Congress Extends Certain Telehealth Flexibilities Through March 31, 2025
Overview
KEY UPDATE
At the close of 2024, US Congress passed a short-term extension of Medicare telehealth flexibilities as part of the American Relief Act, 2025 (ARA). The Medicare telehealth waivers, originally enacted as part of the COVID-19 public health emergency (PHE) and subsequently extended through legislation, were set to end on December 31, 2024. These flexibilities, along with the Acute Hospital Care at Home waiver program, are now set to expire March 31, 2025. The ARA failed to extend other waivers, such as the temporary safe harbor for high-deductible health plans (HDHPs) to provide first-dollar coverage of telehealth without interfering with health savings account (HSA) eligibility. While the short-term extension provides continued access to telehealth for Medicare patients, stakeholders should continue to engage with Congress for a more permanent solution.
WHY IT MATTERS
The ARA extension is limited to certain Medicare policies and is only effective through March 31, 2025. Some bipartisan policies, such as the extension of the telehealth HDHP safe harbor, were not included in the ARA. Additionally, the flexibilities related to coverage of cardiac and pulmonary rehabilitation services provided via telehealth were not extended.
The extension indicates bipartisan support for continuing coverage for telehealth services, but the short timeline warrants continued stakeholder engagement for the extension and eventual permanence of the Medicare telehealth flexibilities and reinstatement of the HDHP safe harbor. As the new administration takes office, it is unclear where telehealth will fall on the list of priorities.
In Depth
Historically, Medicare has provided coverage for telehealth services in instances where patients would otherwise be geographically distant from approved providers (e.g., physicians, nurse practitioners, and clinical psychologists). Section 1834(m) of the Social Security Act provides that telehealth services are covered if the beneficiary is seen:
At an approved “originating site” (e.g., physician office, hospital, or skilled nursing facility) that is located within a rural health professional shortage area that is either outside of a metropolitan statistical area (MSA), in a rural census tract, or in a county outside of an MSA
By an approved provider
For a defined set of services
Using certain telecommunications technologies.
Many of these Medicare restrictions regarding coverage and payment for telehealth services were waived via authority delegated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Congress subsequently extended the waivers in other pieces of legislation, including the Consolidated Appropriations Act (CAA) 2022 and CAA 2023, with the flexibilities most recently set to expire on December 31, 2024.
The ARA extended the following Medicare flexibilities through March 31, 2025:
Geographic restrictions and originating sites. Patients’ homes will continue to serve as eligible originating sites for all telehealth services (ARA § 3207(a)(2)). Geographic restrictions also remain waived (ARA § 3207(a)(1)).
Eligible practitioners. The expanded definition of the term “practitioner” will continue to apply. The expanded definition includes qualified occupational therapists, physical therapists, speech-language pathologists, and audiologists (ARA § 3207(b)).
Audio-only. Audio-only telehealth services remain eligible for reimbursement (ARA § 3207(e)).
Extending telehealth services for federally qualified health centers (FQHCs) and rural health clinics (RHCs). The US Department of Health and Human Services will cover telehealth services furnished via FQHCs and RHCs to eligible individuals (ARA § 3207(c)).
In-person requirements for mental health. The in-person requirement for mental health care to be reimbursed under Medicare has been delayed until April 1, 2025 (ARA § 3207(d)(1)).
Telehealth for hospice. Telehealth can continue to be used for the required face-to-face encounter prior to the recertification of a patient’s eligibility for hospice care (ARA § 3207(f)).
The ARA also extended the Acute Hospital Care at Home waiver program through March 31, 2025. In the midst of the PHE, the Centers for Medicare & Medicaid Services (CMS) used its PHE flexibilities to issue waivers to certain Medicare hospital conditions of participation (CoPs). These waivers, along with the PHE-related telehealth flexibilities, allowed Medicare-certified hospitals to furnish inpatient-level care in patients’ homes. Addressing hospital bed capacity during the pandemic was a high priority for CMS. These waivers and flexibilities, collectively referred to as the AHCAH Initiative, included:
Waiver of the CoP requiring nursing services to be provided on-premises 24 hours a day, seven days a week.
Waiver of the CoP requiring immediate on-premises availability of a registered nurse for care of any patient.
Waiver of CoPs that define structural and physical environment criteria specific to the hospital setting.
Telehealth flexibility allowing the home or temporary residence of an individual to serve as an originating telehealth site.
Telehealth flexibility allowing a hospital to use remote clinician services in combination with in-home nursing services to provide inpatient-level care in the patient’s home.
As with the Medicare telehealth flexibilities, these had been previously extended through December 31, 2024.
Notable flexibilities that expired or were absent from the ARA include the following:
The telehealth safe harbor for HDHPs. The CARES Act created a temporary safe harbor that permitted HDHPs to cover telehealth and remote care services on a first-dollar basis without jeopardizing eligibility for HSA contributions. By permitting health plans to provide HDHP participants coverage for telehealth services without requiring them to first meet the minimum required deductible, the safe harbor increased access to telehealth services. Additionally, covered individuals who received these services were still able to make or receive contributions to their HSAs because telehealth services were temporarily disregarded in determining eligibility for HSA contributions. Previously, the telehealth HDHP safe harbor ceased for three months from January 1, 2022, to March 31, 2022, before the CAA 2022 renewed it. Most recently extended by the CAA 2023, the telehealth safe harbor for HDHPs expired on December 31, 2024. Starting on January 1, 2025, health plans, insurers, and health plan vendors that previously relied on the telehealth HDHP safe harbor may need to update telehealth coverage for HDHP participants, such as updating plan design and/or cost sharing, to prevent disqualifying HDHP participants from making or receiving HSA contributions.
The SPEAK Act, which would establish a task force to improve access to health IT for non-English speakers.
The PREVENT DIABETES Act, which would broaden access to diabetes prevention services through the Medicare Diabetes Prevention Program.
The Sustainable Cardiopulmonary Rehabilitation Services in the Home Act, which would permanently codify cardiopulmonary rehabilitation Medicare telehealth flexibilities.
With the March 31, 2025, deadline in the not-too-distant future, stakeholders should continue to engage with Congress regarding an extension and permanent solution for the telehealth flexibilities, reinstatement of flexibilities that expired, and inclusion of the other bipartisan telehealth policies that were not included in the final ARA.
Lisa Mazur, Sarah G. Raaii, and Dale C. Van Demark contributed to this article.
Make Food “Healthy” Again: FDA’s Resolution for a Healthier 2025
The U.S. Food and Drug Administration (FDA) began 2025 with a resolution to make food “healthy” again by announcing a trio of new final and proposed rules that are intended to make it easier for consumers to identify healthy food choices. These rules – which include a new ban on the use of red dye No. 3, a revised definition of what “healthy” claims can be made about foods, and new proposed requirements for nutritional labeling on the front of food packaging – have implications for many stakeholders in the food industry.
Although these healthy food initiatives were initiated under the Biden Administration, they directly align with the new Trump Administration’s agenda for the U.S. Department of Health and Human Services (HHS). The recently confirmed Secretary of HHS under the second Trump administration, Robert F. Kennedy Jr., has campaigned on limiting the use of food dyes and taking aim at highly processed “junk foods” that contribute to obesity. Therefore, we expect that these new rules will be here to stay, despite the new administration’s recent freeze on new proposed rules and recommended postponement of new final rules (which is currently pending court review). Regulated stakeholders should take steps now to prepare for compliance.
Revocation of Use of Red Dye No. 3 in Food and Ingestible Drugs
On January 16, 2025, FDA announced that it amended its color additive regulations to revoke the authorization for the use of FD&C Red No. 3 (commonly known as “red dye No. 3”) as a color additive in food and drugs (90 Fed. Reg. 4628 (Jan. 16, 2025)). Therefore, effective January 15, 2027, red dye No. 3 will no longer be permitted for use in food products, such as candy, cakes, cupcakes, cookies, frozen desserts, frostings, and icings, and all certificates for the use of red dye No. 3 in such products will cease to be effective. Red dye No. 3 will be banned from use as a color additive in ingestible drugs, effective January 18, 2027. Any food and ingestible drug products (including imports) containing red dye No. 3 without effective certification will be considered adulterated.
Notably, although other countries still permit certain uses of red dye No. 3 (sometimes called “erythrosine” abroad), foreign manufactured food products imported into the U.S. will also need to comply with this new ban. Though FDA has not yet signaled whether the implementation of this new rule will be delayed further, food industry members should take steps now to reformulate any products containing red dye No. 3.
FDA’s action on red dye No. 3 is not surprising to some extent, considering that the agency revoked use of the dye in cosmetics in 1990, and its use is already prohibited in food in other countries. What remains to be seen is whether FDA will continue down the regulatory path it has begun. Petitions are presently before the agency to ban other chemicals in food use, such as PFAS, BPA, TCE, and titanium dioxide—some of which have been pending for years. Further, prior to the change in administrations, FDA announced that it is developing a “systemic process” for conducting post-market assessments of chemicals in food, including GRAS ingredients, color additives, food contact substances, and potential contaminants, and established a docket for public comment. By the time the comment period closed, more than 34,000 comments had been submitted to FDA, signaling significant interest in this issue. Given the new HHS Secretary’s stated priorities, it would not surprise us if FDA continues its rulemaking efforts in this space.
Updated Requirements for “Healthy” Claims
In recent years, FDA has expressed concern over the growing prevalence of preventable chronic diseases and health conditions associated with unhealthy diet choices. Because FDA’s research demonstrates that U.S. consumers choose foods based on information readily (and easily) available to them, FDA has focused its attention on revising its food labeling regulations to provide consumers with additional information about a food’s nutritional benefits (or lack thereof). The result is the revised final rule for “healthy” claims and a proposed rule mandating front-of-pack nutrition disclosures, as discussed below.
The preambles to these rulemaking efforts demonstrate that FDA’s thinking has been heavily influenced by the Dietary Guidelines for Americans, 2020-2025 (the “Dietary Guidelines”). Under the National Nutrition Monitoring and Related Research Act of 1990, the U.S. Department of Agriculture (USDA) and HHS must publish the Dietary Guidelines at least once every five years, based on the current state of scientific and medical knowledge. The current Dietary Guidelines deemphasize the importance of individual nutrients or food groups in isolation in favor of a more holistic approach that focuses on dietary patterns during different life stages. A healthy dietary pattern, according to the Dietary Guidelines, emphasizes nutrient dense foods across all food groups, while staying within calorie limits and limiting sugars, saturated fats, and sodium.
FDA regulations have included parameters on “healthy” claims since 1994, but the requirements have not significantly changed since that time, even though nutrition science has evolved. The parameters established under the original rule were fairly rigid, and included specific limits on total fat, saturated fat, cholesterol, and sodium, as well as minimum amounts of nutrients whose consumption was encouraged (e.g., vitamin A, iron, protein). Under the 1994 rule, a food had to meet all the limits of the “discouraged” nutrients and contain the minimum amount of at least one of the “encouraged” nutrients to bear a “healthy” claim. That had the effect of excluding certain “nutrient dense” foods often viewed by consumers as healthy, such as salmon (due to its fat content).
The new Final Rule (89 Fed. Reg. 106,064 (Dec. 27, 2024)) proposes a more flexible approach consistent with the revised Dietary Guidelines. Current nutrition science emphasizes nutrient-dense foods – such as fruits, vegetables, and whole grains – as part of a healthy dietary pattern. Nutrient-dense foods and beverages are defined as those that provide vitamins, minerals, and other health promoting nutrients but also have little or no added sugars, saturated fats, or sodium. Accordingly, foods that meet the requirements for “healthy”, as defined in the new rule, are foods that, because of their overall nutrition profiles, can be the “foundation” or “building blocks” of an overall healthy dietary pattern recommended by the Dietary Guidelines.
Under the rule, a “healthy” food claim “[s]uggests that a food, because of its nutrient content, may be useful in maintaining healthy dietary practices, where there is also implied or explicit information about the nutrition content of the food (e.g., “healthy”).” See 89 Fed. Reg. 106,064, 106161. In general, to meet the new parameters for “healthy” food claims, including claims that foods are “healthful” or “healthier”, food products (including individual foods, mixed products, main dishes, and meals) must (1) for example, contain a certain amount of food (referred to as a “food group equivalent”) from at least one of the food groups or subgroups recommended by the Dietary Guidelines for Americans (e.g., vegetables, fruits, whole grains, fat-free or low-fat dairy, lean meat, seafood, eggs, beans, peas, lentils, nuts, or seeds) and (2) meet specific limits for added sugars, saturated fats, and sodium (based on a percentage of the Daily Value (DV) for these nutrients). Under the new criteria, some categories of foods – vegetables, fruits, seafood, lentils, nuts and seeds, among others – automatically qualify for the “healthy” claim due to their nutrient density, so long as they do not contain any additional ingredients other than water. And some foods that did not qualify for a “healthy” claim under the old rule due to their fat content now do, including avocados, salmon, and olive oil. Conversely, some food products that qualified as “healthy” under the old rule now do not, including fortified white bread, highly sweetened yogurts, and highly sweetened cereal.
The new rule also contains a substantiation requirement. Manufacturers of foods for which “healthy” claims are made must make and keep written records substantiating the “healthy” claims in accordance with the new requirements, except where nutritional food labeling makes clear that the requirements are met.
The food industry may begin voluntarily complying with the new rule on or after February 25, 2025, and must comply by February 25, 2028. Therefore, the food industry should take steps now to review any “healthy” claims made for their products, assess whether those claims should be changed in light of the new final rule, and document the substantiation for their claims.
We add that health claims on food labeling are heavily policed by consumer class action attorneys under consumer fraud laws (particularly in California and New York), and that compliance with FDA’s requirements for “healthy” claims will not necessarily preempt these lawsuits, if a court determines that other aspects of the label or packaging renders the claim misleading on the whole. Therefore, food manufacturers should work closely with experienced counsel in formulating “healthy” claims and ensuring that these claims are properly substantiated.
Nutrition Labeling
On January 16, 2025, FDA published a proposed rule (90 Fed. Reg. 5426 (Jan. 16, 2025)) (the “Proposed Rule”), which, if finalized, would require a front-of-package nutrition label called a “Nutrition Info box” on most packaged foods to assist consumers in more easily identifying healthy foods. This new label would require manufacturers to address the relative amounts of saturated fat, sodium, and added sugars in a serving of the food, and identify whether those amounts are low, medium, or high. FDA’s proposed format for the new label appears below:
The ranges that FDA proposes for each category are as follows:
Low: 5% daily value (DV) or less
Medium: 6% to 19% DV
High: 20% DV or more
In proposing these DV ranges, FDA considered the regulatory history of the percent DV; the agency’s commitment to helping consumers understand the percent DV concept in the context of a person’s daily diet; and the agency’s existing regulatory definitions for nutrient content claims (including definitions established for “low” and “high” claims), among other factors. FDA believes that the ranges it proposes for the interpretive descriptions – and in particular, its designation of 5% DV or less as “low” and 20% DV or more as “high” – align with its longstanding regulatory approach.[1] However, FDA invites comment on its conclusions and analysis.
Calorie disclosures
In the Preamble to the Proposed Rule, FDA acknowledged that some manufacturers already voluntarily include a calorie statement on the front of the food packaging, in accordance with existing regulations. FDA invites comment from industry stakeholders on the inclusion of a mandatory or voluntary statement of calories in the proposed Nutrition Info box, as well as suggestions as to how FDA could consider including quantitative calorie information (e.g., “low”, “medium”, “high”) in the box (including any new data or other information on which FDA could base this interpretation).
Anticipated costs
One notable aspect of the Proposed Rule is its anticipated cost to industry, which FDA analyzed as part of the rulemaking effort. FDA quantified the estimated costs of relabeling to the packaged food industry as a whole to range between $66 million and $154 million per year over a ten-year time horizon. Further, although product reformulation is not a requirement or a stated goal of the Proposed Rule, FDA recognizes that the rule may result in voluntary reformulation efforts by some food producers. FDA estimates that the annualized costs of reformulation would range from $125 million to $377 million over a ten-year time horizon. FDA recognizes the possibility that some of these relabeling/reformulation costs may be passed along to consumers (at least in part).
If finalized, businesses with $10 million or more in annual food sales will be expected to comply with these requirements within three years of the final rule’s effective date. Businesses with less than $10 million in annual food sales will be expected to comply with the requirements within four years of the final rule’s effective date. FDA is accepting comments on this new proposed rule by May 16, 2025. Food industry stakeholders should consider submitting comments to this proposed rule. Foley’s Food and Beverage Industry Team members have extensive experience assisting regulated stakeholders in preparing comments on FDA rulemaking. Any of the authors would be happy to provide additional information.
Regulatory Freeze
As is standard practice for an incoming administration, one of President Trump’s first Executive Orders (“EO”) places a freeze on all pending regulations proposed in the last days of the Biden administration. The EO encourages a 60-day review of any such proposed rules or guidance, with further consultation by the Director of the Office of Management and Budget (OMB) as-needed for “for those rules that raise substantial questions of fact, law, or policy.”
Next Steps
Though there is some uncertainty about timing, overall, industry should plan for the possibility that these rules and orders will take effect. Therefore, food industry stakeholders should act now to:
Begin planning on reformulation of products with red dye No. 3;
Review and assess what “healthy” food claims are made about their products, and document their support for those claims in accordance with the new “healthy” framework; and
Consider submitting comments to the new proposed rule requiring front-of-package nutrition information labeling.
[1] FDA does not have a regulation that establishes a “medium” nutrient content claim for any nutrient. In the Preamble to the Proposed Rule, FDA effectively takes a common-sense approach to defining that term. See 90 Fed. Reg. 5426, 5445 (“The adjective ‘medium’ is defined as, for example, ‘being in the middle between an upper and lower amount, size, degree, or value . . . and ‘intermediate in quantity, quality, position, size, or degree’ . . . . The common meaning of the adjective ‘medium’, then, aligns with the meaning of the interpretive . . . we are proposing.”). Which is just to say that the “low” and “high” goalposts are really what matter for purposes of comment on the Proposed Rule.
What Will Trump 2.0 Mean for Employee Benefits?—One Place to Look for Clues: Project 2025
Even as high-priority issues such as diversity, equity, and inclusion (DEI), immigration, and Ukraine take center stage in the first months of the new presidential administration, many employers are wondering what the next four years might mean for employee benefits.
Quick Hits
The Heritage Foundation’s Project 2025 provides clues for potential employee benefits changes under the second Trump administration.
Project 2025 calls for reversing federal rules that added gender identity, sexual orientation, and pregnancy as protected classes covered under the nondiscrimination provisions of the Affordable Care Act.
Project 2025 also proposes eliminating the dispute resolution process under the No Surprises Act in favor of a “truth-in-advertising approach.”
Plan sponsors may find clues in Project 2025, the far-reaching report produced by Washington, D.C., think tank Heritage Foundation as a blueprint for a second Trump administration and actually written in part by a number officials in the first Trump administration and public advocates for the 2024 Trump presidential campaign. (The president distanced himself from Project 2025 during the campaign, although several contributors are serving in the new administration.)
Specifically, three chapters of the 900-plus page report may offer insight for plan sponsors: one covering the U.S. Department of Health and Human Services (HHS), one covering the U.S. Department of the Treasury (Treasury), and one covering the U.S. Department of Labor (DOL) and related agencies.
Below, we dust off our copies of the report—originally released in 2023—and recap a few notable Project 2025 employee benefits policy recommendations (and the specific page numbers in the report):
ACA Section 1557: Reverse federal rules that added gender identity, sexual orientation, and pregnancy as protected classes covered under the nondiscrimination provisions of Section 1557 of the Affordable Care Act (ACA). These provisions have a limited impact on employee benefit plans, and in 2020, the Trump administration issued regulations that removed provisions detailing specific forms of discrimination, including gender dysphoria treatment, health insurance participation, and benefit plan design. (Page 475)
No Surprises Act: Encourage the U.S. Congress to revisit the 2021 legislation, including addressing the “deeply flawed system for resolving payment disputes between insurers and providers.” Project 2025 advocates eliminating the dispute resolution process in favor of a “truth-in-advertising approach.” (Page 469)
State restrictions on “anti-life” benefits: Encourage Congress and the DOL to “clarify” that the Employee Retirement Income Security Act (ERISA) would not preempt state attempts to prevent employer-sponsored health benefit plans from offering plan coverage for abortion, surrogacy, or other “anti-life” health care benefits (Page 585)
Individual Retirement Accounts (IRAs): Increase the IRA contribution limit to equal the amounts that can be contributed under 401(k) or 403(b) plans with respect to married couples. (Page 588)
Independent contractor benefits: Project 2025 encourages Congress to provide “a safe harbor” from employer-employee status when an employer permits independent contractors to participate in employer-provided benefits. Traditionally, only common law employees can participate in employer-sponsored retirement programs. (Page 591)
ESG investing: Encourage the DOL to prohibit ERISA retirement plans from investing plan assets based on any factor other than investor risks and returns, specifically environmental, social, and governance (ESG) factors. In addition, Project 2025 encourages the DOL to consider taking “enforcement and/or regulatory action to subject investment in China to greater scrutiny under ERISA” based on a perceived lack of compliance with American accounting standards and state control of Chinese companies. (Page 606)
Multiemployer plans: Project 2025 advocates greater scrutiny and reporting requirements for multiemployer plans, which are jointly administered by unions and employers. Among the specific recommendations is that the Pension Benefit Guaranty Corporation (PBGC), which insures defined benefit pension plans, require more detailed and timely reporting from plans. (Page 609)
ESOPs: Project 2025 recommends the DOL issue regulations that encourage greater participation in employee stock ownership plans (ESOPs). (Page 610)
Cap benefits deductibility: Project 2025 recommends limiting the amounts that employers can deduct for certain benefit costs to $12,000 or less per year per full-time equivalent employee. Retirement plan contributions would not count against that limit, and only “a percentage” of contributions to health savings accounts (HSAs) would count toward such limitation. (Page 697)
Deductibility for dependent coverage: Limit the ability of employers to deduct the value of health insurance and other benefits provided to employee dependents who are 23 or older. (Page 697)
Universal Savings Accounts (USAs): Establish accounts for taxpayers to contribute up to $15,000 of post-tax wages into USAs, similar to Roth IRAs. Investment gains would be nontaxable, portable, and withdrawable at any time for any purpose without penalty. (Page 696)
Anti-Kickback Statute Premised False Claims Cases: The “But For” Causation Standard Finds Support from First Circuit
It’s now 3–1, with the First Circuit (2025) aligning with the Sixth (2023) and Eighth (2022) Circuits finding the meaning of the words “resulting from” — as used in a 2010 amendment to the federal Anti-Kickback Statute (AKS) — to require “but for” causation in AKS-premised False Claims Act (FCA) cases. This is the third time a circuit court has diverged from the 2018 Third Circuit decision, which held that the phrase “resulting from” requires the government (or relator) to prove only a link “between the alleged kickbacks and the medical care received. . . .”
Notably, in October 2023, the Supreme Court declined to review the Sixth Circuit Court of Appeals case. As such, the circuit split on causation continues — and all parties should be aware of the applicable case law where they reside.
Background
In 2010, Congress amended the AKS to provide that any Medicare claim “that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” Fifteen years later, the courts are still working through what this amendment means for FCA cases.
In the First Circuit case, United States v. Regeneron Pharmaceuticals, Inc., the complaint alleged Regeneron’s efforts to funnel money into Chronic Disease Fund — an independent charitable foundation — specifically to reimburse patients’ copays from one of Regeneron’s products, Eylea, violated the AKS, and the resulting claims to Medicare were allegedly tainted by these illegal kickbacks in violation of the FCA.
This case was before Chief Judge Saylor in the District of Massachusetts. Three months after a different District of Massachusetts court judge found “but for” causation is not the causation standard in AKS-premised FCA cases, Chief Judge Saylor wrote the opinion in Regeneron, finding the “but for” standard applicable in AKS-premised FCA cases and denied the government’s motion for summary judgment. Chief Judge Saylor explicitly called out that the Third Circuit case was not binding and that the “only a link” standard “is divorced from the actual language of the statute and from basic principles of statutory interpretation.” The case was then appealed to the First Circuit.
On July 22, 2024, the First Circuit heard oral argument on what the appropriate standard of causation is for AKS-premised FCA claims. The specific issue on appeal was whether a “claim” under the FCA “result[s] from” a kickback only if the claim would not have included the items or services but for the kickback. On February 18, 2025, the First Circuit released its opinion in United States v. Regeneron Pharma., Inc., finding against the government in holding an AKS violation must be a “but for” cause of the challenged claim.
But-For Causation in Regeneron
There is a default assumption derived from the Supreme Court that “resulting from” is read as calling for a but-for causation standard “in the usual course.” While this is not an immutable rule, there needs to be support for any deviation to the typical reading.
Regeneron argued that a but-for causation standard was appropriate, and there is no reason to deviate from the standard reading. Specifically, Regeneron argued that under the 2010 AKS amendment, the government bears the burden of proving an AKS violation actually caused a provider to provide different medical treatment (and thus caused the false claim). That is, the claim would not have been submitted but for the alleged kickback.
Meanwhile, the government argued that this is exactly this situation where the usual does not apply with three points:
The AKS itself requires no proof that the government would not have paid a claim but for the inducement of the offered kickback.
Congress did not intend to alter false-certification case law by imposing a but-for causation requirement in the 2010 AKS amendment.
Legislative history for the 2010 AKS amendment supports something other than the but-for causation.
None of these arguments were persuasive to the First Circuit, which found “no convincing ‘textual or contextual’ reason to deviate from the default presumption that the phrase ‘resulting from’ as used in the 2010 amendment imposes a but for causation standard.” As a result, the First Circuit held the government must show that an illicit kickback was the but-for cause of a submitted claim.
Looking Ahead
While the spoken Circuit Courts are generally finding in favor of “but for” causation for AKS-premised FCA cases, several circuit courts have yet to weigh in, and there is a split with the Third Circuit. Unless and until the Supreme Court grants certiorari on a causation case, we will continue to see differences on how courts approach these issues within district courts without controlling case law. Government attorneys and the relators’ bar may continue to try out different theories, hoping a court may find them persuasive, which could result in splits between district courts and a deeper divide at the circuit courts.
Observers and impacted parties will want to watch the developing case law in this area to see how courts square with this circuit split.
Want to learn more about recent FCA developments?
Renewed Prohibition on Use of Sub-Regulatory Guidance – Key to False Claims Act Cases
Medicare Advantage: A Circuit Court Addresses What is (or is not) Material in False Claims Act Cases
Chevron’s Demise Creates New False Claims Act Defenses
Loper Bright False Claims Act Developments
Member of Congress Introduces Bill to Abolish Occupational Safety and Health Administration
U.S. Representative Andy Biggs (R-AZ) first introduced the “Nullify the Occupational Safety and Health Administration Act” or “NOSHA Act” in November 2021, legislation aimed at abolishing the Occupational Safety and Health Administration (OSHA). His justification for filing the bill was that OSHA was “usurping states’ authorities and forcing [President] Biden’s vaccine mandate on the private sector.” Though Arizona has a “state plan” and federal OSHA does not regulate workplaces there, he had nine cosponsors of the NOSHA Act.
Quick Hits
Representative Andy Biggs (R-AZ) reintroduced legislation (H.R. 86) that would abolish OSHA.
Although the bill has little chance of being enacted—the bill has no cosponsors and there is no companion legislation in the U.S. Senate—what seems more likely to happen is a challenge to how OSHA standards are created.
Supreme Court Justice Clarence Thomas has expressed support for curtailing the OSH Act’s delegation of authority to OSHA and stated that “[a]t least five justices have already expressed an interest in reconsidering [the] Court’s approach to Congress’s delegations of legislative power.”
The NOSHA Act was reintroduced in the 118th Congress with a single cosponsor, Representative Scott Perry (R-PA). (He became a cosponsor in August 2023, eight months after introduction in January 2023.) As was true of its predecessor bill, this version did not make it out of the House Committee on Education and Labor (renamed the “House Committee on Education and the Workforce” when Republicans took the reins of the U.S. House of Representatives in January 2023), which is the first step in becoming law.
Representative Biggs recently introduced it again in the 119th Congress, without cosponsors, as H.R. 86. It has been referred to the House Committee on Education and the Workforce.
H.R. 86 is a simple piece of legislation that includes two simple sentences that have caused an uproar: “The Occupational Safety and Health Act of 1970 is repealed. The Occupational Safety and Health Administration is abolished.” These two sentences have generated more controversy in the workplace health and safety sphere than any two other sentences have, potentially since the Occupational Safety and Health Act of 1970 (OSH Act) was signed into law.
The OSH Act was signed into law by President Richard M. Nixon on December 29, 1970, after years of movement toward a national law to regulate health and safety in the workplace. While the OSH Act and OSHA are often viewed as partisan creations, they were a bipartisan effort to improve workplace health and safety conditions for American workers.
Though some potential exists for the U.S. Congress to take action to overturn the OSH Act and eliminate OSHA, given the lack of current and historical support for the NOSHA Act bill and the fact that no companion bill has been introduced in the U.S. Senate, the likelihood of either succumbing to the NOSHA Act appears rather limited. Moreover, the impact of the bill seems suspect, given that at present twenty-two states have their own state plans that provide oversight of both private and government workplaces, while seven more have plans that provide oversight of government workplaces (while federal OSHA provides oversight of the private workplaces).
What seems more likely to happen is a challenge to the way OSHA standards are created. Supreme Court Justice Clarence Thomas, in a dissent to the denial of certiorari in Allstates Refractory Contractors, LLC, v. Su, stated that “[t]he Occupational Safety and Health Act may be the broadest delegation of power to an administrative agency found in the United States Code.” He continued, writing, “If this far-reaching grant of authority does not impermissibly confer legislative power on an agency, it is hard to imagine what would.” He also indicated that a majority of the justices had expressed an interest in reviewing this sort of broad delegation of authority.
If the Supreme Court of the United States were to determine that the OSH Act constituted an unconstitutional delegation of legislative power to an agency, Congress would need to reframe OSHA’s rulemaking authority or take on some of the rulemaking responsibilities itself. This would likely result in a dramatic decrease in OSHA’s already limited rulemaking activity.
This Week in 340B: February 11 – 17, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Contract Pharmacy; Medicare Payment; Rebate Model
In a case challenging a proposed state law governing contract pharmacy arrangements in Missouri, the court granted in part and denied in part defendant’s and intervenor’s separate motions to dismiss.
In a breach of contract claim filed by a 340B covered entity against several related party Medicare Advantage plans, defendants filed a reply in support of their motion to compel plaintiff’s claims spreadsheets.
In five cases against the Health Resources and Services Administration (HRSA) alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
Five amicus briefs were filed in support of the drug manufacturer.
In four such cases, drug manufacturers filed a joint position statement on consolidation.
In one such case, a drug manufacturer filed a notice of opposition to consolidation and memorandum in opposition to intervenors.
In one such case, the government filed a position statement in support of consolidation.
Kelsey Reinhardt and Nadine Tejadilla also contributed to this article.
Environmental, Health, and Safety Outlook for 2025
In putting together our thoughts on this post, it was hard not to think about the elephant in the room (see what I did there?). The change in administration has already brought significant changes in our nation’s environmental priorities. While time will show us all of the specific ways this will play out in 2025, we are already seeing some trends and can expect others to guide manufacturers as to what the Environmental, Health, and Safety (EHS) landscape might look like over the year.
Rollback of Federal Environmental Regulation and Enforcement
As my partner, Jon Schaefer, reported earlier this month, even before Lee Zeldin was confirmed as the new Environmental Protection Agency (EPA) Administrator, the EPA had temporarily frozen its lawsuits, certain communications, and some final and pending regulations. Several freezes impact per- and polyfluoroalkyl substances (PFAS) regulations. For example, the EPA instituted a 60-day delay for certain imminent Toxics Release Inventory (TRI) PFAS reporting requirements “for the purpose of reviewing any questions of fact, law, and policy that the rules may raise.” The EPA noted that it may further delay the effective date beyond 60 days. The EPA also put a stop to Clean Water Act rulemaking to develop effluent limitations for PFAS for the organic chemicals, plastics, and synthetic fibers point source category. Whether this trend will carry through to the many other rules, both adopted and contemplated, related to PFAS remains to be seen.
In the saga of the on-again, off-again Securities Exchange Commission (SEC) Climate Disclosure Rule, the SEC recently requested that the Eighth Circuit delay oral arguments in its case defending the rule. As we previously reported, this rule would require companies to report various climate-related information to the SEC. When it became final last year, it was immediately challenged, and the rule’s fate was placed in the hands of the Eighth Circuit Court of Appeals. While it was once moving forward to defend the rule, the SEC is now requesting additional time “to deliberate and determine the appropriate next steps in these cases.” This could be the first step in the ultimate demise of the rule, at least under the current administration.
We will continue to track developments at the federal level. Given the administration’s overall priorities, we expect to see further enforcement and regulation rollbacks on several EHS issues.
Uptick in State Action
Many states are poised to pick up the slack in the face of decreasing federal action. With regard to climate disclosure laws, California has already passed several requiring climate-related disclosures for entities doing business in the state, with reporting requirements approaching next year. Other states are joining in, with New York and Colorado considering their own climate disclosure laws. And as many of us have already experienced, decision-making related to PFAS is dominated by state law. As the federal government steps back from regulation and enforcement, we can expect many states take up the mantle on various issues. The patchwork of state laws could create a compliance challenge for manufacturers operating in multiple locations around the country. It will be important for manufacturers to remain up-to-date on proposed and final state actions so they can be prepared for new requirements that could pop up in various jurisdictions.
Citizen Suit Action
In addition to increased state activity, we expect an increase in citizen enforcement of federal environmental laws in 2025. Many federal environmental statutes have provisions allowing for citizen enforcement when the federal government fails to do so. These laws also allow citizens to pursue the government for failed enforcement and oversight. Under the first Trump administration, we saw an uptick in citizen enforcement of federal environmental laws, and we expect to see the same during Trump 2.0. These lawsuits could hit manufacturers on various topics, including enforcement related to clean water, clean air, and hazardous waste. Citizens may also target the federal government, which could ultimately cause the federal government to take action of its own, even when it was not planning to do so.
We expect 2025 to be a busy year in the EHS world.
ANOTHER MASSIVE TCPA SETTLEMENT: Blue Cross Pays Over $1,000.00 Per Class Member as Court Approves $1.6MM TCPA Class Action Settlement
From Red Cross to Blue Cross, TCPA risk is massive these days.
And wrong number calling, in particular, can be incredibly costly.
Just ask Citibank.
Or John Deere.
Or, now, Blue Cross.
In Stark v. BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA and CHANGE HEALTHCARE RESOURCES, LLC, 1:23-CV-22, 2025 WL 524781 (M.D.N.C. Feb 18, 2025) the Court approved a $1.6MM settlement related to Blue Cross making illegal robocalls to a wrong number.
Per the order:
the case arose because Change Healthcare allegedly made calls on behalf of BCBSNC to identify BCBSNC customers and increase enrollment in certain programs, but Change Healthcare made calls to wrong numbers or to consumers who had opted out of receiving these calls. Ms. Stark alleged that despite being told that her number no longer belonged to a BCBSNC customer, Change Healthcare continued to make sales calls to her number.
The class had 1,573 people in it– which means Blue Cross paid over $1,000.00 per class member!!! (Whoa)
Oh and per the order Class Counsel Avi Kaufman has “recovered via settlement more than $100 million on behalf of TCPA class members.”
This case will net him another $500k in fees.
So there you have it Blue Cross paid a ton of money to settle this– one of the highest-per-class-member settlements I have seen yet. Not sure why they paid so much but it is a good reminder to all of you out there– use the reassigned numbers database to avoid this sort of thing folks!
President Trump Signs Executive Order Establishing the Make America Healthy Again Commission
On February 13, 2025, President Donald J. Trump signed an Executive Order establishing the President’s Make America Healthy Again Commission. This initiative, chaired by the newly-confirmed U.S. Health and Human Services Secretary Robert F. Kennedy Jr., aims to tackle the root causes of chronic diseases that affect millions of Americans.
According to the order, six in ten Americans have at least one chronic disease, and four in ten have two or more. The commission aims to review the American diet, “absorption of toxic material,” and “food production techniques,” as part of its objectives.
The Commission has outlined four main policy directives to achieve its goals: (1) requiring federally funded research to be transparent; (2) prioritizing researching the root causes of illness; (3) working with farmers to ensure our food supply is healthy and abundant; and (4) increasing the flexibility of health insurance coverage to provide better support for disease prevention.
The composition of the Make America Healthy Again Commission will include the Secretary of Health and Human Services as Chair, and the Assistant to the President for Domestic Policy as Executive Director, and top officials across several federal agencies related to health, the environment, food and drugs, and others.
The EO requires that within 100 days of the order, the commission will provide a preliminary assessment identifying the causes of childhood chronic disease in America.
Maryland DOL Seeks to Delay Paid Family and Medical Leave Insurance Program
Enacted in 2022, the Maryland Family and Medical Leave Insurance (FAMLI) program covers all employers with Maryland employees and will eventually provide most of those employees with up to twelve weeks of paid family and medical leave, with the possibility of an additional twelve weeks of paid parental leave.
Following several prior delays, employee contributions were scheduled to begin on July 1, 2025, with benefits commencing one year later on July 1, 2026. However, the Maryland Department of Labor (Maryland DOL) is now proposing a delay until January 1, 2027, for deductions and January 1, 2028, for benefits, based on the need to focus on supporting Maryland businesses and their employees in light of the significant uncertainty arising from President Donald Trump’s many employment-related executive orders.
Quick Hits
Due to concerns about readiness and cost, the Maryland DOL is proposing to delay the start of employee contributions to the Maryland FAMLI program to January 1, 2027, and the commencement of benefits to January 1, 2028.
The FAMLI program, enacted in 2022, aims to provide up to twelve weeks of paid family and medical leave for most Maryland employees, with the potential for an additional twelve weeks of paid parental leave.
A state senator has introduced a bill to delay the FAMLI program’s effective dates, highlighting the business community’s concerns over the lack of final regulations and the program’s significant economic impact.
Where Are the Regulations Now?
The Maryland DOL’s FAMLI Division was directed to issue regulations to implement the FAMLI program. As we previously noted in our multipart series on the FAMLI program, the Maryland DOL has engaged in an unusually extended and inclusive rulemaking process, likely impacted by amendments and delays to the program that were enacted in each of the 2023 and 2024 Maryland General Assembly sessions. At this point, the Maryland DOL has issued two sets of proposed regulations, which we covered in Part II (General Provisions, Contributions, and Equivalent Private Insurance Plans) and Part III (Claims and Dispute Resolution) of our series. But other sections of the proposed regulations, including Enforcement, have yet to be issued.
Concerns About Implementation and a Proposed Delay
There have been significant concerns about the Maryland DOL’s readiness to implement this complex program, as well as its overall cost (approximately $1.6 billion) in the current economic climate. In fact, Maryland state Senator Stephen Hershey has proposed a bill, Senate Bill (SB) 355, that seeks to delay the effective contribution and benefits dates by two years. In a hearing on this bill before the Senate Finance Committee on February 5, 2025, Fiona W. Ong (the author of this article) testified about the business community’s concern that final regulations—and even entire sections of the proposed regulations—have yet to be issued only months before the first deadlines. For example, employers are supposed to begin filing a declaration of intent (DOI) to have an equivalent private insurance plan (EPIP) starting on May 1, 2025. But at this point, employers do not have final rules about creating a self-insured plan, and insurance companies do not have final rules on creating commercial plans (which would also need to be compliant with insurance laws and regulations).
The Maryland DOL acknowledges that legislative action is required to authorize the delay and, in its press release, states that it is working closely with leadership in the General Assembly to extend the implementation dates. It is unclear whether the General Assembly will use Senator Hershey’s bill or issue a new bill. But given the Maryland DOL’s public statements, it is almost certain that the delay will take place.
This is obviously a significant development for employers with Maryland employees, many of whom are concerned about the cost and impact of this program in which the state, and not the employer, grants the paid leave benefit.
Health Agencies Face Terminations; Jim Jones Resigns from FDA’s Human Foods Program
Thousands of workers employed across the Department of Health and Human Services received notices that they would be terminated following four weeks of leave, including at least 89 members of FDA’s Human Foods Program staff, as part of the Trump administration’s overhaul of the federal workforce. The layoffs follow the confirmation of Robert F. Kennedy, Jr. as HHS secretary on February 13.
Terminated staff from FDA’s Human Foods Program include those working on nutrition, infant formula, and food safety response, as well as 10 staff members “who were charged with reviewing potentially unsafe chemicals in the nation’s food supply.”
Jim Jones, FDA’s deputy commissioner for human foods, resigned from the Agency on February 17, citing the “indiscriminate firing” of food program staff and Robert F. Kennedy, Jr.’s rhetoric toward staff. In a letter, Jones wrote: “I was looking forward to working to pursue the Department’s agenda of improving the health of Americans by reducing diet-related chronic disease and risks from chemicals in food. It has been increasingly clear that with the Trump Administration’s disdain for the very people necessary to implement your agenda, however, it would have been fruitless for me to continue in this role.”
Jones, who was appointed as deputy commissioner for human foods in 2023, had committed to priority areas of preventing foodborne illness, decreasing diet-related chronic disease, and safeguarding the food supply, as we previously blogged.
New York Proposal to Protect Workers Displaced by Artificial Intelligence
On 14 January 2025, during her State of the State Address (the Address), New York Governor Kathy Hochul announced a new proposal aimed at supporting workers displaced by artificial intelligence (AI).1 This proposal would require employers to disclose whether AI tools played a role in mass layoffs or closings subject to New York’s Worker Adjustment and Retraining Notification Act (NY WARN Act). Governor Hochul announced that she is directing the New York State Department of Labor (DOL) to enact and enforce this requirement. The DOL does not have a timeline for implementing the new requirement, and Labor Commissioner Roberta Reardon acknowledged that “defining what counts as an AI-related layoff would be a challenge [to implementation].”2
In the Address, Governor Hochul acknowledged the benefits of AI, stating, “[innovations in AI] have the ability to change the way businesses operate, leading to greater efficiency, fewer business disruptions, and increased responsiveness to customer needs.” However, the implementation of AI tools in the workplace leads to increased automation, which may result in increased job loss, wage stagnation or loss, reduced hiring, lack of job satisfaction, and skill obsolescence—all of which are major concerns for US workers.3
The primary goals of imposing these employer disclosures are to: (i) aid transparency and gather data on the impact of AI technologies on employment and employees; and (ii) ensure the integration of AI tools into the workforce creates an environment where workers can thrive.
Implications for Employers
Disclosure Requirement
Employers in New York will need to disclose in their NY WARN Act notices whether layoffs are due to the implementation of AI tools replacing employees.
Scope
While specific details about the scope of the new disclosure requirement are not yet available, employers should prepare for this additional obligation as part of the existing complex notice requirements under the NY WARN Act.4
Compliance
Employers contemplating a NY WARN Act-triggering event should consult with legal counsel to ensure compliance with these disclosure requirements and expanded NY WARN Act obligations.
NY WARN Act
The Worker Adjustment and Retraining Notification Act (WARN Act) is a federal law that requires covered employers to provide employees with 60-day advance notice before closing a plant or conducting a mass layoff.5 The purpose of the WARN Act is to give workers and their families time to adjust to potential layoffs and to seek or train for new jobs.6 New York is one of 18 states with its own “mini-WARN Act.” The NY WARN Act imposes stricter requirements than the federal WARN Act. For example, the NY WARN Act applies to employers with 50 or more employees while the federal WARN Act applies to employers with 100 or more employees. The NY WARN Act also requires a 90-day advance notice, compared to the 60-day notice required under federal law. The early warning notices of closures and layoffs are provided to affected employees, their representatives, and the Department of Labor and local officials. If Governor Hochul’s proposal is enforced, NY WARN Act notices will also need to include the required AI disclosure.
Takeaways for Employers
Employers should be well versed in how AI tools are being used and the impact they are having on workers, especially if such impacts may lead to mass layoffs. Specifically, legal and human resources leaders should understand how the business is automating certain processes through AI tools and the implications the tools have on headcount requirements, employee job satisfaction and morale.
Our Labor, Employment, and Workplace Safety lawyers regularly counsel clients on a wide variety of issues related to emerging issues in labor, employment, and workplace safety law, and are well-positioned to provide guidance and assistance to clients on AI developments.
Footnotes
1 https://www.governor.ny.gov/news/governor-hochul-announces-new-proposals-support-small-businesses-and-boost-economic-growth
2 https://news.bloomberglaw.com/product/blaw/bloomberglawnews/exp/eyJpZCI6IjAwMDAwMTk0LTcxNTYtZDIzYy1hYmZjLTc1ZmU5NDhiMDAwMSIsImN0eHQiOiJETE5XIiwidXVpZCI6ImhqMGRvcTNKdGdrSkpKckZyL01QaUE9PU9seW0rTExPbVdiODlZZ1N6aWtDZHc9PSIsInRpbWUiOiIxNzM3Mzc0NjI2MDg5Iiwic2lnIjoiYTZXMnkwZnczcGZ3SnVpdlFrclV0S3FERFlnPSIsInYiOiIxIn0=?source=newsletter&item=body-link®ion=text-section&channel=daily-labor-report
3 https://www.imf.org/en/Blogs/Articles/2024/01/14/ai-will-transform-the-global-economy-lets-make-sure-it-benefits-humanity#:~:text=Roughly%20half%20the%20exposed%20jobs,of%20these%20jobs%20may%20disappear; https://cepr.org/voxeu/columns/workers-responses-threat-automation.
4 12 NYCRR Part 92
5 https://www.dol.gov/general/topic/termination/plantclosings
6 Id.