals and practitioners violating federal or state laws banning female genital mutilation and other, related practices.”
Promoting new legislation. The AG Memorandum describes an initiative to draft legislation creating a federal private right of action for children and parents of children who have received gender affirming care and later wish to impose liability on providers of such care.

Takeaways
Litigation over the AG Memorandum is inevitable and may start quickly. On Friday, April 25, the government filed a notice with the federal court in Washington advising it of the AG Memorandum, apparently having learned from being chastised in other cases for appearing to clandestinely attempt to circumvent court orders. The government can no longer take the position that there is no evidence of a “credible threat of prosecution under 18 U.S. Code § 116” now that the attorney general herself has given instructions to utilize it against providers of certain gender affirming care. We would expect to see an effort by plaintiffs to expand the preliminary injunction to include Section 8(a) of Surgical Mutilation EO.
There may be other ways in which the AG Memorandum could be viewed as violating the two preliminary injunctions, resulting in additional proceedings in the two courts. And, to the extent the AG Memorandum introduces new initiatives, separate legal action against those provisions may be filed.
The AG Memorandum brings increased risk to health care providers who provide certain types of gender affirming care. Clinicians and hospitals should consult with their legal, compliance, quality, and risk departments about the implications of the new DOJ policies and initiatives on provider services. We would expect to see access to this type of care become more limited.
In addition, the threat of FCA prosecution should encourage close review and communications of billing practices surrounding gender affirming care. It is unlikely that a court will, or even could, pre-emptively enjoin all prosecution by the DOJ at an individual case level, so providers should be especially vigilant that their billing practices are appropriate and defensible.
Finally, providers are challenged to manage the conflict between the AG Memorandum (and related actions by HHS and other federal agencies) and laws in some states intended to protect access to gender affirming care and prohibit discrimination based on gender identity. This federal-state conflict is the mirror image of the issue faced in restrictive states during the prior administration, when federal law was positioned to protect or even mandate the gender affirming care that laws in those states specifically restricted or prevented. The courts did not definitively resolve those conflicts over the prior four years, and some of the practical resolution was that patients travelled to states without those restrictions. Actions taken by the Department of Justice in response to the AG Memorandum may result in the more urgent need for courts to act to resolve this conflict between state and federal law.