Texas Federal Court Pauses CFPB Rule Banning Medical Debt from Credit Reports
On February 6, a judge for the United District Court for the Eastern District of Texas issued a 90-day stay on the CFPB’s final rule prohibiting the inclusion of medical debt in consumer credit reports, delaying the rule’s effective date from March 17 to June 15.
The CFPB’s rule (which we previously discussed here and here) seeks to prohibit consumer reporting agencies from including these unpaid medical bills in credit reports and prohibit lenders from considering medical debt when making credit decisions. The pause follows a legal challenge (previously discussed here) from industry trade associations, contending that the rule exceeds the CFPB’s authority under the Fair Credit Reporting Act (FCRA).
Putting It Into Practice: The 90-day delay temporarily halts implementation of the CFPB’s rule, however its future remains uncertain under new CFPB leadership. The rule would have been effective 60 days after publication in the Federal Register. However, the Bureau’s first Acting Director, Scott Bessent “suspend[ed] the effective dates of all final rules that have been issued or published but that have not yet become effective. Any formal changes to the rules would require adherence to the Administrative Procedure Act (APA) through formal notice-and-comment rulemaking. The rule is also subject to a challenge under the Congressional Review Act. Consumer reporting agencies should continue to monitor these developments closely, as the litigation could lead to further delays or a potential invalidation of the rule.
Listen to this post
Robert F. Kennedy, Jr. Confirmed as HHS Secretary
On 13 February 2025, President Trump announced that he is directing the US Commerce Secretary and US Trade Representative to report to him by 1 April 2025 on specific tariffs the United States should impose to address bilateral trade deficits with countries that maintain higher tariffs on US exports than the level of tariffs that the United States imposes on their products. These “reciprocal” tariffs are expected to be finalized soon after the Commerce and USTR reports are finalized, but the date on which they may be implemented has yet to be announced.
Key points to remember concerning this latest tariff announcement are:
There will be no additional tariffs immediately as a result of this latest announcement.
US trade agencies (primarily Commerce and USTR) are to study tariffs imposed by other countries on US exports and recommend whether the United States should impose comparable tariffs against US imports from those countries.
Value-Added Tax and other tax regimes that US trading partners use but the US does not are potentially going to be included in the tariff rate calculations for those countries. Also potentially addressed will be distortions in exchange rates caused by currency policies of some countries and “non-tariff barriers” such as regulatory requirements (e.g., country-specific product standards) that are found to restrict market access opportunities for US exporters.
The US trade agencies must provide their recommendations to the president by 1 April 2025, the same date as originally set in the “America First Trade Policy.”
Thereafter, the US trade agencies are to use their respective statutory authorities (e.g., Section 232, 301, etc.) to impose relevant and necessary remedies such as tariffs, quotas, or other measures. Such remedies are likely to be in addition to the 10% tariffs on imports from China and 25% tariffs on imports of steel and aluminum that President Trump announced earlier this month. They are also likely to include new Section 232 tariffs on semiconductors, autos, and pharmaceuticals.
On its face, the Executive Order applies to all countries, but we may see exemptions for some (e.g., Australia) with which the United States maintains relatively balanced trade in goods.
Overall, this latest trade action signals the form that eventual additional US trade measures may take – e.g., tariffs and quotas under existing statutory authorities – as well as, most importantly, that there will be a process and longer time horizon for interested parties to comment before such measures go into effect. Companies and investors with interests impacted by these issues should use this time to prepare data and other analyses and advocacy to support their interests.
McDermott+ Check-Up: February 14, 2025
THIS WEEK’S DOSE
Senate Confirms RFK Jr. as HHS Secretary. He was approved by a vote of 52 – 48. Sen. McConnell (R-KY) joined all Democrats in voting no.
House, Senate Budget Committees Hold Budget Resolution Markups. The House and Senate must pass a unified budget resolution for reconciliation to move forward.
Sen. Tina Smith (D-MN) Announces She Won’t Run for Reelection. This announcement comes on the heels of Sen. Gary Peters’ (D-MI) announcement that he also will not run for reelection.
House Ways & Means Health Subcommittee Holds Hearing on Modernizing Healthcare. Members and witnesses expressed concerns regarding the healthcare system.
House Oversight Healthcare Subcommittee Examines Welfare Programs. Members expressed differing views on the state of US welfare programs, including Medicaid.
House Oversight DOGE Subcommittee Holds First Hearing. The hearing discussed improper payments and fraud, with healthcare mentions focused on Medicaid.
Senate Aging Committee Examines How to Optimize Longevity. The hearing focused on how Americans can live longer, healthier lives.
Trump Nominates Additional Healthcare Personnel. The Trump administration’s US Department of Health and Human Services (HHS) and healthcare personnel continue to fill out, including a nomination for US Drug Enforcement Administration administrator.
NIH Issues Guidance Capping Indirect Costs. A federal court subsequently granted a temporary restraining order.
President Trump Issues EO to Reduce Federal Workforce. The executive order (EO) aims to drastically cut the federal workforce, including at HHS.
Legal Challenges Continue Against Trump Administration Actions. Lawsuits have been filed over health agency webpages, the federal funding freeze, and federal employee buyouts.
CONGRESS
RFK Jr. Confirmed as HHS Secretary. In a 52 – 48 Senate vote, Robert F. Kennedy (RFK) Jr. was confirmed as the next HHS secretary. All Democrats voted no, and Sen. McConnell (R-KY) was the only Republican to join them. He issued a statement explaining that he believed RFK Jr. spreads conspiracy theories and is unfit to lead HHS. Sen. McConnell also voted no on the confirmation of Tulsi Gabbard as the director of national intelligence, and on Pete Hegseth as secretary of the US Department of Defense. With RFK Jr. now officially leading HHS, we are especially attuned to the likelihood of new healthcare EOs and other administrative actions. On the same day as RFK Jr.’s confirmation, President Trump signed an EO establishing a Make America Healthy Again Commission.
The Senate will now move forward on the confirmation process for Mehmet Oz, MD, to be administrator of the Centers for Medicare and Medicaid Services (CMS). The Senate Finance Committee confirmation hearing could be scheduled as soon as early March.
House, Senate Budget Committees Hold Budget Resolution Markups. As a first step toward reconciliation, the House and Senate must pass a unified budget resolution. That process began in earnest this week when the Senate Budget Committee passed a budget resolution on a party-line vote that would bring forth a smaller reconciliation package to include immigration, defense, and energy policies. This approach is of interest to those in healthcare, because health programs could become part of the policies that help pay for this package if it moves forward. Senate Finance Chairman Crapo (R-ID) has said that the Finance Committee would likely rescind the Biden administration’s nursing home staffing regulation, which the Congressional Budget Office has scored as saving $22 billion, as his committee’s contribution to the effort.
The House Budget Committee is taking a very different approach. On February 13, it held a markup of its budget resolution, with the goal of passing one large reconciliation bill this year to address all priorities, including immigration, energy, defense, and tax cut extensions. This differs from the Senate’s intention to pass two separate reconciliation bills. The House budget resolution includes directions to the House Energy and Commerce Committee to find at least $880 billion in savings, which would likely include Medicaid reforms. The resolution passed by a party-line vote and included two Republican-led amendments. Notably, one amendment, intended to secure votes from members of the Freedom Caucus, would decrease the amount of tax cuts that could be included if $2 trillion in spending is not cut.
Senator Tina Smith (D-MN) Announces She Won’t Run for Reelection. Sen. Smith sits on the Senate Finance and HELP Committees and is active on healthcare issues. This announcement comes on the heels of Sen. Peters’ (D-MI) recent announcement that he also won’t run for reelection. These two key Democratic seats will be open for the 2026 midterm elections. Democrats and Republicans will both work to recruit top-tier candidates to enter these races.
House Ways & Means Health Subcommittee Holds Hearing on Modernizing Healthcare. The hearing included a panel of experts who discussed ways to promote healthy living, including wellness programs, early screenings, and flexible healthcare options (such as health savings accounts and individual coverage health reimbursement arrangements for small business owners). Democrats focused their questions on the recent National Institutes of Health (NIH) guidance capping indirect costs and the impact it would have on future treatments and cures, while Republicans focused on the cost of chronic conditions and their impact on the US healthcare system.
House Oversight Healthcare Subcommittee Examines Welfare Programs. During the hearing, witnesses discussed their views on safety net and welfare programs, including Medicaid, housing benefits, and nutrition programs. Republicans expressed concerns about the growth of these programs. They specifically discussed fraud, waste, and abuse in Medicaid, citing concerns over continuous enrollment and spending on illegal immigrants. They raised policies such as Medicaid block grants and work requirements as potential solutions. Democrats expressed their views that more barriers to accessing benefits should not be added, and some shared their personal experiences with welfare programs.
House Oversight DOGE Subcommittee Holds First Hearing. The newly formed subcommittee is chaired by Rep. Green (R-GA), and Rep. Stansbury (D-NM) is the ranking member. The first hearing included a panel of witnesses who discussed improper payments and fraud in federal programs. Republicans emphasized tackling waste and improper payments in federal programs, particularly Medicaid and Medicare, while Democrats highlighted the negative impact of proposed cuts on low-income and working-class people.
Senate Aging Committee Examines How to Optimize Longevity. Witnesses at the hearing discussed their concerns regarding the rise in chronic conditions and how a focus on healthy lifestyles – including eating a good diet, exercising regularly, and taking preventive efforts – could increase lifespans and improve health outcomes among older Americans. Democrats emphasized the importance of addressing social determinants of health, such as access to affordable healthcare, stable housing, financial security, and walkable communities. Republicans focused on the inefficiency of the current healthcare system, which they believe is reactive rather than preventive, and the need for more longevity-focused care.
ADMINISTRATION
Trump Nominates Additional Healthcare Personnel. President Trump nominated Gary Andres, former staff director for key House healthcare committees, and Gustav Chiarello III, an antitrust lawyer, as HHS assistant secretaries. President Trump nominated Michael Stuart, a West Virginia state senator, to be the HHS general counsel. Trump nominated Terry Cole, the secretary of public safety and homeland security for the commonwealth of Virginia, to be administrator of the US Drug Enforcement Administration, after his first pick Chad Chronister withdrew in December 2024. These nominees will all need to be confirmed by the Senate. Tom Engels returned to the Health Resources & Services Administration, a role he held for two years in the first Trump administration. Peter Nelson, formerly with the Center for American Experiment, will lead the Center for Consumer Information and Insurance Oversight, which has jurisdiction over the Affordable Care Act. These last two positions do not require Senate confirmation, and the individuals are now working in these roles.
NIH Issues Guidance Capping Indirect Costs. Late on February 7, the NIH issued guidance capping indirect cost rates for NIH award recipients at 15%. Indirect costs support grantees’ overhead and administrative costs. The guidance stated that the policy would apply to any new grants issued and to future expenses for existing grants from February 10 onward. As a justification, the NIH stated that the average indirect cost rate has been around 27% and that many organizations’ rates are higher, reaching 50% or 60%. Stakeholders issued statements opposing the policy, including hospitals, the Association of American Medical Colleges (AAMC), and lawmakers from both parties, including Sen. Collins (R-ME), the chair of the Senate Appropriations Committee.
On February 10, when the policy was supposed to go into effect, a group of 22 Democratic state attorneys general filed a federal lawsuit arguing that the change is illegal since Congress passed legislation in 2018 to prevent changes to indirect cost rates. The court granted a temporary injunction the same day, blocking the policy from going into effect in the 22 states that filed suit. AAMC subsequently joined the suit, and on February 11 the judge broadened the injunction to apply nationwide. The American Council on Education, the Association of American Universities, and the Association of Public and Land-grant Universities filed an additional federal lawsuit on February 10. This is an ongoing issue, but it is worth noting that lawmakers could advance a similar indirect costs cap in future appropriations bills or in reconciliation.
President Trump Issues EO to Reduce Federal Workforce. The EO requires agencies to implement a workforce optimization initiative, stating:
Each agency can hire no more than one employee for every four employees that depart.
Agency heads, in consultation with their DOGE team lead, must develop a hiring plan that meets the following requirements:
New career appointment hiring decisions must be made in consultation with the agency’s DOGE team lead.
If the DOGE team lead determines that a career appointment vacancy should not be filled, that vacancy may not be filled unless the agency head decides otherwise.
DOGE team leads must provide the DOGE service administrator with a monthly hiring report.
Agency heads should prepare for large-scale reductions in force, particularly in offices that perform functions not mandated by statute and include employees working in DEI initiatives.
Agency heads must submit a report identifying statutes that establish the agency, or subcomponents of the agency, as required entities. Of note, the authorization for NIH expired after 2020 and has not been reauthorized by Congress, although appropriations have continued.
COURTS
Legal Challenges Continue Against Trump Administration Actions. Lawsuits continue to be filed against actions taken by the Trump administration, including EOs and other administrative actions. In addition to the lawsuits against the NIH indirect costs guidance noted above, lawsuits have been filed in relation to the following:
Health Agency Webpages. On February 11, a federal judge issued a temporary restraining order directing HHS agencies, such as the Centers for Disease Control and Prevention and the US Food and Drug Administration, to restore certain health data on their websites.
Federal Funding Freeze. In late January, a judge blocked Office of Management and Budget (OMB) guidance ordering agencies to pause federal funding that didn’t comply with certain Trump EOs, and OMB subsequently rescinded the guidance. On February 10, a federal judge who previously ruled on the matter granted an additional motion stating that the Trump administration was violating the previous decisions and ordering agencies to restore funding.
Federal Employee Buyout. In the original deferred resignation offer, federal employees had until February 6 to make a decision. The federal judge who originally issued an order to extend the deadline issued an additional extension but then dissolved the temporary restraining order, putting the buyout back in place.
Gender Affirming Care EO. In response to a lawsuit filed by the PFLAG National, GLMA, and transgender individuals and their families, a federal judge on February 13 entered a 14-day nationwide temporary restraining order that prohibits the defendants from “conditioning or withholding federal funds on the fact that a healthcare entity or health professional provides gender affirming medical care to a patient under the age of nineteen.”
QUICK HITS
GAO Publishes Report on Medicaid Enrollment of Individuals Formerly in Foster Care. In response to a request from Senate Finance Committee Ranking Member Wyden (D-OR), the Government Accountability Office (GAO) report summarized efforts by states to enroll children who age out of foster care.
Democratic Healthcare Leaders Urge OIG to Investigate DOGE Access to Sensitive Health Information. House Energy & Commerce Committee Ranking Member Pallone (D-NJ), Senate Finance Committee Ranking Member Wyden, and House Ways & Means Committee Ranking Member Neal (D-MA) requested that the HHS Office of Inspector General (OIG) review actions taken by DOGE when accessing data at CMS and HHS. They also wrote a letter to the acting HHS secretary and acting CMS administrator seeking responses to questions about the DOGE access.
Republicans on Energy & Commerce Committee Announce Data Privacy Working Group. The group includes Vice Chair Joyce (R-PA) and Reps. Griffith (R-VA), Balderson (R-OH), Obernolte (R-CA), Fry (R-SC), Langworthy (R-NY), Kean (R-NJ), Goldman (R-TX), and Fedorchak (R-ND), and aims to explore a legislative framework on data privacy.
CMS Announces Reduction in Marketplace Navigator Funding. For the next four years, navigators will receive $10 million per year, which is a cut from $98 million in 2024. This matches the funding provided in the first Trump Administration. Read the press release here, where CMS notes this will allow the agency to focus on more effective strategies to improve Exchange outcomes and reduce premiums.
NEXT WEEK’S DIAGNOSIS
The House is in recess next week. The Senate will be in session following the President’s Day federal holiday on Monday. The Senate is expected to continue working on confirmations for cabinet secretaries and may also take up the budget resolution reported by the Senate Budget Committee. The Senate Homeland Security & Governmental Affairs Committee will hold a nomination hearing for Deputy Director of OMB nominee Dan Bishop, and the Senate Judiciary Committee will markup the HALT Fentanyl Act, which passed the House in a bipartisan vote earlier this month.
New York Proposes Expansion of Disclosure Requirements for Material Health Care Transactions
Governor Kathy Hochul released the proposed Fiscal Year 2026 New York State Executive Budget on January 21, 2025 (FY 26 Executive Budget). The FY 26 Executive Budget contains an amendment to Article 45-A of New York’s Public Health Law (hereinafter, the Disclosure of Material Transactions Law), which has been in effect since August 1, 2023. The law currently requires parties to a “material transaction” to provide 30 days pre-closing as well as post-closing notice to the New York State Department of Health (DOH). Since the law has taken effect, DOH has received notice of 9 material transactions, the details of which are listed on its website. If enacted, the amendment will change the reporting parties’ notice requirement, extend waiting periods, and increase DOH’s oversight of material health care transactions.
Existing Pre-Closing Notice Requirements
The Disclosure of Material Transactions Law currently requires a written notice to be submitted to DOH at least 30 days prior to the proposed material transaction’s closing. A transaction will be considered “material” if any of the below occur, whether in a single transaction or through a series of related transactions during a rolling 12-month period that results in a health care entity increasing its gross in-state revenues by $25 million or more:
A merger with a health care entity;
An acquisition of one or more health care entities, including, but not limited to, the assignment, sale, or other conveyance of assets, voting securities, membership, or partnership interest or the transfer of control (which is presumed if any person, directly or indirectly, owns, controls, or holds with the power to vote, 10% or more of the voting securities of a health care entity);
An affiliation or contract formed between a health care entity and another person; or
The formation of a partnership, joint venture, accountable care organization, parent organization, or management service organization for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers.
The law requires all “health care entities”, defined under Article 45-A of New York’s Public Health Law to include physician practices or groups, management services organizations or similar entities that provide all or substantially all administrative or management services under contract with at least one physician practice, provider-sponsored organizations, health insurance plans, and any other health care facilities, organizations, or plans that provide health care services in New York (except for insurers or pharmacy benefit managers regulated by the New York State Department of Financial Services), to submit the notice to DOH. Such notice must include:
The names of the parties to the transaction and their current addresses;
Copies of any definitive agreements governing the terms of the material transaction, including pre- and post-closing conditions;
Identification of all locations where each party provides health care services and the revenue generated in the state from such locations;
Any plans to reduce or eliminate services and/or participation in specific plan networks;
The closing date of the transaction;
A brief description of the nature and purpose of the proposed transaction;
The anticipated impact of the material transaction on cost, quality, access, health equity, and competition in the markets the transaction will impact, which may be supported by data and a formal market impact analysis; and
Any commitments by the health care entity to address anticipated impacts.
Change to Pre-Closing Notice Requirement
The proposed amendment to the Disclosure of Material Transaction Law would modify the timing and content requirements of the required notice to DOH. First, the written pre-closing notice would need to be submitted to DOH at least 60 days prior to the closing of the proposed transaction, as opposed to 30 days under the current law. Second, the written pre-closing notice would require:
A statement as to whether any party to the transaction, or a controlling person or parent company of such party, owns any other health care entity which, in the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and if so,
A statement as to whether a sale-leaseback agreement, mortgage, lease payments, or other payments associated with real estate are a component of the proposed transaction. If so, the parties shall provide the proposed sale-leaseback agreement or mortgage, lease, or real estate documents with the notice.
DOH Preliminary Review
When the Disclosure of Material Transactions Law was initially proposed in the Fiscal Year 2024 Executive Budget (FY 24 Executive Budget), it included not only the notification requirement but also a DOH approval process. Under the FY 24 Executive Budget proposal, each material transaction would be subject to DOH review and approval, including DOH’s consideration of several factors (Review Factors), such as:
If the potential positive impacts of the transaction outweigh any potential negative impacts;
Potential anticompetitive effects of the transaction;
The parties’ financial conditions;
The character and competence of the parties, their officers, and their directors;
The source of funds or assets involved in the transaction; and
The fairness of the exchange.
The amendment to the Disclosure of Material Transactions Law proposed in the FY 26 Executive Budget does not revive the Review Factors. However, it does provide that DOH shall conduct a preliminary review of all proposed transactions and, at its discretion, conduct a full cost and market impact review of the transaction. DOH shall notify the parties of the date the preliminary review is completed, and if DOH requires a full cost and market impact review, it shall notify the parties that such a review is required. The law does not specify a timeframe by which DOH must complete its preliminary review. However, if a full cost and market impact review is required, DOH has the power to delay the transaction until the review’s completion, however, closing cannot be delayed more than 180 days from the completion of the preliminary review. As part of a review, DOH may require the parties to the transaction (including parent and subsidiary companies of the parties) to submit additional documentation and information as necessary. Additionally, DOH may require that the parties to a transaction pay to DOH all actual, reasonable, and direct costs incurred by DOH in reviewing and evaluating the notice. Any information obtained by DOH pursuant to the cost and market impact review may be used by DOH in assessing certificate of need applications submitted by the parties. The proposed amendment to the Disclosure of Material Transactions Law in the FY 2026 Executive Budget does not propose a DOH approval process for material transactions, as initially sought in the FY 24 Executive Budget. However, it does give DOH the power to delay transaction closings until it receives all requested information from the parties.
Five-Year Transaction Reporting Requirement
The proposed amendment would add an annual reporting requirement for five years following the transaction’s closing. Each year on the anniversary of the transaction’s closing, the parties to the material transaction would need to provide a report to DOH so that DOH can assess the impact of the transaction on cost, quality, access, health equity, and competition. In addition, DOH may require any parents or subsidiaries of the parties to the material transaction to submit to DOH within 21 days upon request information needed for DOH to assess the impact of the transaction on cost, quality, access, health equity, and competition.
Implications
The proposed amendment indicates the DOH’s desire to heavily regulate and increase its oversight over health care transactions in New York. Including a cost and market impact review signals that DOH may be trying to move toward a more comprehensive review and approval process similar to the framework implemented in Massachusetts in 2012. For providers and other entities who are currently party to a transaction, or contemplating entering into such a transaction, that would be subject to the Disclosure of Material Transactions Law, it is important to note that these proposed amendments may significantly lengthen the timeline of your transaction. In this case, it may behoove such providers and others to proceed with such transactions sooner rather than later.
We will continue to monitor and report on this proposal and other state legislative efforts to broaden the scope of government review of health care transactions.
Trump Administration Names New Head of White House Pandemic Response Office
The Trump administration has named Gerald Parker to lead the White House Office of Pandemic Preparedness and Response Policy. Parker is a veterinarian and has served in the Departments of Health & Human Services, Homeland Security, and Defense.
Most recently, Parker served as the associate dean for Global One Health at Texas A&M’s College of Veterinary Medicine and Biomedical Sciences. In this role, he advised lawmakers on the U.S. bird flu outbreak that has sickened at least 66 people.
Congress established the White House Office of Preparedness and Response Policy in 2022 as the Covid-19 pandemic began to abate. The office advises the President on pandemic preparedness and response policy, drives interagency strategic coordination and communication in preparation for and response to biological threats, and promotes and supports the development of relevant expertise and capabilities to ensure the U.S. can quickly detect, identify, and respond to such threats.
Recent Federal OSHA Workplace Violence Case Provides a Road Map on General Duty Clause in Workplace Violence Cases
On October 25, 2021, a customer named Jacob Bergquist, with a history of violating the Boise Towne Square Mall’s firearms ban, opened fire at the mall. The shooting in the Idaho mall led to the deaths of a Professional Security Consultants, Inc. (PSC) security officer and a mall patron, with several others injured.
This tragic event prompted the federal Occupational Safety and Health Administration (OSHA) to issue a citation against PSC under the General Duty Clause of the Occupational Safety and Health Act (OSH Act), alleging that the company failed to protect its employees from recognized workplace violence hazards. Specifically, OSHA alleged that the hazard arose when PSC officers were enforcing the mall’s code of conduct provision that prohibited firearms on the premises.
After a trial before an administrative law judge (ALJ or court) of the Occupational Safety and Health Review Commission (OSHRC or Commission), the judge found for the employer and vacated the citation. The decision is notable as many states across the country draft workplace violence prevention legislation, and states like California implement further workplace violence regulations.
Quick Hits
On December 26, 2024, an OSHRC ALJ issued a decision vacating an OSHA citation alleging that a private security company, whose mall security officer was shot and killed after approaching an armed patron, had committed a serious violation of the OSH Act’s General Duty Clause by failing to implement sufficient safeguards to protect its security officers from a recognized workplace hazard.
The ALJ determined that the specific hazard cited—the shooter—was not legally cognizable under OSHA standards because the hazard was “idiosyncratic in nature” and “unforeseeable.” also found that the company had implemented adequate policies and training to mitigate the risk posed by the general hazard of workplace violence.
The record established that the security company’s training and policies were clear and specific in instructing mall security officers on how to handle workplace violence hazards.
Since OSHA has not promulgated any workplace violence–specific standards, any citations (including the one against PSC) must be cited under the General Duty Clause. The citation focused on PSC’s alleged failure to protect its security officers from the specific hazard posed by the shooter. However, the difficulty in identifying workplace violence hazards was demonstrated by OSHA’s ongoing struggle throughout the trial to clearly articulate the “recognized hazard” to which PSC had allegedly exposed its employees.
The ambiguity of the citation was tackled head-on by the court, which noted in its decision and order that “the Secretary’s cited hazardous condition ha[d] been unclear in this case.” The court pointed out that OSHA initially identified the hazard as the risk of physical assault posed to PSC security officers by “approaching and engaging with an armed repeat offender of the [mall’s] firearms prohibition,” such as Bergquist (or someone like him), who had shown previous warning signs of violence. As a result, OSHA argued, PSC had not taken adequate measures to mitigate the risk, thereby violating the General Duty Clause of the OSH Act. Ultimately, the court concluded that OSHA’s cited hazard was Bergquist, the individual. However, the court also analyzed the general hazard of workplace violence.
In response to the citation, PSC contended that the hazard posed by an unpredictable mass shooter was beyond the scope of the OSH Act. The company argued that OSHA had failed to meet its burden of proof, as the specific hazard cited was idiosyncratic and unforeseeable. At trial, PSC highlighted its existing policies and training programs designed to address workplace violence, including conflict resolution, use of force, and active shooter training. The court noted that “PSC argued that the unpredictable violent acts of a third-party mall customer committing a mass public shooting were hazards beyond the scope of the OSH Act generally and the General Duty Clause specifically.”
Ultimately, the court used the framework outlined in Integra Health Management, Inc., a 2019 decision where the Commission concluded that in cases of workplace violence cited under the General Duty Clause, the secretary of labor “must establish a ‘direct nexus’ between the work being performed by the employer’s employees and the alleged risk of workplace violence.” The court highlighted the Commission’s finding in Integra that “interactions with the general public may not satisfy the direct nexus test.” Using this framework, the court found that the specific hazard cited by OSHA—Bergquist—was not legally cognizable under OSHA standards. The court determined that the hazard was too “idiosyncratic” and “unforeseeable” to be addressed under the General Duty Clause. This was supported by testimony received during the trial from a behavioral threat assessment expert, who noted that Bergquist’s behavior on the day of the shooting would have been unforeseeable because it “was a spontaneous, impulsive, and emotionally based decision to commit violence.”
Additionally, the court considered the more general hazard of workplace violence and found that PSC had implemented adequate policies and training to mitigate such risks.
“Although an armed-patron-turned-murderer’s motives may be idiosyncratic and beyond PSC’s control,” the court noted, “PSC can control how and when its employees make contact with armed patrons to avoid workplace violence.”
In support of that control, the court looked to PSC’s numerous policies and procedures aimed at avoiding workplace violence. Specifically, the court looked to PSC’s written policy on interacting with armed patrons, which prohibited approach if a patron was exhibiting suspicious behavior or appeared to be intoxicated. There were also guidelines on what to do if an armed patron became confrontational or refused to comply with a security officer’s directive.
Unlike OSHA’s struggles with plainly stating the recognized hazard serving as the basis for its citation, PSC’s training and policies were clear and specific in arming PSC security officers with information and safety protocols to handle workplace violence hazards.
Conclusion
This OSHRC decision highlights the complexities and challenges of addressing workplace violence hazards, particularly those posed in public spaces like malls or shopping centers. The employer’s safety policies, training, and best practices, along with effective trial testimony, helped defeat the citation at the trial.
Community and Environmental Groups File TSCA Section 21 Petition Seeking the Phase Out of Hydrogen Fluoride in Domestic Oil Refining
The Natural Resources Defense Council (NRDC) announced on February 11, 2025, that community and environmental groups submitted a petition under Section 21 of the Toxic Substances Control Act (TSCA) to the U.S. Environmental Protection Agency (EPA) to prohibit the use of hydrogen fluoride in domestic oil refining “to eliminate the extreme and unreasonable risks this use presents to public health and the environment.” Brought by NRDC, Clean Air Council (CAC), and Communities for a Better Environment (CBE), the petition states that EPA must issue a TSCA Section 6(a) rule prohibiting the use of hydrogen fluoride in domestic oil refining to eliminate unreasonable risks to public health and the environment. According to the petition, “TSCA requires EPA to issue such a rule because this petition identifies (1) a ‘chemical substance’ ([hydrogen fluoride]) that presents, (2) under one or more ‘conditions of use’ (the use of HF for alkylation at U.S. refineries, and the rail and truck transportation needed to supply HF to those refineries), (3) an unreasonable risk to health or the environment.” The petition notes that hydrogen fluoride can take different forms and that anhydrous hydrogen fluoride tends to form hydrofluoric acid when it mixes with water. As reported in our November 13, 2019, blog item, in 2019, EPA denied a similar TSCA Section 21 petition to prohibit the use of hydrofluoric acid in manufacturing processes at oil refineries. EPA denied the 2019 petition because it lacked the analysis that would be expected in a TSCA risk evaluation preceding a Section 6(a) rulemaking, such as “discussion of the appropriate hazard threshold, exposure estimates, assessment of risks, or how the facts presented allow EPA to comply with its duties under section 26 or other statutory requirements in making an unreasonable risk determination.” Absent such information, EPA “cannot make the threshold determinations necessary to substantively assess and grant a petition for a TSCA section 6(a) rulemaking.”
TSCA requires EPA to grant or deny the petition within 90 days from the day the petition is filed. If EPA grants the petition, EPA must promptly commence an appropriate proceeding. If EPA denies the petition, EPA must publish the reasons for denial in the Federal Register.
HHS Security Rule NPRM Proposes Makeover for Administrative Safeguard Compliance for Regulated Entities
In this week’s installment of our blog series on the U.S. Department of Health and Human Services’ (HHS) HIPAA Security Rule updates in its January 6 Notice of Proposed Rulemaking (NPRM), we are exploring the proposed updates to the HIPAA Security Rule’s administrative safeguards requirement (45 C.F.R. § 164.308).
Background
Currently, HIPAA regulated entities must generally implement nine standards for administrative safeguards protecting electronic protected health information (ePHI):
Security Management Process
Assigned Security Responsibility
Workforce Security
Information Access Management
Security Awareness and Training
Security Incident Procedures
Contingency Plan
Evaluation
Business Associate Contracts and Other Arrangements
Entities are already familiar with these requirements and their implementation specifications. The existing requirements either do not identify the specific control methods or technologies to implement or are otherwise “addressable” as opposed to “required” in some circumstances for regulated entities. As noted throughout this series, HHS has proposed removing the distinction between “required” and “addressable” implementation specifications, providing for specific guidelines for implementation with limited exceptions for certain safeguards, as well as introducing new safeguards.
New Administrative Safeguard Requirements
The NPRM proposes updates to the following administrative safeguards: risk analyses, workforce security, and information access management. HHS also introduced a new administrative safeguard, technology inventory management and mapping. These updated or new administrative requirements are summarized here:
Asset Inventory Management – The HIPAA Security Rule does not explicitly mandate a formal asset inventory, but HHS informal guidance and audits suggest that inventorying assets that create, receive, maintain, or transmit ePHI is a critical step in evaluating security risks. The NPRM proposes a new administrative safeguard provision requiring regulated entities to conduct and maintain written inventories of any technological assets (e.g., hardware, software, electronic media, data, etc.) capable of creating, receiving, maintaining, or transmitting ePHI, and to illustrate a network map showing the movement of ePHI throughout the organization. HHS would require these inventories and maps to be periodically reviewed and updated at least once every 12 months andwhen certain events prompt changes in how regulated entities protect ePHI, such as new, or updates to, technological assets; new threats to ePHI; transactions that impact all or part of regulated entities; security incidents; or changes in laws.
Risk Analysis – While conducting a risk analysis has always been a required administrative safeguard, the NPRM proposes more-detailed content specifications around items that need to be addressed in the written risk assessment, including reviewing the technology asset inventory; identifying reasonably anticipated threats and vulnerabilities; documenting security measures, policies and procedures for documenting risks and vulnerabilities to ePHI systems; and making documented “reasonable determinations” of the likelihood and potential impact of each threat and vulnerability identified.
Workforce Security and Information Access Management – The NPRM proposes that, with respect to its ePHI or relevant electronic information systems, regulated entities would need to establish and implement written procedures that (1) determine whether access is appropriate based on a workforce member’s role; (2) authorize access consistent with the Minimum Necessary Rule; and (3) grant and revise access consistent with role-based access policies. Under the NPRM, these administrative safeguard specifications would no longer be “addressable,” as previously classified, meaning these policies and procedures would now be mandatory for regulated entities. In addition, the NPRM develops specific standards for the content and timing for training workforce members of Security Rule compliance beyond the previous general requirements.
2025 Outlook – the Department of Health and Human Services Under the Second Trump Administration – Diagnosing Health Care [Video, Podcast]
New from the Diagnosing Health Care Video Podcast: It is critical for health care and life sciences businesses to understand what might and might not change during this transitionary period.
How can you advocate for your needs and priorities in a time of such uncertainty?
On this episode, Epstein Becker Green (EBG) attorneys James Boiani, Rachel Snyder Good, Marjorie Scher, and Rob Wanerman discuss the proposed leadership of the U.S. Department of Health and Human Services under the second Trump administration and the top-ticket items for these potential new leaders.
Chevron deference article mentioned in today’s show
This podcast was recorded on January 23, 2025. Since then, EBG has put out several important free resources in response to President Trump’s executive orders and other executive actions to make sure EBG subscribers have the information they need to navigate any uncertainty. Some examples include:
DEI and Affirmative Action Programs Blitzed, While Executive Order 11246 Is Revoked
Navigating Executive Orders: Insights and What Lies Ahead
The Trump Administration’s Immigration Enforcement Policy: What Hospitals and Health Care Providers Must Know for Their Patients, Staff, and Visitors
The Future of Gender-Affirming Care: Legal, Ethical, and Practical Considerations for Providers
Recent policy shifts have placed gender-affirming care at the center of a legal and political battle that has profound implications for healthcare providers, patients, and institutions. A newly issued executive order has created uncertainty for hospitals, medical schools, and healthcare systems that provide these critical services, raising concerns about potential restrictions tied to federal funding, regulatory enforcement, and ethical obligations.
At its core, gender-affirming care encompasses a range of medical and psychological interventions that support transgender and nonbinary individuals. Major medical organizations, including the American Medical Association, the American Academy of Pediatrics, and the Endocrine Society, have long affirmed that these services are not only necessary but also life-saving for many patients. Treatments such as puberty blockers, hormone therapy, and surgical interventions have been standard components of medical care for gender-diverse individuals, following decades of research and clinical best practices. Despite this, the current policy climate has introduced new risks and challenges for providers and institutions committed to evidence-based care.
One of the most immediate concerns is the potential threat to federal funding for institutions that continue to offer gender-affirming services to minors. Federal research grants, medical education funds, and Medicare and Medicaid reimbursements could all be leveraged as enforcement mechanisms to discourage or prevent the provision of this care. The executive order signals an intent to use regulatory measures to impose restrictions, but it remains unclear how agencies will interpret and enforce these directives. Providers and institutions will need to monitor how federal agencies, such as the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, implement these policies and whether legal challenges will limit or delay enforcement.
The legal landscape surrounding gender-affirming care is complex. Federal agencies have broad discretion in setting funding conditions, but they cannot do so in ways that violate constitutional protections or existing statutory laws. The Affordable Care Act’s Section 1557, for example, prohibits discrimination in healthcare settings based on gender identity. Recent court rulings have reinforced these protections, and legal challenges to any new restrictions will likely invoke these precedents. Several states and civil rights organizations have already initiated lawsuits, arguing that the executive order infringes on medical autonomy, equal protection rights, and existing federal nondiscrimination laws.
Beyond the legal and financial implications, healthcare institutions must also consider the ethical and reputational consequences of their response. Many hospitals and health systems have made public commitments to diversity, equity, and inclusion. A decision to scale back or eliminate gender-affirming services could undermine these commitments and erode trust within the communities they serve. For providers, the ethical obligation to deliver medically necessary care remains paramount. Professional organizations have repeatedly warned that restricting access to gender-affirming care can lead to severe mental health consequences, including increased rates of anxiety, depression, and suicidal ideation among transgender youth.
In light of these challenges, healthcare institutions should take proactive steps to prepare for potential regulatory changes and legal disputes. A critical first step is conducting a thorough review of federal funding streams to assess how dependent the organization is on grants, Medicaid, and Medicare reimbursements. Understanding the precise legal and financial risks will help inform decision-making. Institutions should also engage with legal and policy experts to explore compliance strategies that align with their commitment to patient care. In addition, collaboration with state and local governments may offer alternative funding mechanisms and legal protections that can mitigate federal enforcement risks.
Healthcare leaders must also consider the broader implications for access to care. In states where gender-affirming services remain protected under state law, institutions may still face federal pressure but will have legal support to continue providing care. In states where gender-affirming care is already restricted or under attack, providers may need to explore partnerships with out-of-state institutions, telehealth models, and other innovative solutions to ensure patients can still access the care they need.
As legal and policy battles over gender-affirming care continue to evolve, healthcare institutions will need to remain adaptable. The shifting regulatory environment requires a careful balance between compliance, financial sustainability, and institutional commitments to patient care. The coming months will likely bring new legal challenges, agency guidance, and policy shifts that could further shape the landscape. Healthcare leaders should proactively assess their organizational risk, consult legal and policy experts, and remain engaged in discussions about how best to navigate these complexities while ensuring access to appropriate care within the bounds of applicable laws.
Listen to this post
This Week in 340B: February 4 – 10, 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: HRSA Audit Process; Rebate Model; Other
In a case brought by a 340B covered entity against the Health Resources and Services Administration (HRSA) alleging that HRSA prevented the covered entity from accessing the 340B Program, the covered entity filed a notice of voluntary dismissal.
In a case challenging HRSA’s policy prohibiting all manufacturer conditions on 340B transactions, plaintiffs filed a motion for summary judgment.
In a Freedom of Information Act (FOIA) case, the plaintiff filed a motion to strike HRSA’s motion for summary judgment.
In one HRSA audit process case, the plaintiff filed a brief in opposition to a drug manufacturer’s motion for leave to file as amicus curiae.
In four HRSA audit process cases, the parties filed joint stipulations that the government will provide to the plaintiffs thirty days’ written notice before termination of the plaintiffs from the 340B Program.
In five cases against HRSA alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models:
In two cases, each drug manufacturer plaintiff filed a motion for summary judgment and a group of interested parties filed a motion to intervene.
In one case, two patient advocacy groups filed a motion for leave to file as amicus curiae.
In one case, the drug manufacturer plaintiff filed a motion for summary judgment, a group of interested parties filed a motion to intervene, and two patient advocacy groups filed a motion for leave to file as amicus curiae.
In one case, a group of interested parties filed a motion to intervene.
Kelsey Reinhardt and Nadine Tejadilla also contributed to this article.
End of an Era: Cal/OSHA’s COVID Non-Emergency Standard Sunsets
As of February 3, 2025, most of Cal/OSHA’s COVID-19 Prevention Non-Emergency Standards have officially come to an end. This marks a significant shift for California employers who have been navigating these regulations and their predecessor emergency temporary standards for the past four years.
Despite the expiration of most obligations under this standard, employers are required to comply with certain recordkeeping requirements under Title 8, Subsection 3205(j) until February 3, 2026. As a practical matter, what does this require? There is some ambiguity in how the regulation is drafted.
To set the stage: While the Non-Emergency Standards were in effect, employers were required to keep detailed records of all COVID-19 cases, including the employee’s name, contact information, occupation, workplace location, last day at the workplace, and the date of the positive COVID-19 test or diagnosis.
Going forward, the requirement that employers comply with recordkeeping requirements through February 3, 2026, could be interpreted in either of two ways:
First, the simplest reading is:
With respect to COVID-19 cases that occurred up to February 3, 2025, employers must maintain these detailed records for two years or until February 3, 2026, whichever date comes first.
Alternatively, a more conservative reading of the regulation leads to the following:
Employers must continue to record and track COVID-19 cases that occur through February 3, 2026. Records of COVID-19 cases must be kept for two years. For example, records of a COVID-19 case in January 2026 would need to be maintained through January 2028.
The second interpretation raises additional questions. For instance, why would employers need to record and track COVID-19 cases when all of the related requirements from the Non-Emergency Regulations have expired (such as notifying employees, providing testing, etc.)?
Absent further guidance on this point, the answer is unclear. Cal/OSHA could be expecting employers to keep track of COVID-19 trends and respond to safety concerns through California’s Injury and Illness Prevention Program (IIPP) requirement.
To that point, even though the specific COVID-19 prevention regulations have ended, employers must still adhere to general workplace safety requirements:
Employers are required to maintain a safe and healthful workplace as mandated by Labor Code section 6400.
Employers must continue to implement and maintain an effective IIPP as required by Title 8, California Code of Regulations, sections 1509 (Construction) and 3203 (General Industry).
If COVID-19 is identified as a workplace hazard, employers must evaluate and correct any unsafe conditions, work practices, or procedures associated with it.
While the end of Cal/OSHA’s COVID-19 Prevention Non-Emergency Standards signifies a return to pre-pandemic regulatory conditions, employers must remain vigilant in maintaining workplace safety and complying with ongoing recordkeeping requirements.