Healthcare Preview for the Week of: January 21, 2025 [Podcast]
First Official Week of Trump 2.0
President Trump officially began his second term yesterday. He briefly discussed healthcare in his first inaugural speech, committing to tackle chronic disease and keep children safe, healthy, and disease free. He also signed several executive orders, with fewer than expected directly focusing on healthcare on day one.
It is important to note that executive orders generally are not immediately effective; rather, they initiate a longer process and require additional steps before they can be enforced. Executive orders generally signal values and future plans, but they can be challenged in court. Thus, we need to be precise when looking at executive orders and their potential implications.
Yesterday, President Trump used executive orders to rescind several Biden-era policies, including some related to diversity, equity, and inclusion; climate; and the COVID-19 pandemic. He also issued an order to begin the process of withdrawing the United States from the World Health Organization, referencing the organization’s “mishandling” of COVID-19. This process could take up to a year to go into effect.
President Trump also revoked President Biden’s 2022 executive order on lowering prescription drug costs. This revocation did not stop prescription drug pricing initiatives that are moving forward at the Center for Medicare and Medicaid Innovation, but we’ll need to watch closely any next steps that may stem from it.
President Trump also ordered federal employees to return to in-office work full time, limited the release of new regulations, and froze federal hiring, although he specified that Medicare won’t be adversely impacted. He named Dorothy Fink, MD, as the acting Health and Human Services secretary, while we await the nomination hearings for Robert F. Kennedy Jr.
In health-related legislative news this week, the Senate Committee on the Budget will hold a hearing for Russell Vought’s nomination to become director of the Office of Management and Budget. The House Committee on Veterans’ Affairs Subcommittee on Health Oversight will hold a hearing on community care for veterans. The House Committee on Rules will also meet on items for potential suspension and may consider an abortion-related bill later in the week.
This is only day two of the Administration, so we know that there will be much more healthcare policy to come.
Today’s Podcast
In this week’s Healthcare Preview podcast, Debbie Curtis and Rodney Whitlock join Maddie News to discuss Day One actions by President Trump, including what to take away from his first executive orders and what is still to come for healthcare.
House Bipartisan Task Force on Artificial Intelligence Report
In February 2024, the House of Representatives launched a bipartisan Task Force on Artificial Intelligence (AI). The group was tasked with studying and providing guidance on ways the United States can continue to lead in AI and fully capitalize on the benefits it offers while mitigating the risks associated with this exciting yet emerging technology. On 17 December 2024, after nearly a year of holding hearings and meeting with industry leaders and experts, the group released the long-awaited Bipartisan House Task Force Report on Artificial Intelligence. This robust report touches on how this technology impacts almost every industry ranging from rural agricultural communities to energy and the financial sector to name just a few. It is clear that the AI policy and regulatory space will continue to evolve while being front and center for both Congress and the new administration as lawmakers, regulators, and businesses continue to grapple with this new exciting technology.
The 274-page report highlights “America’s leadership in its approach to responsible AI innovation while considering guardrails that may be appropriate to safeguard the nation against current and emerging threats.” Specifically, it outlines the Task Force’s key findings and recommendations for Congress to legislate in over a dozen different sectors. The Task Force co-chairs, Representative Jay Obernolte (R-CA) and Representative Ted Lieu (D-CA), called the report a “roadmap for Congress to follow to both safeguard consumers and foster continued US investment and innovation in AI,” and a “starting point to tackle pressing issues involving artificial intelligence.”
There was a high level of bipartisan work on AI in the 118th Congress, and although most of the legislation in this area did not end up becoming law, the working group report provides insight into what legislators may do this year and which industries may be of particular focus. Our team continues to monitor legislation, Congressional hearings, and the latest developments writ large in these industries as we transition into the 119th Congress. See below for a sector-by-sector breakdown of a number of findings and recommendations from the report.
Data Privacy
The report’s section on data privacy discusses advanced AI systems’ need to collect huge amounts of data, the significant risks this creates for the unauthorized use of consumers’ personal data, the current state of US consumer privacy protection laws, and recommendations to address these issues.
It begins with a discussion of AI systems’ need for “large quantities of data from multiple diverse sources” to perform at an optimal level. Companies collect and license this data in a variety of ways, including collecting data from their own users, scraping data from the internet, or some combination of these and other methods. Further, some companies collect, package, and sell scraped data “while others release open-source data sets.” These collection methods raise their own set of issues. For example, according to the report, many websites following “a voluntary standard” state that their websites should not be scraped, but their requests are ignored and litigation ensues. It also notes that some companies “are updating their privacy policies in order to permit the use of user data to train AI models” but not otherwise informing users that their data is being used for this purpose. The European Union and Federal Trade Commission have challenged this practice. It notes that in response, “some companies are turning to privacy-enhanced technologies, which seek to protect the privacy and confidentiality of data when sharing it.” They also are looking at “synthetic data.”
In turn, the report discusses the types of harms that consumers frequently experience when their personal and sensitive data is shared intentionally or unintentionally without their authorization. The list includes physical, economic, emotional, reputational, discrimination, and autonomy harms.
The report follows with a discussion of the current state of US consumer privacy protection laws. It kicks off with a familiar tune: “Currently, there is no comprehensive US federal data privacy and security law.” It notes that there are several sector specific federal privacy laws, such as those intended to protect health and financial data and children’s data, but, as has become clear from this year’s Congressional debate, even these laws need to be updated. It also notes that 19 states have adopted state privacy laws but notes that their standards vary. This suggests that, as in the case of state data breach laws, the result is that they have “created a patchwork of rules and regulations with many drawbacks.” This has caused confusion among consumers and resulted in increased costs and lawsuits for businesses. It concludes with the statement that Federal legislation that preempts state data privacy laws has advantages and disadvantages.” The report outlines three Key Findings: (1) “AI has the potential to exacerbate privacy harms;” (2) “Americans have limited recourse for many privacy harms;” and (3) “Federal privacy laws could potentially augment state laws.”
Based on its findings, the report recommends that Congress should: (1) help “in facilitating access to representative data sets in privacy-enhanced ways” and “support partnerships to improve the design of AI systems” and (2) ensure that US privacy laws are “technology neutral” and “can address the most salient privacy concerns with respect to the training and use of advanced AI systems.”
National Security
The report highlights both the potential benefits of emerging technologies to US defense capabilities, as well as the risks, especially if the United States is outpaced by its adversaries in development. The report discusses the status and successes of current AI programs at the Department of Defense (DOD), the Army, and the Navy. The report categorizes issues facing development of AI in the national security arena into technical and nontechnical impediments. The technical impediments include increased data usage, infrastructure/compute power, attacks on algorithms and models, and talent acquisition, especially when competing with the private sector in the workforce. The report also identifies perceived institutional challenges facing DOD, saying “acquisition professionals, senior leaders, and warfighters often hesitate to adopt new, innovative technologies and their associated risk of failure. DOD must shift this mindset to one more accepting of failure when testing and integrating AI and other innovative technologies.” The nontechnical challenges identified in the report revolved around third-party development of AI and the inability of the United States to control systems it does not create. The report notes that advancements in AI are driven primarily by the private sector and encourages DOD to capitalize on that innovation, including through more timely procurement of AI solutions at scale with nontraditional defense contractors.
Chief among the report’s findings and recommendations is a call to Congress to explore ways that the US national security apparatus can “safely adopt and harness the benefits of AI” and to use its oversight powers to hone in on AI activities for national security. Other findings focus on the need for advanced cloud access, the value of AI in contested environments, and the ability of AI to manage DOD business processes. The additional recommendations were to expand AI training at DOD, continue oversight of autonomous weapons policies, and support international cooperation on AI through the Political Declaration on Responsible Military Use of AI. The report indicates that Congress will be paying much more attention to the development and deployment of AI in the national security arena going forward, and now is the time for impacted stakeholders to engage on this issue.
Education and the Workforce
The report also highlights the role of AI technologies in education and the promise and challenges that it could pose on the workforce. The report recognizes that despite the worldwide demand for science, technology, engineering, and mathematics (STEM) workers, the United States has a significant gap in the talent needed to research, develop, and deploy AI technologies. As a result, the report found that training and educating US learners on AI topics will be critical to continuing US leadership in AI technology. The report notes that training the future generations of talent in AI-related fields needs to start with AI and STEM education. Digital literacy has extended to new literacies, such as media, computer, data, and now AI. Challenges include resources for AI literacy.
US leadership in AI will require growing the pool of trained AI practitioners, including people with skills in researching, developing, and incorporating AI techniques. The report notes that this will likely require expanding workforce pathways beyond the traditional educational routes and a new understanding of the AI workforce, including its demographic makeup, changes in the workforce over time, employment gaps, and the penetration of AI-related jobs across sectors. A critical aspect to understanding the AI workforce will be having good data. US leadership in AI will also require public-private partnerships as a means to bolster the AI workforce. This includes collaborations between educational institutions, government, and industries with market needs and emerging technologies.
While the automation of human jobs is not new, using AI to automate tasks across industries has the potential to displace jobs that involve repetitive or predictable tasks. In this regard, the report notes that while AI may displace some jobs, it will augment existing jobs and create new ones. Such new jobs will inevitably require more advanced skills, such as AI system design, maintenance, and oversight. Other jobs, however, may require less advanced skills. The report adds that harnessing the benefits of AI systems will require a workforce capable of integrating these systems into their daily jobs. It also highlights several existing programs for workforce development, which could be updated to address some of these challenges.
Overall, the report found that AI is increasingly used in the workplace by both employers and employees. US AI leadership would be strengthened by utilizing a more skilled technical workforce. Fostering domestic AI talent and continued US leadership will require significant improvements in basic STEM education and training. AI adoption requires AI literacy and resources for educators.
Based on the above, the report recommends the following:
Invest in K-12 STEM and AI education and broaden participation.
Bolster US AI skills by providing needed AI resources.
Develop a full understanding of the AI workforce in the United States.
Facilitate public-private partnerships to bolster the AI workforce.
Develop regional expertise when supporting government-university-industry partnerships.
Broaden pathways to the AI workforce for all Americans.
Support the standardization of work roles, job categories, tasks, skill sets, and competencies for AI-related jobs.
Evaluate existing workforce development programs.
Promote AI literacy across the United States.
Empower US educators with AI training and resources.
Support National Science Foundation curricula development.
Monitor the interaction of labor laws and worker protections with AI adoption.
Energy Usage and Data Centers
AI has the power to modernize our energy sector, strengthen our economy, and bolster our national security but only if the grid can support it. As the report details, electrical demand is predicted to grow over the next five years as data centers—among other major energy users—continue to come online. These technologies’ outpacing of new power capacity can “cause supply constraints and raise energy prices, creating challenges for electrical grid reliability and affordable electricity.” While data centers only take a few years to construct, new sources of power, such as power plants and transmission infrastructure, can take up to or over a decade to complete. To meet growing electrical demand and support US leadership in AI, the report recommends the following:
Support and increase federal investments in scientific research that enables innovations in AI hardware, algorithmic efficiency, energy technology development, and energy infrastructure.
Strengthen efforts to track and project AI data center power usage.
Create new standards, metrics, and a taxonomy of definitions for communicating relevant energy use and efficiency metrics.
Ensure that AI and the energy grid are a part of broader discussions about grid modernization and security.
Ensure that the costs of new infrastructure are borne primarily by those customers who receive the associated benefits.
Promote broader adoption of AI to enhance energy infrastructure, energy production, and energy efficiency.
Health Care
The report highlights that AI technologies have the potential to improve multiple aspects of health care research, diagnosis, and care delivery. The report provides an overview of use to date and its promise in the health care system, including with regard to drug, medical device, and software development, as well as in diagnostics and biomedical research, clinical decision-making, population health management, and health care administration. The report also highlights the use of AI by payers of health care services both for the coverage of AI-provided services and devices and for the use of AI tools in the health insurance industry.
The report notes that the evolution of AI in health care has raised new policy issues and challenges. This includes issues involving data availability, utility, and quality as the data required to train AI systems must exist, be of high quality, and be able to be transferred and combined. It also involves issues concerning interoperability and transparency. AI-enabled tools must be able to integrate with health care systems, including EHR systems, and they need to be transparent for providers and other users to understand how an AI model makes decisions. Data-related risks also include the potential for bias, which can be found during development or as the system is deployed. Finally, there is the lack of legal and ethical guidance regarding accountability when AI produces incorrect diagnoses or recommendations.
Overall, the report found that AI’s use in health care can potentially reduce administrative burdens and speed up drug development and clinical diagnosis. When used appropriately, these uses of AI could lead to increased efficiency, better patient care, and improved health outcomes. The report also found that the lack of standards for medical data and algorithms impedes system interoperability and data sharing. The report notes that if AI tools cannot easily connect with all relevant medical systems, their adoption and use could be impeded.
Based on the above, the report recommends the following:
Encourage the practices needed to ensure AI in health care is safe, transparent, and effective.
Maintain robust support for health care research related to AI.
Create incentives and guidance to encourage risk management of AI technologies in health care across various deployment conditions to support AI adoption and improve privacy, enhance security, and prevent disparate health outcomes.
Support the development of standards for liability related to AI issues.
Support appropriate payment mechanisms without stifling innovation.
Financial Services
With respect to financial services, the report emphasizes that AI is already and has been used for decades within the financial services system, by both industry and financial regulators alike. Key examples of use cases have included fraud detection, underwriting, debt collection, customer onboarding, real estate, investment research, property management, customer service, and regulatory compliance, among other things. The report also notes that AI presents both significant risks and opportunities to the financial system, so it is critical to be thoughtful when considering and crafting regulatory and legislative frameworks in order to protect consumers and the integrity of the financial system, while also ensuring to not stifle technological innovation. As such, the report states that lawmakers should adopt a principles-based approach that is agnostic to technological advances, rather than a technology-based approach, in order to preserve longevity of the regulatory ecosystem as technology evolves over time, particularly given the rapid rate at which AI technology is advancing. Importantly, the report notes that small financial institutions may be at a significant disadvantage with respect to adoption of AI, given a lack of sufficient resources to leverage AI at scale, and states that regulators and lawmakers must ensure that larger financial institutions are not inadvertently favored in policies so as not to limit the ability of smaller institutions to compete or enter the market. Moreover, the report stresses the need to maintain relevant consumer and investor protections with AI utilization, particularly with respect to data privacy, discrimination, and predatory practices.
A Multi-Branch Approach to AI/Next Steps
The Task Force recognizes that AI policy will not fall strictly under the purview of Congress. Co-chair Obernolte shared that he has met with David Sacks, President Trump’s “AI Czar,” as well as members of the transition team to discuss what is in the report.
We will be closely following how both the administration and Congress act on AI in 2025, and we are confident that no industry will be left untouched.
Vivian K. Bridges, Lauren E. Hamma, Abby Dinegar contributed to this article.
New York Employers Must (Again) Provide Reproductive Health Notice of Rights in Employee Handbooks Following Second Circuit Ruling
New York employers are – once again – required to provide employees with notice regarding New York’s reproductive health decision making protections. The U.S. Court of Appeals for the Second Circuit vacated a lower court’s permanent injunction of a New York law that requires employers to include a notice in their employee handbooks regarding the State’s prohibition of discrimination based on reproductive health choices.
The handbook notice requirement stems from New York’s Reproductive Health Bias Law (Labor Law § 203-e) (the “Act”) which was enacted in November 2019 to “ensure that employees or their dependents are able to make their own reproductive health care decisions without incurring adverse employment consequences.” Under the Act, employers may not “discriminate nor take any retaliatory personnel action against an employee with respect to compensation, terms, conditions or privileges of employment because of or on the basis of the employee’s or dependent’s reproductive health decision making, including, but not limited to, a decision to use or access a particular drug, device or medical service.” The Act also prohibits employers from “accessing an employee’s personal information regarding the employee’s or the employee’s dependent’s reproductive health decision making, including, but not limited to, the decision to use or access a particular drug, device or medical service, without the employee’s prior informed affirmative written consent.” Relevant here, the Act requires that employers include in their handbooks a notice of employees’ rights and remedies under the Act.
Numerous religious organizations challenged the Act, including by arguing that the notice requirement violated their First Amendment rights. The U.S. District Court for the Northern District of New York issued a permanent injunction in 2022 halting enforcement of the Act’s notice requirement. On appeal, the Second Circuit disagreed with the district court’s reasoning and lifted the notice-related injunction. In finding the notice requirement lawful, the Second Circuit stated that the notice requirement “is similar to many other state and federal laws requiring workplace disclosures” and that while “the policy judgment that motivated [§ 203-e] may be ‘controversial’ in the same way that the policy judgments underlying Title VII, or minimum wage laws, are controversial . . . the existence and contents of [§ 203-e] – and an employer’s obligation to comply with it – is not itself controversial.” The Second Circuit further noted that the notice requirement in no way restricts employers from otherwise communicating their moral, political, or religious views (or even their disagreement with the provision) to their employees. The Second Circuit remanded the issue back to the district court for further analysis consistent with the appellate decision – thus, the litigation may not be over just yet.
Although the statute does not establish a clear penalty for an employer’s non-compliance with the notice provision (as opposed to the clearly stated employer penalties for engaging in discrimination/retaliation under the Act), New York employers are encouraged to revisit their employee handbooks to ensure compliance with the recent ruling.
Watch Out, Employers: Using Smart Devices in the Workplace May Not Be So Smart
What does the EEOC have to do with smart watches, rings, glasses, helmets and other devices that track bodily movement and other data? These devices, known as “wearables,” can track location, brain activity, heart rate, and other mental or physical information about the wearer, which has led some employers to require their employees to wear company-issued wearables. While the wearables may provide useful data, the EEOC recently warned employers to watch out for the dangers associated with them. A summary of the EEOC’s reported risks are identified below. You can find the full guidance here.
What to watch out for
Per the EEOC’s guidance, there are three categories of risk: collecting information, using information, and reasonable accommodations.
1. Collecting Information – Among other things, wearables collect information related to employees’ physical or mental condition (e.g., heart rate and blood pressure). The EEOC warned that collecting this type of information may pose risks under the Americans with Disabilities Act.
The EEOC considers tracking this sort of information as the equivalent of a disability-related inquiry, or even a medical examination under the ADA. Both inquiries and medical examinations for all employees (not just those with disabilities) are limited to situations where the inquiry or exam is job-related and consistent with business necessity or otherwise permitted by the ADA. The ADA allows inquiries and examinations for employees in the following circumstances:
When a federal, safety-related law or regulation allows for the inquiry or exam,
For certain public-safety related positions (e.g., police or firefighters), or
If the inquiry or exam is voluntary and part of the employer’s health program that is reasonably designed to promote health or prevent disease.
Outside of these three exceptions, the ADA prohibits disability-related inquiries and medical examinations. Also, if you are tracking this information, keep it confidential, just like you would any other medical information.
2. Using Information – Even if collection is permitted, employers must use caution when determining how to use the information. If an employer uses the information in a way that adversely effects employees due to a protected status, it could trigger anti-discrimination laws. A few cautionary examples from the guidance:
Using heart rate or other information to infer an employee is pregnant, then taking adverse action against her
Relying on wearable data, which is less accurate for individuals with dark skin, and making an adverse decision based on that data
Tracking an employee’s location, particularly when they are on a break or off work, and asking questions about their visits to medical facilities, which could elicit genetic information
Analyzing heart rate data to infer or predict menopause and refusing to promote employee because of sex, age, and/or disability
Increased tracking of employees who have previously reported allegations of discrimination or other protected activity
Employers need to be cautious about policies regarding mandated-wearable use. Requiring some, but not all, employees to wear these devices may trigger risks of discrimination under Title VII. If you plan to use these devices, you need human oversight and the employees monitoring the data must understand the device flaws, imperfections in the data, and potential ways of misusing the information.
3. Reasonable Accommodations – Even if an employer’s mandated-wearable requirement meets one of the above-listed exceptions, you may need to make reasonable accommodations if an employee meets the requirements for a religious exception or based on pregnancy or disability.
Takeaways
Technology in the workplace is ever-changing, and you need to stay informed about potential issues before you decide to use it. Do you need this information? If so, do you need it on all of your employees? Remember that if you don’t know about an employee’s protected status, you are less likely to be accused of basing a decision on it.
Before you implement (or continue using) mandated wearables, meet with your employment lawyer to work out a plan for implementation, follow-up, and continued policy monitoring for these devices. Also, check out our prior blog on AI in the workforce for additional tips on responsible use of technology in the workplace.
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FDA Issues New Recommendations on Use of AI for Medical Devices, Drugs, and Biologics
In its most recent effort to keep pace with advancing technology, the US Food and Drug Administration (FDA) recently issued two draft guidances on the use of artificial intelligence (AI) in the context of drugs, biologics, and medical devices.
Medical Device Guidance
The first draft guidance is entitled “Artificial Intelligence-Enabled Device Software Functions: Lifecycle Management and Marketing Submission Recommendations.” The guidance provides an overview of the type of documentation and information that companies will need to submit to the FDA to obtain medical device regulatory approval — part of the so-called “marketing submission” process. Among other things, the FDA advises that such documentation and information should include:
A description of the device inputs and outputs, including whether inputs are entered manually or automatically.
A description of how AI is used to achieve the device’s intended purpose.
A description of the device’s intended users, their characteristics, and the level and type of training they are expected to have and/or receive.
A description of the intended use environment (e.g., clinical setting, home setting).
A description of the degree of automation that the device provides in comparison to the workflow for the current standard of care.
A comprehensive risk assessment and risk management plan.
Data management information, including how data were collected, limitations of the dataset, and an explanation of how the data are representative of the intended use population.
A cybersecurity assessment, particularly focusing on those risks that may be unique to AI.
Guidance for Drugs and Biological Products
The second draft guidance issued this month is entitled “Considerations for the Use of Artificial Intelligence to Support Regulatory Decision-Making for Drug and Biological Products.” The guidance addresses considerations for the use of AI to support regulatory decision-making for drugs and biologics. Specifically, the draft guidance discusses the use of AI models to produce information or data to support regulatory decision-making regarding safety, effectiveness, or quality for these products. To that end, the FDA recommends utilizing the following seven-step process to establish and assess the credibility of an AI model output for a specific context of use (COU) based on model risk:
Step 1: Define the question of interest that will be addressed by the AI model.
Step 2: Define the COU for the AI model.
Step 3: Assess the AI model risk.
Step 4: Develop a plan to establish the credibility of AI model output within the COU.
Step 5: Execute the plan.
Step 6: Document the results of the credibility assessment plan and discuss deviations from the plan.
Step 7: Determine the adequacy of the AI model for the COU.
Each of these steps is discussed in detail in the draft guidance, with examples provided. The FDA states that this will provide a “risk-based credibility assessment framework” that will help manufacturers and other interested parties plan, gather, organize, and document information to establish the credibility of AI model outputs when the model is used to produce information or data intended to support regulatory decision-making.
Conclusion
The new guidances from the FDA provide further indication that the agency is closely scrutinizing the use of AI in and in connection with FDA-regulated medical devices, drugs, and biological products. To reduce the risk of unnecessary regulatory delays, companies seeking approval of FDA-regulated products should carefully review their regulatory submissions to ensure they align with the new AI guidance documents.
PFAS Personal Injury Lawsuits: Warning Bells for Users of PFAS
Two recent PFAS personal injury lawsuits have grabbed headlines, as the plaintiffs in the respective lawsuits allege that they developed cancer from public drinking water supplies that were contaminated with PFAS. These are not the only examples of such lawsuits, and while the cases to date target PFAS manufacturers, AFFF manufacturers, the cases are notable because of the allegations that drinking water caused the plaintiffs’ cancers and also, in one lawsuit, that one of the named defendants is a public water utility.
It is not farfetched to imagine a future in the not distant future where PFAS personal injuries expand the scope of defendants to include companies that used PFAS and discharged effluent into waterways that fed public water supplies. It is also not unrealistic to imagine water utilities brought into lawsuits such as the ones described in this article seeking contribution for alleged liability from upstream (literally) companies that discharged PFAS-containing effluent into waterways that the utility had no choice but to accept and send to customers for drinking water.
PFAS Personal Injury Lawsuits and Drinking Water
The two most recent lawsuits alleging cancer as a direct result of ingesting drinking water are Robert Stanfield v. 3M, et al filed in Martin County, Florida and Freeman and Barbara Thompson v. 3M, et al filed in the federal court for Washington state. Both are similar in nature in that they allege that their drinking water sources (private drinking wells in the Thompson case, and a public water supply in the Stanfield case) caused thyroid, prostate and other cancers. Both cases bring claims for compensation against various manufacturers of PFAS and AFFF (firefighting foam) manufacturers, with the Stanfield case adding the Martin County Utilities as a defendant to the lawsuit. In short, the lawsuits allege that the manufacturers of PFAS and AFFF knew of the potential harms to human health associated with PFAS, specifically from contamination to drinking water. The claim against the Martin Cunty Utilities alleges that the water utility knew of the presence and harms of PFAS in drinking water in 2016, yet continued to supply PFAS-contaminated drinking water to customers.
Current and Future Implications To Companies
The current lawsuits present interesting trends in the PFAS personal injury legal space, as they represent a growing trend of personal injury claims alleging drinking water as the cause. The cases are narrowly focused on PFAS manufacturers, AFFF makers, and in some instances, water utilities. This is a trend that will continue in the short term. However, companies must be aware that the future, in my view, the trajectory will look quite different. Plaintiffs will broaden the number of defendants they bring into lawsuits alleging injury from drinking water, to include companies that historically discharged or continue to discharge PFAS-containing effluent into waterways that ultimately feed into drinking water sources. With the ever-increasing reporting obligations for companies under federal and state regulations (including TRI and NPDES permit reporting requirements), the evidence that plaintiffs need to develop cases such as the ones that I predict will be easier to develop.
A head-in-the-sand approach to these issues is unwise for companies. Understandably, companies face significant business interruption issues every day that demand the “here and now” attention of its professionals. Of course, there is always the hope that the day never comes that the company will be brought into a PFAS lawsuit and it is difficult to provide a percent prediction that Board members crave before investing in risk deterrence programs. However, attorneys in the environmental law space and toxic torts space have seen trends like this before. One need not look any further than the asbestos litigation for support of the predicted trend I speak of. More pointedly, in the 1970s and 1980s, the asbestos litigation focused almost entirely on the suppliers of raw asbestos fiber and the companies that manufactured thermal insulation (seen as one of the products with the highest levels of potential exposure, akin to AFFF in the current PFAS litigation). Yet, today, the litigation focuses exclusively on a wide variety of industry and product types that used asbestos as one component of materials such as gaskets, electrical wire, floor tiles, and cosmetics. As the asbestos litigation evolved and a broader and broader net was cast, so too, i believe, will the course of PFAS litigation follow in the footsteps of asbestos litigation. It is for this reason that companies absolutely must prepare now for what is to come.
CMBG3 Law is following judicial, legislative, administrative, and scientific developments relating to PFAS. We represent companies of all sizes on PFAS compliance, litigation, and risk management issues, as well as consult with insurers and financial world firms on PFAS issues. We are recognized thought leaders on the subject of PFAS and are regularly contacted by media – including Bloomberg, Wall Street Journal, Washington Post – for our opinions on PFAS issues.
Federal Circuit Says Proper Orange Book-Listed Patent Must Claim Active Ingredient
In Teva Branded Pharmaceutical Products R&D, Inc. v. Amneal Pharmaceuticals of New York, LLC, the Federal Circuit jumped on the bandwagon of scrutinizing the types of patents that can be listed in the Food & Drug Administration (FDA) Orange Book (Approved Drug Products with Therapeutic Equivalence Evaluations), and decided that the “device” patents at issue were not properly listable. The decision follows recent action in this space by the Federal Trade Commission (FTC), including a general policy statement issued in late 2023, and challenges to more than 100 specific patent listings related to inhaler devices, multidose eyedrop bottles, and autoinjectors.
The Patents at Issue
The patents at issue were five patents Teva had listed in the Orange Book for its ProAir® HFA (albuterol sulfate) Inhalation Aerosol. The patents are described in the Federal Circuit opinion as relating to “improvements in the device parts of inhalers—specifically, the dose counter.” According to the Federal Circuit opinion, “None of the claims … explicitly require the presence of an active drug” as an element of the claimed product.
The ANDA Proceedings and Delisting Counterclaim
Amneal filed an Abbreviated New Drug Application (ANDA) seeking approval for a generic version of Teva’s ProAir® HFA product. Amneal’s ANDA included a paragraph IV certification against the Orange Book-listed patents at issue. After Teva sued for infringement, Amneal filed a counterclaim seeking delisting of the patents at issue. The district court agreed that the patents should not be listed in the Orange Book, but its delisting order was stayed pending Teva’s appeal to the Federal Circuit.
The Federal Circuit Opinion
The Federal Circuit opinion was authored by Judge Prost and joined by Judges Taranto and Hughes.
The Federal Circuit opinion includes a lengthy background section that touches on the origins of the Hatch-Waxman Act, basic principles of the ANDA framework, and statutory and regulatory provisions governing the listing of patents in the Orange Book. For those not familiar with Orange Book listings, it is important to understand that New Drug Application (NDA) holders are required to list certain patents in the Orange Book, but the FDA does not substantively review whether a patent submitted for listing meets the statutory and regulatory listing requirements. In effect, the listing process operates on an honor system, although ANDA filers can challenge Orange Book listings in a counterclaim in paragraph IV litigation as Amneal did here.
Prior to 2021, NDA holders were required to list “any patent which claims the drug for which the applicant submitted the application or which claims a method of using such drug and with respect to which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner engaged in the manufacture, use, or sale of the drug.” In 2021, the Orange Book Transparency Act (OBTA) was enacted to clarify the types of patents that could be listed and codify existing FDA guidance. As amended by the OBTA, an NDA holder must list:
… each patent for which a claim of patent infringement could reasonably be asserted if a person not licensed by the owner of the patent engaged in the manufacture, use, or sale of the drug, and that—
(I) claims the drug for which the applicant submitted the application and is a drug substance (active ingredient) patent or a drug product (formulation or composition) patent; or
(II) claims a method of using such drug for which approval is sought or has been granted in the application.
The Federal Circuit opinion walks through a lengthy analysis to conclude that the patents at issue are not listable because they do not “claim[] the drug for which the applicant submitted the application,” which the court determined was the active ingredient (albuterol sulfate). At the end of its opinion, the court acknowledges but does not “adopt or reject” Amneal’s additional arguments that the patents are not listable because they are not “drug substance” or “drug product” patents under the OBTA.
The Federal Circuit rejected Teva’s arguments that a patent “claims the drug” if the NDA product infringes the claims, explaining in a nine-page analysis that “claiming” and “infringing” have distinct meanings. The court also rejected Teva’s arguments that a patent “claims the drug” if it claims any part of the NDA product, concluding after an eight-page analysis that just because a drug-device combination product was “approved with an NDA” does not mean every part of the product is a “drug.” Rather, according to the Federal Circuit, for drug-device combination products, “the drug for which the application was submitted and approved” is only “the part of the drug-device combination that made it regulatable as a drug in the first place,” i.e., “the active ingredient.”
Using the Definiteness Requirement as a Touchstone For Listability
The definiteness requirement of 35 USC § 112 requires the claims of a patent to “particularly point[] out and distinctly claim[] the subject matter which the inventor … regards as the invention.” Throughout its analysis, the Federal Circuit opinion invokes this definiteness requirement when interpreting the Orange Book listing requirement that the patent “claims the drug for which the applicant submitted the application.” For example, the court emphasizes:
[A] patent claims the drug when it particularly points out and distinctly claims the drug as the invention.
In rejecting Teva’s arguments that the patents would be listable if its claims were construed as requiring the presence of “an active drug,” the court reasoned:
[T]o claim something, a patent must particularly point out and distinctly claim what it purports to be the invention. See 35 U.S.C. § 112(b). And to qualify for listing, a patent must claim at least the active ingredient in the application and the approved drug product. …
In language that may open the door to Orange Book-listing scrutiny of generic claims, the court stated:
A claim requiring the presence of “an active drug” is far too broad to particularly point out and distinctly claim the drug approved in Teva’s NDA. Teva’s construction permits the presence of any active ingredient in any form. As a matter of law, Teva’s construction does not particularly point out and distinctly claim what was approved—the ProAir® HFA with albuterol sulfate as the active ingredient.
Taking Care With Orange Book Listings
In its policy statement, the FTC characterized improper Orange Book listings as potentially anti-competitive behavior, and “put market participants on notice that the FTC intends to scrutinize improper Orange Book listings to determine whether these constitute unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act.” As noted in the Federal Circuit opinion, Amneal also filed antitrust counterclaims, alleging that the improper listings delayed FDA approval of its generic product. Thus, even though Judge Prost opined that “[t]he attractiveness of the thirty-month stay might arguably provide an NDA holder significant incentives to improperly list patents in the Orange Book,” there are good reasons for taking care with Orange Book Listings.
New Year’s Resolutions for Employment, Industrial Relations, and Work Health and Safety
A few New Year’s Resolutions from an employment, industrial relations and work health and safety perspective as we kick off 2025.
See how many of these can be completed or substantively advanced by the end of March 2025:
Payroll Compliance
Conduct or review your modern award mapping and classifications across the business. Ensure that all employees are receiving correct pay and entitlements under applicable industrial instruments and workplace laws. Criminal wage theft laws are now in place for intentional underpayments. Severe civil penalties also remain in place for underpayments which are not intentional in nature.
Preventing Sexual Harassment (Queensland)
Prepare, consult and implement a prevention plan to manage an identified risk to the health or safety of workers, or other persons, from sexual harassment and sex or gender-based harassment at work. This needs to underway from March 2025.
Positive Duty to Prevent Sexual Harassment (All Australian States and Territories)
Review current measures in place to prevent sexual harassment and sex or gender based harassment at work, generally. Are the measures effective? Does more need to be done to prevent such conduct? There is an expectation of ongoing positive and active attention to this important area.
Psychosocial Hazards and Risks
Review current risk assessments and ensure that psychosocial hazards and risks have been appropriately identified and recorded. Review control measures. Are the measures effective? Does more need to be done in this area?
Work Health and Safety
Review risk assessments holistically across the business. Are they up to date? Do they reflect current business operations and any changes to operations? Are control measures effective? Do they reflect applicable laws, standards, codes of practice and/or best practice? Do they need revision? Have workers been consulted with and trained on hazards, risks and control measures?
Board Briefings
If not already on the agenda, include the above key areas of importance into quarterly updates to the Board. Consider conducting board briefings / training on these matters periodically.
Contractor Classifications
Review each contractor engagement within the business against the new definition of employee. Is there a risk of misclassification or sham contracting (adopting a multi factor test)? Are practical arrangements for contractors in place to reduce this risk? Are opt out notices being used where appropriate? Misclassification or sham contracting can lead to severe consequences – including criminal and civil penalties for underpayments of minimum employment entitlements under applicable industrial instruments.
Industrial Relations Strategy
Review your present Industrial Relations strategy. Does it reflect best practice? Does it incorporate 2023/2024 changes to industrial relations laws?
With the range of criminal sanctions now expanded in the employment law, industrial relations and safety space, and the significant reform over the last year or two, there has never been a more important time to ensure a deliberate and focused plan to manage employment, industrial relations and work health and safety across every business in every industry. Not doing so could expose a company, its directors and other officers and other workplace participants.
Dirty Steel-Toe Boots, Episode 26: OSHA’s Role During President Trump’s Second Term [Podcast]
In this first episode of our Dirty Steel-Toe Boots podcast series for the year, Tampa shareholders Phillip Russell and Dee Anna Hays discuss anticipated changes and developments within the Occupational Safety and Health Administration (OSHA) during President Trump’s second term. Dee Anna and Phillip address the status of the proposed heat illness standard and walkaround rule, expected changes in OSHA leadership, and the potential impact that the incoming administration’s policies, regulatory adjustments, and enforcement strategies may have on workplace safety and health.
PFAS Sewer Sludge Risks Exist Says EPA…But Will It Matter After Today?
Last week, there was significant news in the PFAS realm when the EPA announced its long-awaited draft risk assessment with respect to PFOA and PFOS in sewer sludge from two popular methods of disposing of such sludge – landfilling and land application. Although the draft risk assessment is now set for public comment, the new EPA under the Trump administration will have to determine what to do with the risk assessment findings after the comment period ends. Options of course range from utilizing the risk assessment to create enforceable regulations to…..nothing at all. Given the push already for renewed efforts to create CERCLA exemptions for certain industries, including wastewater treatment facilities, my view is that while neither option on the ends of the possibility spectrum will be the resulting action of the new EPA, the EPA’s actions will not favor a rush to create regulations.
PFAS Sewer Sludge Risks
The EPA’s draft risk assessment finds that PFOA and PFOS from landfilling or land application of sewer sludge “…exceed the agency’s acceptable human health risk thresholds for some pasture farm, food crop farm, and reclamation scenarios when assuming that the land-applied sewage sludge contains 1 part per billion (ppb) of PFOA or PFOS.” EPA also found that “there may be human health risks associated with drinking contaminated groundwater sourced near a surface disposal site when sewage sludge containing 1 ppb of PFOA or sewage sludge containing 4 to 5 ppb of PFOS is disposed in an unlined or clay-lined surface disposal unit.” The EPA did caution that its findings were less conservative that it wished due in part to factoring in non-sludge exposures to PFOA / PFOS, and that its risk assessment did not take into consideration transformation of other PFAS chemicals into PFOA or PFOS.
Once published int he Federal Register, public comment will be open for 60 days.
Likely Action Stemming From Risk Assessment
The timing of the publication of the draft risk assessment if both critical and entirely deliberate. The new EPA will have to allow the public comment period to take its course, and at some point, may have to finalize the risk assessment. However, it is possible that the new EPA will seek ways to either stall doing so or release a statement that after considering public comment, it has decided that a less conservative PFOA / PFOS risk number is appropriate. The latter would in effect allow the EPA to go back to the drawing board in terms of conducting further assessment and comment periods.
I believe that this is precisely what the new administration will seek to do, primarily because of the likely related push to work out a CERCLA exemption carve out for the wastewater treatment industry. It makes little sense, after all, to finalize a risk assessment for sewer sludge, which would then have Clean Water Act and RCRA impacts and obligations for potential enforcement, if enforcement against the industries responsible for managing sewer sludge are to gain CERCLA exemptions.
Further, do not expect the new EPA to be in any rush whatsoever to finalize regulations related to PFOA / PFOS under either the Clean Water Act or RCRA based on the risk assessment, even if finalized in its current form. Even the Biden Administration’s EPA indicated that the risk assessment is but a first step in the process, and that is legally correct. EPA would need to undertake a cost/benefit analysis and feasibility assessment before it could successfully implement regulations under RCRA or the Clean Water Act. I would not expect the new EPA to be in any rush to finalize either assessment.
Looking Beyond Four Years
The longer term impact of the PFAS sewer sludge risk assessment, though, may be more impactful, but likely will be determined based on political party shifts. The draft risk assessment lays the foundation for sludge-related regulations. I believe that given the citizen awareness of the sludge land application issues, it will be difficult for the new EPA to simply ignore or entirely reject the risk assessment. It will have to take some action, but such action will not be rapid. Thus, if in 2029, we see another party shift with more interest in accelerating environmental and PFAS regulations, the foundational framework for what is needed will already be accomplished. I therefore believe that the sludge risk assessment’s legacy will not be felt prior to 2029, but at some point beyond that, it will become incredibly significant as an enforcement tool for the EPA against alleged polluters, as well as a civil litigation tool for plaintiffs’ attorneys seeking to bolster their lawsuits related to sludge contamination.
CMBG3 Law is following judicial, legislative, administrative, and scientific developments relating to PFAS. We represent companies of all sizes on PFAS compliance, litigation, and risk management issues, as well as consult with insurers and financial world firms on PFAS issues. We are recognized thought leaders on the subject of PFAS and are regularly contacted by media – including Bloomberg, Wall Street Journal, Washington Post – for our opinions on PFAS issues.
Maryland’s FAMLI Program, Part I: An Overview of The Law
In 2022, the Maryland General Assembly overrode Governor Larry Hogan’s veto to enact the law that created the Family and Medical Leave Insurance (FAMLI) program. Applicable to all employers with Maryland employees and starting July 1, 2026, the program will provide most employees in Maryland with twelve weeks of paid family and medical leave, with the possibility of an additional twelve weeks of paid parental leave. Contributions from employers and employees to fund the program will begin July 1, 2025.
Quick Hits
Maryland’s Family and Medical Leave Insurance (FAMLI) program provides most Maryland employees with up to twelve weeks of paid leave, with some eligible for an additional twelve weeks, starting July 1, 2026, funded by contributions from both employers and employees beginning July 1, 2025.
The Maryland Department of Labor has released two sets of proposed regulations for the FAMLI program.
Under the FAMLI program, employees in Maryland will be eligible for paid leave for various family and medical reasons, and if they take leave for their own medical reasons, they will be eligible for an additional twelve weeks for parental bonding purposes.
There is much that employers may need to do to prepare. That preparation will depend on regulations issued by the Maryland Department of Labor (MDOL) to implement the law. Thus far, the MDOL has released two sets of proposed regulations, with more to come. The first set, released in October 2024, covers general provisions, contributions, equivalent-private insurance plans, and claims, while the second set, released on January 13, 2025, and currently open for public comment, covers dispute resolution. Part one of this multipart series explains the law, with parts two and three summarizing the proposed regulations, as well as employer concerns.
The law sets forth a general framework for the program, consisting of the following elements:
Leave Amount and Reasons for Leave
Effective July 1, 2026, all employees who have worked at least 680 hours in Maryland over the prior twelve months will be eligible to receive up to twelve weeks of paid leave for their own serious health condition, to care for a family member’s serious health condition, for parental bonding (including kinship care), to care for an injured or ill military servicemember who is next of kin, or for certain qualifying exigency reasons related to a servicemember’s active duty. If an employee has taken FAMLI leave for their own serious health condition, they may receive an additional twelve weeks for parental bonding purposes (and vice versa). The law requires employees to take leave in a minimum of four-hour increments.
Family members include the child of the employee or their spouse, the parent of the employee or their spouse, the employee’s spouse or domestic partner, and the employee’s grandparent, grandchild, or sibling. These include biological, adopted, foster, step, legal guardian, and in loco parentis relationships.
Contributions
The benefits will be administered through a state program, which will be funded through contributions from employers and employees, starting July 1, 2025. The rate of contribution will be determined annually by the Maryland secretary of labor, but is capped at 1.2 percent of an employee’s wages, up to the Social Security wage base (which will be $176,100 in 2025). The law splits contributions 50-50, unless the employer elects to make the employee share of the contribution as well. The law does not require small employers (those with fewer than fifteen employees) to submit the employer portion of the contribution (although employee contributions are still required), and the Maryland Department of Health will reimburse certain licensed/certified community health providers for up to the full amount of their share of the premium.
Employer Notice to Employees
The law requires covered employers to provide written notice to employees of their rights and duties under the law upon hire, annually, and within five days when leave is requested or when the employer knows leave may qualify.
Employee Notice to Employers
If the need for leave is foreseeable, the law requires employees to provide employers with at least thirty days’ written notice of their intention to take leave. If it is not foreseeable, they must provide notice as soon as practicable and generally comply with the employer’s absence-reporting requirements. If intermittent leave is required, the employee must make a reasonable effort to schedule the leave to not unduly disrupt business operations.
Employee Application for Benefits
Employees may apply for benefits up to sixty days before and sixty days after the anticipated start date of the leave, although the MDOL may waive the filing deadlines for good cause. Employers have five days to respond to an application.
Interaction With Other Benefits
FAMLI leave will run concurrently with federal Family and Medical Leave Act (FMLA) leave. Employers may not require employees to use vacation, sick leave, or other paid time off before or while receiving FAMLI benefits, although employers may permit employees to use such leave to bridge the difference between FAMLI benefits and full pay. However, if an employer provides paid leave specifically for purposes of parental bonding, family care, military leave, or disability, the employer may require employees to use such leave concurrently or coordinated with FAMLI leave. Employees receiving unemployment insurance benefits or workers’ compensation benefits (other than for a permanent partial disability) are not eligible for FAMLI benefits.
Job Protection and Health Benefits
During FAMLI leave, the law states that employers may discharge employees only for cause. They must otherwise be reinstated to their job, unless the employer determines that reinstatement will cause “substantial and grievous economic injury” to their operations and has notified the employee of that fact. In addition, the law requires employers to maintain the employee’s health benefits during FAMLI leave.
Private Employer Plans
Employers may establish their own plan or utilize a certified third-party insurance plan that meets or exceeds the rights, protections, and benefits provided to employees under the law. For such private employer plans to be valid, the MDOL, which is directed to establish “reasonable criteria” for such plans, must approve the plan.
Grassley Defends Constitutionality of False Claims Act’s Qui Tam Provisions in Amicus Brief
In an amicus brief filed on January 15, Senator Chuck Grassley (R-IA) urges the Eleventh Circuit to reverse a district court ruling which held that the False Claims Act’s qui tam provisions are unconstitutional.
Grassley, who authored the 1986 amendments which modernized the FCA, states that “the False Claims Act is our nation’s single greatest tool to fight waste, fraud and abuse” and calls the Middle District of Florida’s decision in Zafirov v. Florida Medical Associations a “flawed decision.”
In September, the Middle District of Florida dismissed whistleblower Claire Zafirov’s qui tam lawsuit on the grounds that the FCA’s qui tam provisions are unconstitutional as they violate the Appointments Clause of Article II of the Constitution.
In his brief, Grassley lays out the long-history of qui tam laws and details a number of qui tam provisions enacted by the First Congress. He criticizes the district court for discarding this history despite the Supreme Court’s heavy reliance on it in its decision in Vermont Agency of Nat. Res. v. United States ex rel. Stevens, which held that the FCA’s qui tam provisions do not violate Article III of the Constitution.
“The First Congress that enacted numerous statutes that featured qui tam provisions made clear that, at the time of the founding, the legislature believed that the limited rights granted relators fell within the Constitutional separation of powers many of them had personally fashioned,” Grassley’s brief states.
In the brief, Grassley also notes that “every court to have addressed the issue has concluded that the qui tam provision is in accordance with the Constitutional separation of powers.”
He further emphasizes the immense success of the FCA’s qui tam provisions in incentivizing whistleblowers to come forward and expose otherwise hard-to-detect frauds, deter would-be fraudsters, and protect the public from harm.
As Grassley notes in his brief, “the FCA is a resounding success, as Congress and the Executive Branch have both acknowledged.” According to newly released statistics from the Department of Justice (DOJ), since the FCA was modernized in 1986, qui tam lawsuits have resulted in over $55 billion in recoveries of taxpayer dollars.
Grassley’s brief joins a brief filed by the U.S. government in urging the Eleventh Circuit to reverse the district court ruling. In its brief, the government claims that the Stevens decision “makes clear that relators do not exercise Executive power when they sue under the Act… Rather, they are pursuing a private interest in the money they will obtain if their suit prevails.”
It further states that “the historical record.. suggests that all three branches of the early American government accepted qui tam statutes as an established feature of the legal system.”
During her Senate confirmation hearing on January 15, Senator Grassley asked Pam Bondi, nominee to be the Attorney General, if she would commit to defending the constitutionality of the FCA.
“I would defend the constitutionality of course of the False Claims Act,” Bondi stated. “The False Claims Act is so important, especially by what you said with whistleblowers.”