OIG Favorable Advisory Opinion on Physician Practice’s Arrangement with Telehealth Platform and Recent Corporate Practice of Medicine Developments
On June 11, 2025, the Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion on a proposed arrangement where a physician practice managed by a management services organization (MSO) would engage telehealth-based practices and platforms (collectively, Telehealth Companies) to provide telehealth services, including leasing health care professionals and maintaining the telehealth platform. The physician practice would submit claims for the telehealth services under its own private and government payor contracts. This advisory opinion addresses an increasingly common telehealth delivery model aimed at increasing the availability of health plan coverage for telehealth services, particularly in recent years with the rise in popularity of GLP-1 drugs for managing obesity.
The Proposed Arrangement
The advisory opinion was requested by an MSO and a physician practice wholly owned by a physician shareholder whose underlying arrangement was presumably designed to comply with state prohibitions on the corporate practice of medicine (CPOM). State CPOM provisions generally bar a business corporation from practicing medicine or employing physicians to provide medical services. Under the proposed arrangement, the physician practice would engage the Telehealth Companies, which would (i) lease health care professionals to the physician practice for the provision of professional telehealth services; (ii) provide accounting services (e.g., collecting patients’ copays); (iii) provide online marketing services; and (iv) maintain the telehealth platform. The physician practice would pay hourly rates to lease the health care professionals and an administrative fee for the non-clinical services provided by the Telehealth Companies. The requesters certified that the fees were consistent with fair market value as established by a third-party valuator and that the physician practice would pay the fees regardless of whether the practice was ultimately reimbursed by payors for the telehealth services.
The requestors noted that the Telehealth Companies often have limited in-network contracts with health plans, which can result in reduced access to covered telehealth services and higher out-of-pocket costs for patients—especially those in rural and underserved communities. To address this, the arrangement allows for referrals between the Telehealth Companies and the physician practice when both maintain contracts with the same payor. For example, a Telehealth Company may serve patients in one state, while referring patients from another state to the physician practice, thereby expanding access to in-network care.
OIG’s Analysis
The OIG determined that the arrangement would implicate the federal Anti-Kickback Statute (AKS) since the physician practice would pay remuneration in the form of service fees and the physician practice would receive patient referrals from the Telehealth Companies. But ultimately, the OIG reached a favorable determination based on the requesters’ certification that the proposed arrangement would fully satisfy the AKS’s personal services and management contracts safe harbor including outcomes-based payment arrangements. This safe harbor protects service arrangements meeting certain requirements, including that the methodology for determining the compensation related to the services is set in advance, the compensation is consistent with fair market value in arms-length transactions, and the compensation does not take into account the volume or value of any referrals or other business generated between the parties for which payment may be made by federal health care programs.
GLP-1 Manufacturers’ Lawsuits Against Telehealth Companies
The types of medical services contemplated under the proposed arrangement include obesity management care and the arrangement is reminiscent of the models adopted by a number of telehealth companies focused on managing obesity using drugs commonly known as GLP-1s. In recent years, there has been a rise in telehealth companies partnering with compounding pharmacies, physician practices and/or med spas to compound, prescribe, and distribute compounded versions of GLP-1s. The Food and Drug Administration (FDA) temporarily permitted the compounding of GLP-1s during a nationwide shortage that lasted for about two years and ended by mid-March 2025.
Subsequently, manufacturers of FDA-approved GLP-1s have filed lawsuits against multiple Telehealth Companies alleging that the Telehealth Companies are making compounded versions of their drugs illegally and without approval from FDA. Moreover, in two lawsuits filed by Eli Lilly in April 2025, the manufacturer introduced a novel argument that the Telehealth Companies are violating California’s CPOM law by unduly controlling or influencing prescribing decisions. Both Telehealth Companies are structured as MSOs managing physician-owned physician practices. To comply with state CPOM laws, physician practices must maintain autonomy over clinical decision-making and MSOs must refrain from exercising control over clinical decision-making. However, in both lawsuits, Eli Lilly alleges that the Telehealth Companies (and not the physician practices) provide insufficiently “personalized” medical advice to patients and switch patients’ dosages in violation of California’s CPOM statute.
The advisory opinion in support of, and the lawsuits challenging, these common MSO arrangements have emerged against a backdrop of increased interest in CPOM enforcement by the states. As discussed in another recent post, Oregon and Massachusetts are the latest examples of states aiming to impose additional restrictions on the MSO model.
Oregon Targets Corporate Practice of Medicine with Enacted Bill: What SB 951 Means for MSOs, PE-Backed Physician Groups, and Physicians
Overview of SB 951
Oregon Governor Tina Kotek on Monday, June 9, 2025, signed a first-of-its-kind law that significantly reshapes the state’s regulatory landscape for non-physician investment in medical practices. Senate Bill 951 (“SB 951” or the “Law”) imposes broad restrictions on how non-professional parties, such as private equity firms and other non-physician investors, participate in the ownership, management, and operation of medical practices in Oregon. The Law strengthens and expands Oregon’s existing corporate practice of medicine (“CPOM”) prohibition, directly impacting the way investors, management services organizations (“MSOs”), and professional medical entities structure their relationships. The Law has garnered national attention for its aggressive stance on limiting corporate involvement in healthcare and signals an evolving trend in the state regulation of private equity (and other investor) backed medical practices.
Understanding CPOM Restrictions
A majority of U.S. states (“CPOM States”) recognize some form of CPOM restriction, which generally prohibits unlicensed individuals or non-professional legal entities from owning, operating, or controlling medical practices, or from employing or contracting with physicians to provide medical services to the general public. These CPOM restrictions are intended to prevent non-licensed investors from influencing physicians’ clinical decision-making or from having de facto control over medical practices. The source of CPOM restrictions varies by state, but often are derived from a combination of professional licensure statutes, case law, attorneys general opinions, and regulatory body opinions.
In many CPOM States, a common approach to enable non-physician investment in medical practices, while remaining compliant with applicable CPOM restrictions, is the use of the PC-MSO model. Under this model, a medical practice (i.e., a professional corporation (PC), professional limited liability company (PLLC), or a similar professional entity) is owned exclusively by one or more physicians (unless a particular state’s laws permit minority ownership by non-physicians), and all clinical responsibilities and decision-making authority is reserved exclusively to the physician owners, employees, and contractors. At the same time, an investor forms and operates an MSO (which may be owned, in part, by the same physicians that own the medical practice) that contracts with the medical practice for the provision of all of the non-clinical management, administrative, and business support services necessary to run the medical practice, and the MSO receives a fair market value fee from the medical practice in exchange for such services. This arrangement allows the physicians to focus on providing medical services, while outsourcing non-clinical responsibilities to the MSO.
To promote further alignment between the investor-owned MSO and the medical practice, and to maintain continuity of care and operations of the medical practice, the medical practice physician owners typically enter into a succession agreement (also referred to as a stock transfer restriction agreement, option agreement, or equity transfer agreement) with the MSO and/or the medical practice. Under this agreement the physician owners of the medical practice are restricted from selling or encumbering their equity in the medical practice, or encumbering the assets of the medical practice, without the MSO’s consent. The succession agreement also allows the MSO to require a physician owner of the medical practice to transfer or sell their equity interests in the medical practice to another physician upon the occurrence of certain triggering events, such as the physician’s death, disability, loss of license, or disassociation from the medical practice or the MSO.
Codification of CPOM Restrictions and Narrowing of MSO Control
SB 951 codifies Oregon’s pre-existing CPOM restrictions and takes further aim at private equity-backed PC-MSO arrangements by prohibiting, subject to limited exceptions, MSOs (and their shareholders, directors, members, managers, officers, and employees) from owning or controlling (individually, or in combination with the MSO or any other shareholder, director, member, manager, officer or employee of the MSO) a majority of the shares in a “professional medical entity” (which includes medical, nursing and naturopathic PCs, and LLCs, LPs and partnerships organized for a medical purpose) with which the MSO has a contract for management services, and from serving as directors or officers, being employees of, or working as independent contractors with (or receiving compensation from) the MSO to manage or direct the management of the professional medical entity that has a management agreement with the MSO.
While PC-MSO arrangements are typically structured to delineate the clinical responsibilities and authority of the medical practice from the non-clinical operations and business support services provided by an MSO, SB 951 further restricts the ability of MSOs to exercise “de facto” control over the administrative or business operations of the professional medical entity, including by prohibiting MSOs (and their shareholders, directors, members, managers, officers, and employees) from exercising ultimate decision-making authority over, among other things, setting policies for patient billing and collection, and negotiating, executing, performing, enforcing or terminating contracts with third-party payors or persons that are not employees of the professional medical entity.
SB 951 also significantly impacts the use of succession agreements with physician owners of professional medical entities, permitting only the following triggering events:
Suspension or revocation of a physician’s medical license in any state;
A physician’s disqualification from holding ownership in the professional medical entity;
A physician’s exclusion, debarment, or suspension from a federal healthcare program, or if the physician is under an investigation that could result in such actions;
A physician’s indictment for a felony or other crimes involving fraud or moral turpitude;
The professional medical entity’s breach of a management agreement with an MSO; or
The death, disability or permanent incapacity of a physician.
Consequences of Violating CPOM Restrictions
The Law also expressly provides that a physician or professional medical entity that suffers an ascertainable loss of money or property as a result of a violation of the above prohibitions may bring an action against an MSO with which the medical licensee or professional medical entity has a contract for management services, or a shareholder, director, member, manager, officer or employee of such MSO, in an Oregon circuit court to obtain: (i) actual damages equivalent to the physician’s or professional medical entity’s loss; (ii) an injunction against an act or practice that violates the prohibition; and (iii) other equitable relief the court deems appropriate. A court may also award punitive damages and attorneys’ fees and costs to a plaintiff that prevails in such an action, increasing the potential financial consequences for the defendant.
Additional Restrictions on Non-Competition, Non-Disclosure and Non-Disparagement Agreements
SB 951 also targets the use of nondisclosure, noncompetition and nondisparagement agreements with medical licensees, which could be used by businesses to silence criticism of their operations and management practices. Oregon law already placed restrictions on the use of noncompetition agreements, but with the enactment of SB 951, subject to limited exceptions, noncompetition agreements that restrict the practice of medicine or the practice of nursing are now void and unenforceable between a medical licensee (i.e., a physician, nurse practitioner, physician associate, and practitioner of naturopathic medicine) and an MSO, a hospital (as defined in ORS 442.015) or hospital-affiliated clinic (as defined in ORS 442.612), or any other “person” (as defined in ORS 442.015).
Under the Law, a noncompetition agreement is still valid if the medical licensee is a shareholder or member of the other “person” or otherwise owns or controls an ownership interest and that ownership interest is equal to or exceeds 10% of the entire ownership interest of that person, or the medical licensee owns less than 10% but the medical licensee has not sold or transferred the ownership interest. A noncompetition agreement is also valid, but only for three years after the medical licensee was hired, if it is with a professional medical entity that provides the medical licensee with documentation of the professional medical entity’s protectable interest (i.e., that the costs to the entity – such as for recruiting the employee, sign-on bonus, and education or training in the entity’s procedures – are equal to 20% or more of the annual salary of the medical licensee).
SB 951 also permits a noncompetition agreement if the medical licensee is a shareholder or member of a professional medical entity and has a noncompetition agreement with the professional medical entity, provided the professional medical entity does not have a management agreement with an MSO or if it has a management agreement but the professional medical entity is the MSO or owns a majority of the ownership interests of the MSO. In addition, noncompetition agreements remain valid if the medical licensee does not engage directly in providing medical services, health care services or clinical care.
In addition, the Law specifies that nondisclosure agreements and nondisparagement agreements between a medical licensee and an MSO, or between a medical licensee and a hospital (as defined in ORS 442.015) or hospital-affiliated clinic (as defined in ORS 442.612), if either the hospital or the hospital-affiliated clinic employs a medical licensee, are void and unenforceable, unless the MSO, hospital or hospital-affiliated clinic terminated the medical licensee’s employment or the medical licensee voluntarily left employment with the MSO, hospital or hospital-affiliated clinic, or if the nondisclosure agreement or nondisparagement agreement is part of a negotiated settlement between the medical licensee and an MSO, hospital or hospital-affiliated clinic. Such nondisclosure agreements and nondisparagement agreements cannot, however, be enforced by an MSO, hospital or hospital-affiliated clinic for the medical licensee’s good faith reporting of information to a hospital or hospital-affiliated clinic or a state or federal authority that the medical licensee believes is evidence of a violation of a state or federal law, rule or regulation. Further, the Law prohibits MSOs and professional medical entities from taking an adverse action against a medical licensee as retaliation for, or as a consequence of, the medical licensee’s violation of a nondisclosure agreement or nondisparagement agreement or because the medical licensee in good faith disclosed or reported information to an MSO, hospital, hospital-affiliated clinic, or state or federal authority that the medical licensee believes is evidence of a violation of a federal or state law, rule or regulation.
Market Impact
Oregon’s enactment of SB 951 reflects growing momentum across several states to curtail private-equity and other non-physician investment in medical (and other healthcare) practices.
Notably, over the past two years, legislators in California, Washington, Illinois, Indiana, Massachusetts, New Mexico, and New York have either proposed or passed laws heightening regulatory scrutiny of healthcare transactions or corporate ownership or control of healthcare entities[1]. SB 951 may very well serve as a model for CPOM legislation in other jurisdictions.
While the legislative intent behind the Law is to protect the clinical independence of providers and professional medical entities, its broad scope may have the unintended effect of deterring investment in Oregon’s healthcare market, potentially narrowing the pool of potential buyers for medical (and other healthcare) practices, and subsequently impacting market valuations.
What Comes Next
The CPOM-related restrictions first apply on January 1, 2026 to MSOs and professional medical entities incorporated or organized in Oregon on or after June 9, 2025, and to sales or transfers of ownership in such MSOs or professional medical entities that occur on or after June 9, 2025. The CPOM-related restrictions first apply on January 1, 2029 to MSOs and professional medical entities that existed before June 9, 2025, and to sales or transfers of ownership interests in such MSOs or professional medical entities that occur on or after January 1, 2029. The restrictions on noncompetition, nondisclosure, and nondisparagement agreements apply to contracts that a person enters into or renews on and after June 9, 2025.
Stakeholders with medical operations or investment activity in Oregon should begin preparing now. Key action items for stakeholder consideration may include:
Evaluating whether existing PC-MSO arrangements are compliant with the enacted Law;
Reviewing management and employment agreements for provisions that may soon be unenforceable;
Develop alternative investment and operating models that comply with SB 951’s restrictions; and
Exploring alternatives to succession agreements and restrictive covenant agreements to ensure continued alignment with physician owners of medical practices.
Pending Legislation
On the heels of SB 951, the Oregon legislature is considering a new bill, HB 3410, which seeks to amend the recently enacted SB 951 by tightening and clarifying certain key provisions. Among others, HB 3410 would expand the professional medical entity ownership and control prohibitions to also apply to independent contractors of an MSO, which were previously omitted from SB 951, and slightly relax certain exceptions to the ban on noncompetition agreements with medical licensees. HB 3410 has passed in Oregon’s House of Representatives and is now before Oregon’s Senate Committee on Rules, with many expecting that it will be passed by the Senate and ultimately signed by the Governor.
We continue to monitor developments across the country regarding the potential codification and ongoing enforcement of CPOM restrictions. In light of heightened legislative focus and regulatory scrutiny, we strongly encourage all stakeholders to reassess their healthcare investment strategies and organizational structures to ensure alignment with the evolving legal landscape.
FOOTNOTES
[1] State Healthcare Transaction Laws, https://discover.sheppardmullin.com/state-healthcare-transaction-laws/.
Trump Nominee to Take Reins at OSHA Proposes Strategies for Efficiency and Resource Management
Senate confirmation of David Keeling, President Donald Trump’s nominee to serve as the assistant secretary of labor for occupational safety and health, began on June 6, 2025. The testimony, given during the first week of his nomination process, focused on his qualifications, professional background, and vision for the role to which he was nominated.
He began by outlining his educational credentials and relevant work experience, emphasizing his expertise in his field and his commitment to public service. Keeling addressed key issues pertinent to the position, such as ethical standards, transparency, and the importance of upholding the law or regulations associated with the office.
Quick Hits
Senate confirmation hearings for David Keeling, President Trump’s nominee for assistant secretary of labor for occupational safety and health, began on June 6, 2025, focusing on his qualifications and vision for the role.
Keeling emphasized ethical standards, transparency, and regulatory compliance during his U.S. Senate testimony, proposing strategies to enhance efficiency and stakeholder engagement.
Keeling highlighted the potential of leveraging technology to streamline Occupational Safety and Health Administration (OSHA) operations, improve data management, and enhance service delivery amidst plans to downsize the agency.
Keeling responded to questions from senators regarding his past decisions, his approach to problem-solving, and how he would handle potential conflicts of interest. Keeling assured the committee of his impartiality and dedication to fairness. He also discussed specific policy areas or challenges relevant to the position, offering thoughtful insights and potential strategies for improvement.
Keeling addressed several policy areas and challenges relevant to the position for which he was nominated. These included:
Ethical standards and transparency: Keeling highlighted the ongoing challenge of maintaining high ethical standards within the office. He acknowledged the importance of transparency in decision-making processes and the need to build public trust.
Regulatory compliance: He discussed the complexities of ensuring compliance with existing laws and regulations, particularly in areas where regulations are evolving or subject to interpretation.
Resource allocation and efficiency: Keeling identified the challenge of managing limited resources while striving to maximize efficiency and effectiveness in the office’s operations.
Stakeholder engagement: He recognized the importance of engaging with a diverse range of stakeholders, including the public, industry representatives, and other government agencies, to ensure that policies are well-informed and balanced.
To address these challenges, Keeling proposed several strategies:
Strengthening internal oversight: He suggested implementing more robust internal review processes to ensure ethical standards are upheld and to identify potential conflicts of interest early.
Enhancing training and guidance: Keeling advocated for ongoing training for staff on regulatory requirements and ethical conduct, ensuring that everyone in the office is well-equipped to navigate complex situations.
Improving communication and transparency: He proposed regular public updates and open forums to keep stakeholders informed about the office’s activities and decisions, thereby fostering greater transparency.
Collaborative policy development: He emphasized the value of working collaboratively with the U.S. Congress, other agencies, and external experts to develop policies that are both effective and adaptable to changing circumstances.
Leveraging technology: Keeling mentioned the potential for using new technologies to streamline operations, improve data management, and enhance service delivery.
On this last point, Keeling suggested several ways in which technology could be harnessed to enhance the office’s operations and service delivery:
Streamlining internal processes: Keeling emphasized the adoption of digital tools and automated systems to reduce manual workloads, minimize errors, and accelerate routine administrative tasks. This would allow staff to focus more on complex and value-added activities.
Improving data management: He highlighted the importance of implementing advanced data management systems. These systems would facilitate better collection, storage, and analysis of information, enabling more informed decision-making and efficient tracking of cases or projects.
Enhancing communication: Keeling proposed using technology to improve both internal and external communication. This could include secure messaging platforms for staff collaboration and digital portals for stakeholders to access information, submit inquiries, or provide feedback.
Expanding access to services: By developing online service platforms, the office could make its services more accessible to the public and stakeholders, reducing the need for in-person visits and streamlining application or reporting processes.
Ensuring security and compliance: Keeling also recognized the need for robust cybersecurity measures to protect sensitive data and ensure compliance with privacy regulations as more operations move online.
Through these technological enhancements, Keeling said his aim is to increase efficiency, transparency, and accessibility, ultimately improving the quality and reliability of the office’s services.
Given Keeling’s testimony and the recent testimony of Secretary of Labor Lori Chavez-DeRemer, it is apparent the administration plans to downsize the agency but make up for a reduction in headcount with technology and smarter, more streamlined processes. Some of these efforts are already being seen, such as a recent change in the way area directors are drafting informal settlement agreements with employers that have received citations and the willingness to offer a greater discount off penalty payments if employers pay penalties through Pay.Gov, as opposed to mailing or otherwise submitting the payment for those penalties.
OIG Green Lights MSO Model Arrangement for Telehealth Platforms in New Advisory Opinion
On June 11, 2025, the Department of Health and Human Services Office of Inspector General (OIG) published Advisory Opinion 25-03 (the Advisory Opinion), in which OIG approved of a proposed arrangement under which a management support organization and a physician-owned professional corporation (the Requestors) would enter into an arrangement involving the leasing of clinical employees and provision of certain administrative services related to payor contracting to support the delivery of telehealth services through online platforms. OIG determined that the proposal was protected by a safe harbor under the federal anti-kickback statute (AKS), and therefore the fees payable between the parties thereunder did not constitute prohibited remuneration under the AKS.
Background
Parties Involved
The Requestors include a management support organization that provides non-clinical support services (Requestor MSO), and a physician-owned professional corporation that maintains provider network participation contracts with commercial, Medicare Advantage, and Medicaid plans (Requestor PC) but does not otherwise employ or engage with clinical staff.
Proposed Telehealth Services Platform Arrangement
Under the proposal (Proposed Arrangement), the Requestors would contract with third-party online telehealth platforms – comprised of management services organizations that furnish management services to telehealth providers (Platform MSOs) and telehealth provider entities (Platform PCs) to lease clinicians from the Platform PCs and obtain certain administrative services from the Platform MSOs. According to the Advisory Opinion, the Proposed Arrangement is intended to expand access to in-network services for patients of the Platform PCs, many of whom are “negatively impacted by limited access to insurance-covered telehealth services furnished by Platform PCs” especially in underserved and rural areas. The Requestor PC would credential the clinicians leased from the Platform PCs, and such leased clinicians would furnish services to their patients under Requestor PC’s contracted plans. In conjunction with this clinical arrangement, the Platform MSOs would provide ancillary administrative services to Requestor PC, including accounting (which OIG characterizes as including the collection of patient cost-sharing amounts for services rendered), marketing, administrative support (e.g., support for scheduling of clinical visits), and IT services (e.g., provision of a HIPAA-compliant online platform for receipt of synchronous telehealth services). Requestor PC would pay hourly fees for the leased clinicians and an administrative fee for the non-clinical administrative services, which would be consistent with fair market value for the services rendered as determined by a third-party valuation consultant.
As part of their request for the Advisory Opinion, Requestor MSO and Requestor PC certified that the Proposed Arrangement would meet all conditions of the AKS safe harbor for personal services and management contracts and outcomes-based payment arrangements, including by noting that the methodology for determining the fees would be set in advance and not take into account volume/value of any referrals or other business generated between the parties. Additionally, the fees would be payable regardless of whether Requestor PC was reimbursed by a payor for the visit.
OIG Analysis
Federal Anti-Kickback Statute
The OIG explained that because the Requestor PC offers and pays remuneration to the Platform PC and/or Platform MSO for services rendered, the AKS is implicated whenever the Platform PC refers a patient to Requestor PC. The OIG therefore evaluated whether the Proposed Arrangement could violate the AKS, which prohibits offering, paying, accepting, or soliciting remuneration in exchange for referrals of items or services paid for by federal programs, or in exchange for the purchasing, leasing, ordering of, or arranging for the order of any good, facility, service, or item reimbursed under a federal health care program. Remuneration under the AKS can include anything of value, and violators of the AKS are subject to criminal and civil sanctions, including imprisonment, fines, civil monetary penalties, and exclusion from federal health care programs.
AKS Safe Harbor Requirements and Further Structural Safeguards
The broad scope of the AKS is subject to certain statutory and regulatory safe harbors, which establish protections from scrutiny thereunder for arrangements that meet all required criteria of a safe harbor. As OIG notes, safe harbor compliance “is voluntary” and “arrangements that do not comply with a safe harbor are evaluated on a case-by-case basis.”
In this Advisory Opinion, OIG affirmed that the Proposed Arrangement satisfies the requirements of the “personal services and management contracts and outcomes-based payment arrangements” safe harbor codified at 42 C.F.R. § 1001.952(d), after reviewing the key elements of the Proposed Arrangement and the criteria necessary to comply with such safe harbor.
OIG described the following structural safeguards of the Proposed Arrangement that are compliant with the safe harbor:
The Proposed Arrangement will be memorialized in a written agreement signed by the parties, will have a term of at least one year, and the agreement will clearly describe the duties of, and services provided by all parties involved;
The payments—both for the services of the leased clinicians from each Platform PC, and for the administrative services provided by Platform MSO—are fixed in advance and in line with fair market value, not determined based on volume or value of any referrals or other business generated between the parties, and are payable regardless of whether the Requestor PC is reimbursed by payors for services rendered; and
The Proposed Arrangement would be commercially reasonable even if no referrals resulted from the Proposed Arrangement, the services contracted for are reasonably necessary to accomplish the purpose of the Proposed Arrangement, and the parties are not involved in counseling or promoting any business activity that would violate federal or state law.
The OIG cautioned that this Advisory Opinion is limited to the Proposed Arrangement only, and does not cover additional arrangements or referrals outside of the Proposed Arrangement that may exist between the Platform PC, Platform MSO, Requestor PC and Requestor MSO. The OIG further cautioned that the Advisory Opinion is binding only on the Department of Health and Human Services and not on other government agencies (e.g., the Department of Justice).
Takeaways
The Advisory Opinion is notable for the complexity of the Proposed Arrangement and potentially broad scope of its impact given the reported scope of Platform PC’s payor contracting activities (exceeding 400 payor contracts that cover 80% of all commercially covered lives and 65% of Medicare Advantage covered lives). The Advisory Opinion also acknowledges the role played by management services and support organizations in connection with care delivery, and particularly telehealth services delivered in connection with the Proposed Arrangement. The Advisory Opinion’s conclusion is also noteworthy because OIG did not determine that the arrangement could result in prohibited remuneration, but OIG would exercise discretion not to pursue it due to safeguards present, as OIG often concludes in Advisory Opinions under the AKS. OIG instead went further and determined that there was no prohibited remuneration because it met the safe harbor. It accordingly may provide a potential model for other management services and care delivery organizations to consider for arrangements. We will continue to monitor any guidance or additional advisory opinions that OIG issues on these topics.
This article was co-authored by Ivy Miller
HealthBench: Exploring Its Implications and Future in Health Care
As we noted in our previous blog post, HealthBench, an open-source benchmark developed by OpenAI, measures model performance across realistic health care conversations, providing a comprehensive assessment of both capabilities and safety guardrails that better align with the way physicians actually practice medicine.
In this post, we discuss the legal and regulatory questions HealthBench addresses, the tool’s practical applications within the health care industry, and its significance in shaping the future of artificial intelligence (AI) in medicine.
Legal and Regulatory Implications
Practice of Medicine Concerns
HealthBench’s sophisticated evaluation of AI models in health care contexts raises important questions about the unlicensed practice of medicine and corporate practice of medicine doctrines.
By measuring how models respond to clinical scenarios—particularly in areas like emergency referrals and clinical decision-making—HealthBench provides valuable metrics for assessing when an AI system might cross the line from providing general health information to engaging in activities that could constitute medical practice.
Unlike multiple-choice tests, which primarily assess factual knowledge, HealthBench evaluates models on the types of interactions that might trigger regulatory scrutiny, such as providing personalized clinical advice or making what could be interpreted as medical recommendations, as well as suggesting diagnoses that could merit higher reimbursement. This distinction is crucial as state medical boards and regulators develop frameworks for AI oversight that consider functional capabilities rather than simply knowledge recall. As we highlighted in Epstein Becker Green’s overview of Telemental Health Laws, the regulatory landscape for digital health varies significantly across jurisdictions, requiring careful navigation of different state-specific requirements regarding corporate practice of medicine and the provision of telehealth services.
The benchmark’s ability to distinguish between appropriate responses to health care professionals versus general users also helps clarify when models are operating as clinical decision support tools versus direct-to-consumer health resources, a distinction increasingly important for compliance with state-specific corporate practice of medicine restrictions.
The benchmark can also serve to guide whether a model is biased towards diagnoses with higher risk scores or reimbursement levels, which informs fraud and abuse considerations. The benchmark is also important on the payer side as AI is increasingly used for utilization management and prior authorization, which requires consideration of the individual clinical profile for the determination of medical necessity for an item or service rather than simply relying on a clinical decision-making tool.
EU AI Act and High-Risk Classification
Under the EU AI Act, AI systems intended for use as safety components in medical devices or for providing medical information used in clinical decision-making are classified as “high-risk.” HealthBench’s comprehensive evaluation framework—particularly its assessment of emergency referrals, accuracy, and safety—provides metrics directly relevant to demonstrating compliance with the risk management, technical documentation, and human oversight requirements imposed on high-risk AI systems under the Act.
The benchmark’s measurement of context awareness and the ability to recognize when uncertainty is present aligns with the Act’s requirements that high-risk AI systems appropriately consider limitations in their design and communicate these effectively to users. These capabilities cannot be meaningfully assessed through multiple-choice tests but are captured in HealthBench’s conversational evaluation approach.
Addressing Bias and Fairness
HealthBench’s global health theme evaluates whether models can adapt responses across varied health care contexts, resource settings, and regional disease patterns. This assessment helps identify potential biases in model responses that might disadvantage users from underrepresented regions or health care systems.
Traditional medical knowledge tests have often reflected Western medical education and practice patterns, potentially obscuring biases in how AI systems approach global health questions. HealthBench’s development with physicians from 60 countries who collectively speak 49 languages provides a foundation for assessing model performance across diverse populations, though further work on explicit bias evaluation remains an area for continued development.
Health Care Industry Implementation Considerations
Clinical Workflow Integration
HealthBench evaluates whether models can safely and accurately complete structured health data tasks—such as drafting medical documentation or enhancing clinical decision-making. These metrics help health care institutions assess how effectively AI models might integrate into existing clinical workflows and identify potential friction points before deployment. As the FDA continues to refine its approach to digital health technologies, the ability to demonstrate robust performance on realistic clinical tasks becomes increasingly important for regulatory clearance and market adoption.
Unlike knowledge-based examinations, HealthBench measures capabilities that directly translate to potential clinical applications, providing more actionable insights for implementation planning.
Patient-Provider Communication
The expertise-tailored communication theme measures whether models can distinguish between health care professionals and general users, tailoring communication appropriately. This assessment is crucial for deployment decisions, as models that cannot effectively modulate their responses based on user expertise may create confusion or misunderstanding in clinical settings.
Traditional benchmarks provide little insight into these communication capabilities, which represent core skills for physicians but are rarely captured in standardized testing environments. As ambient listening AI is generating more interest in the health care ecosystem, this benchmark can help to guide whether the information captured represents an accurate clinical picture or is biased. For example, this is particularly relevant in the contexts of complex clinical profiles where poor clinical decision-making could result in medical malpractice. Additionally, this benchmark would also be relevant in the context of clinical profiles where improper coding could impact claims submission that yield higher reimbursement. On the other hand, the benchmark can help practitioners understand whether their ambient listening tools streamline their practice and permit them to be more efficient.
Risk Management and Liability
HealthBench’s evaluation of model reliability—particularly the “worst-at-k” performance that measures how quickly worst-case performance deteriorates with sample size—provides essential metrics for health care risk management. The benchmark reveals that even frontier models like o3, while achieving an overall score of 60%, see their worst-at-16 score reduced by a third, indicating significant reliability gaps when handling edge cases.
This type of risk assessment is impossible with conventional multiple-choice evaluations, which typically report only aggregate scores without revealing the frequency or severity of concerning responses—a critical oversight when considering clinical deployment.
Future Directions and Limitations
While HealthBench represents a significant advancement in health care AI evaluation, it focuses primarily on conversation-based interactions rather than specific clinical workflows that may utilize multiple model responses. The benchmark also does not directly measure health outcomes, which ultimately depend on implementation factors beyond model performance alone.
Real-world studies measuring both quality of model responses and outcomes in terms of human health, time savings, cost efficiency, and user satisfaction will be important complements to benchmark evaluations like HealthBench.
Conclusion
HealthBench establishes a new standard for evaluating AI systems in health care, one that emphasizes real-world applicability, physician validation, and multidimensional assessment. By moving beyond the artificial constraints of multiple-choice tests toward evaluations that mirror authentic clinical practice, HealthBench provides a more meaningful and rigorous assessment of AI capabilities in health care contexts.
As health care organizations, technology developers, and regulators navigate the rapidly evolving landscape of health care AI, benchmarks like HealthBench provide important frameworks for ensuring that innovation advances alongside safety, quality, and ethical deployment.
By grounding progress in physician expertise and realistic scenarios, HealthBench offers a valuable tool for assessing both performance and safety as health care AI continues to evolve—ultimately supporting the responsible development of AI systems that can meaningfully improve human health.
OCR Secures Two HIPAA Settlements Addressing Insider Threats and Ransomware Vulnerabilities
The U.S. Department of Health and Human Services Office for Civil Rights (OCR) recently announced two settlements over alleged violations of the HIPAA Security Rule— one with BayCare Health System, a Florida health care provider, and the other with Comstar, LLC, a Massachusetts billing services company — underscoring the agency’s continued HIPAA enforcement focus. Both settlements emphasize the importance of HIPAA compliance, particularly with respect to implementing proper access controls, conducting HIPAA risk analyses, and maintaining comprehensive security protocols to safeguard electronic protected health information (ePHI).
In the BayCare matter, OCR investigated a complaint involving the alleged unauthorized access and disclosure of a patient’s medical records. According to OCR, a former non-clinical staff member affiliated with a physician practice accessed BayCare’s electronic medical record system and later shared images and video recordings of the complainant’s medical records. Although the physician’s practice had access to BayCare’s systems for continuity of care purposes, OCR determined that BayCare failed to appropriately restrict access to sensitive data and did not implement sufficient oversight mechanisms to monitor system activity.
OCR’s investigation revealed several potential violations of the HIPAA Security Rule. Specifically, OCR alleged that BayCare had not implemented adequate policies and procedures for authorizing access to ePHI and had not taken reasonable steps to reduce known risks and vulnerabilities. In addition, the provider allegedly failed to regularly review information system activity as required by the Security Rule. To resolve the matter, BayCare agreed to pay $800,000 and implement a two-year corrective action plan monitored by OCR. The plan requires BayCare to conduct a thorough HIPAA risk analysis, develop a risk management plan, revise its HIPAA policies and procedures as appropriate, and train its workforce on HIPAA compliance obligations related to ePHI access and data security.
In a separate action, OCR reached a settlement with Comstar, LLC, a business associate providing billing and related services to emergency ambulance services. The case arose from a ransomware breach reported in May 2022, which affected the ePHI of over 585,000 individuals. OCR determined that Comstar had not conducted a proper HIPAA risk analysis to identify potential security vulnerabilities.
The affected data in the Comstar breach included clinical information such as medical assessments and medication records. At the time of the incident, Comstar served as a business associate to more than 70 covered entities. To settle the alleged HIPAA violations, Comstar agreed to pay $75,000 and enter into a two-year corrective action plan. The plan requires Comstar to conduct a comprehensive HIPAA risk analysis, implement a risk management strategy, update its written HIPAA policies and procedures as appropriate, and ensure workforce training on HIPAA compliance.
Acting OCR Director Anthony Archeval emphasized that security failures can make HIPAA-regulated entities attractive targets. “Failure to conduct a HIPAA risk analysis can cause health care entities to be more susceptible to cyberattacks,” he said, adding that identifying and managing risks to ePHI is “effective cybersecurity, and a HIPAA Security Rule requirement.”
Taken together, these enforcement actions signal OCR’s continued focus on ensuring that both covered entities and their business associates meet the requirements of the HIPAA Security Rule, particularly with respect to authorized access and data security.
NYC’s Enhanced ESSTA Rules for Prenatal Leave Create Policy, Posting + Paystub Requirements for Employers
Takeaways
Changes to NYC’s paid prenatal leave requirement take effect 07.02.25.
They incorporate and enhance NYS prenatal leave protections that went into effect at the beginning of this year.
NYC employers should understand their obligations and implement the changes to policies, notices, and recordkeeping.
Consistent with the expanding attention afforded to prenatal health and workplace protections nationally, New York State implemented a new paid prenatal leave requirement as an amendment to the state sick leave law, which went into effect Jan. 1, 2025. New York City recently amended its rules related to the Earned Safe and Sick Time Act (ESSTA) to incorporate the state prenatal leave protections and add enhanced requirements.
NYS Paid Prenatal Leave Rights
Since Jan. 1, 2025, all private-sector employers in New York have been required to provide up to 20 hours of paid prenatal leave in a 52-week period to eligible employees, regardless of company size. The 52-week leave period starts on the first day the prenatal leave is used.
The prenatal leave entitlement is in addition to the statutory sick leave entitlement and other paid time off benefits provided by company policy or applicable law, and it applies only to employees receiving prenatal healthcare services, such as medical exams, fertility treatments, and end-of-pregnancy appointments. Spouses, partners, or support persons are not eligible to use prenatal leave.
Employers cannot force employees to use other leave first or demand medical records or confidential health information to approve prenatal leave requests. (See NYS Paid Prenatal Leave: Employers Must Manage a New Entitlement in the New Year.)
NYC ESSTA Rules Incorporating Prenatal Leave
The New York City Department of Consumer and Worker Protection issued amended rules on May 30, 2025, formally incorporating the state prenatal leave requirement into ESSTA. Changes and obligations related to prenatal leave, which are effective July 2, 2025, include:
Policy Requirements
The obligation to promulgate and distribute a policy related to ESSTA is expanded to require that such policy address paid prenatal leave entitlements. Under the rules, employers must distribute their written safe and sick time and paid prenatal leave policies to employees personally upon hire and within 14 days of the effective date of any policy changes and upon an employee’s request.
In essence, all NYC employers have an obligation to modify their current policy and reissue the revised policy to current employees.
Employee Notice of Rights, Posting
The Department also issued an updated Notice of Employee Rights that includes paid prenatal leave. The updated notice must be provided to new hires and to current employees when rights change (which is the case here), and employers must maintain a record of receipt by the employee. The notice also must be posted.
All NYC employers have an obligation to modify the notice required for new hires and reissue the notice to current employees.
Paystub Requirement
For each pay period in which an employee uses prenatal leave, the following information must be clearly documented on pay stubs or other documentation provided to the employee, such as a pay statement:
The amount of paid prenatal leave used during the pay period; and
Total balance of remaining paid prenatal leave available for use in the 52-week period.
Under updated agency FAQs, this information can be provided by an electronic system in certain instances. This requirement is similar to the existing requirement for notice of paid sick and safe time.
NYC employers should understand their obligations and implement these changes to policies, notices, and recordkeeping.
Your Simple Guide to Depo-Provera Lawsuits and Settlements
What is a meningioma and what types of injuries qualify?
Depo-Provera has many known side effects. However, the current Depo-Provera litigation mainly involves a “signature injury” that was not properly warned against by the Depo-Provera drugmaker, Pfizer. That signature injury is cranial meningioma.
Meningiomas are tumors that have been shown by scientific studies to be caused by Depo-Provera. While meningiomas can form in the tissues surrounding the spinal cord, the signature injury for the purposes of the current litigation are meningiomas that formed in the tissues surrounding the brain – cranial meningiomas. Depending on the size and aggressiveness of the cranial meningioma, symptoms can include pain, altered vision, hearing loss, cognitive impairment, and seizures.
Cranial meningiomas must be diagnosed through computed tomography (CT) scan or magnetic resonance imaging (MRI). Once diagnosed, cranial meningioma sufferers frequently undergo chemotherapy, radiation treatment and surgery.
Bottom Line: You should have been diagnosed with a cranial (not just spinal) meningioma to qualify for the current Depo-Provera litigation.
How do I prove I used Depo-Provera?
The current Depo-Provera litigation involves a minimum level of usage, which is typically one year. Depo-Provera is injected every three months, so the minimum level of usage would equal four injections.
The United States Food and Drug Administration (FDA) approved Depo-Provera for sale back in 1992, and a related drug, Depo-SubQ Provera, was approved shortly afterward. This means that some treatment records could be decades old and may be difficult to obtain.
In those situations, claimants (mostly through their attorneys) will have to search for and try to obtain archived medical records. These searches will not just consist of the usual pharmacy records, but include physician’s records (as injections were many times administered in a doctor’s office) and insurance records (which can tend to be preserved for longer periods of time). Even if these searches eventually prove fruitless, a claimant wants to be in a position to affirm that all avenues were exhausted and ask the Court to rely upon a claimant’s affidavit or similar form of proof.
Bottom Line: You should be able to prove that you used Depo-Provera for one year (received four shots) to qualify for the current Depo-Provera litigation.
What is the current Depo-Provera litigation?
All of the federal Depo-Provera lawsuits have been consolidated into a multidistrict litigation (MDL) before Judge M. Casey Rogers in the Northern District of Florida. It is expected that the MDL will eventually consist of five to ten thousand claims.
Each of the claims in the MDL will retain their individual identities (this is not a class action), but are being consolidated for uniform pretrial proceedings and a what should be a handful of “bellwether cases.” Bellwether cases are basically test cases that are worked up for trial and primarily used to set the value of any future settlements.
Bottom Line: Most cases are being consolidated in the MDL in Florida.
How do I find a Depo-Provera attorney?
You have been diagnosed with a cranial meningioma after using Depo-Provera for at least one year and your claim will likely be filed in the MDL. You now need to talk to legal counsel with experience in MDL litigations and Depo-Provera claims.
Do your homework and research the firm you will be working with — there is a really good chance it will not be the same lawyer that handled your last speeding ticket, or the people answering the phone at the other end of one of the 800 numbers that flash across your television screen late at night.
Also, as with any claims, Pfizer will assert many defenses in the MDL. Some of these defenses can include applicable filing deadlines like statutes of limitations and repose. This basically means that the longer a claimant waits to file a lawsuit, the more likely these types of defenses could be used against that claimant.
Is the One Big Beautiful Bill Act an Employee Benefits Crystal Ball?
Takeaways
Republicans in the U.S. House of Representatives attempt to deliver on President Trump’s campaign promises in the One Big Beautiful Bill Act (BBB or the Act), which passed the House by a razor-thin margin of 215 in favor and 214 opposed on May 22, 2025.
BBB shows favoritism of Health Savings Accounts and Health Reimbursement Account benefits, making changes to broaden their scope, increase utilization, and bolster savings.
The Act also provides a glimpse into legislative or regulatory changes that may be on the horizon for ERISA-governed plans, including standards for Pharmacy Benefit Manager compensation, contractual requirements, and disclosures applicable to government-subsidized plans.
The goal of the U.S. Senate is to pass One Big Beautiful Bill in a form on which Senators can agree, send it back to the U.S. House of Representatives, who then would have it on President Trump’s desk for signature by July 4, 2025. Time will tell whether this accelerated schedule is practical and what ultimately makes its way into federal law.
Without getting too far ahead of the legislative process and certainly staying out of the weeds of the 1,038 pages of legislative proposals, the BBB reveals fringe benefit, health and welfare benefit, and executive compensation priorities. The legislation also tips the hand of the Trump Administration, shining a light on areas in which we may see additional activity.
HSA, HRA Improvements
It is clear that House Republicans like Health Savings Accounts (HSA) and Health Reimbursement Accounts (HRA). There are pages of text aimed at expanding eligibility (including permitting Medicare-eligible enrollees to contribute to HSAs), increasing savings opportunities, allowing rollovers from other healthcare accounts, and permitting the reimbursement of qualified sports and fitness expenses. If the Act becomes law, employers offering HSA or HRA benefits will have some new bells and whistles to add to their programs.
Fringe Benefits That Make Education and Childcare More Affordable
With a focus on families and paying down student loan debt, BBB makes permanent an employer’s ability to make student loan debt repayments on a tax-favored basis under Section 127 of the tax code. BBB also enhances the employer-provided childcare tax credit, further incentivizing employers to provide childcare services to their employees. Whether the employer operates a childcare facility or pays amounts under a contract with a qualified childcare facility, BBB entices employers to add this much-needed employee benefit.
Executive Compensation Changes
The executive compensation changes baked into BBB are designed to help pay for some of the other changes. BBB expands the application of the excise tax on certain tax-exempt organizations paying compensation over $1 million (or excess parachute payments) to include former employees (think: severance). BBB also requires public companies to allocate the Internal Revenue Code Section 162(m) $1 million deduction limit among controlled group members relative to compensation when specified covered employees receive pay from those related employers.
Tax Cuts and Jobs Act Extension
A priority of President Trump, who touted extending his tax cuts during the campaign trail, BBB extends and makes permanent the Tax Cuts and Jobs Act changes. For example, BBB permanently makes qualified moving expense reimbursements taxable.
Pharmacy Benefit Manager Regulation
BBB also includes a few surprise new twists related to Pharmacy Benefit Managers (PBM). Although the legislative reforms currently focus on Medicaid and prescription drug programs subsidized by the federal government (e.g., Medicare Part D plans, including Employer Group Waiver Plans for retirees absent a waiver), it is clear that the Trump Administration and Republicans in Congress seek transparent and fair pricing of prescription drugs. These initiatives eventually may spill over to apply to ERISA-governed plans, in furtherance of President Trump’s Executive Orders advancing Most-Favored Nation prescription drug pricing and directing increased transparency over PBM direct and indirect compensation. So, the changes are worthy of note by all employers that use PBMs.
For Medicaid, BBB prohibits the “spread pricing” model in favor of “transparent prescription drug pass-through pricing model,” which essentially is cost-plus pricing. No more than fair market value can be paid for PBM administrative services.
In the case of Medicare Part D plans, BBB imposes contractual requirements limiting PBM compensation to bona fide service fees. Rebates, incentives, and other price concessions all would need to be passed on to the plan sponsor. Further, the PBM would be required to define and apply in a fully transparent and consistent manner against pricing guarantees and performance measures terms such as “generic drug,” “brand name drug,” and “specialty drug.”
Transparency also is paramount. BBB requires PBMs not only to disclose their compensation, but also their costs and any contractual arrangements with drug manufacturers for rebates, among other details.
It certainly is possible these PBM reforms are coming to an ERISA plan near you. BBB provides a roadmap for the Department of Labor’s Employee Benefits Security Administration to issue ERISA fiduciary standards, best practices, or disclosure requirements.
Oregon Imposes Limitations on Restrictive Covenants in Agreements With Healthcare Practitioners
On June 9, 2025, Oregon Governor Tina Kotek signed into law Senate Bill (SB) 951, which, among other things, will impose significant new limitations on restrictive covenants with healthcare practitioners relating to noncompetition, nondisparagement, and nondisclosure. The limitations may soon be modified by separate legislation, House Bill (HB) 3410.
Quick Hits
With some exceptions, Oregon’s SB 951 renders “void and unenforceable” noncompetition agreements with “medical licensees,” i.e., Oregon-licensed physicians, nurse practitioners, physician associates, and practitioners of naturopathic medicine.
The law also renders “void and unenforceable” certain kinds of nondisparagement and nondisclosure agreements between medical licensees and management services organizations, hospitals, or hospital-affiliated entities.
The new limitations currently apply prospectively and void noncompliant agreements entered into or renewed on or after the law takes effect. HB 3410, if passed, will apply new limitations on noncompetition agreements retroactively.
The law provides anti-retaliation protections to medical licensees who violate otherwise valid nondisclosure or nondisparagement agreements or who disclose or report information that a licensee believes in good faith violates a law, rule, or regulation.
Limitations on Noncompetition Agreements With Medical Licensees
SB 951 renders void and unenforceable noncompetition agreements with medical licensees that are entered into on or after the passage of the law, with some exceptions. If HB 3410 becomes law, however, SB 951 will be given retroactive effect as to noncompetition agreements. The law will render void and unenforceable noncompetition agreements with medical licensees that are entered into before, on, or after the passage of the law.
A “medical licensee” includes an individual licensed in Oregon to practice medicine or naturopathic medicine, or an individual licensed as a nurse practitioner or physician associate.
SB 951 defines a “noncompetition agreement” as “a written agreement between a medical licensee and another person under which the medical licensee agrees that the medical licensee, either alone or as an employee, associate or affiliate of a third person, will not compete with the other person in providing products, processes or services that are similar to the other person’s products, processes or services for a period of time or within a specified geographic area after termination of employment or termination of a contract under which the medical licensee supplied goods to or performed services for the other person.”
The limitation on noncompetition agreements broadly applies to agreements between medical licensees and any person, management services organization, hospital, or hospital-affiliated clinics.
A “management services organization” in this context is defined as “an entity that under a written agreement, and in return for monetary compensation” provides “management services”—i.e., “ services for or on behalf of a professional medical entity”—including payroll, human resources, employment screening, employee relations, or any other administrative or business services that support or enable the entity’s medical purpose but that do not constitute the practice of medicine; the enabling of physicians, physician associates, and nurse practitioners to jointly render professional healthcare services; or the practice of naturopathic medicine.
The law provides exceptions to the prohibition on noncompetition agreements with medical licensees. In all cases, a noncompetition agreement must comply with Oregon’s general limitations on such agreements between employers and employees set out in ORS 653.295. The exceptions may be revised if HB 3410 passes the legislature and the bill is signed into law by the governor.
In both SB 951 and HB 3410, noncompetition agreements with medical licensees will be permitted where the medical licensee has a minimum ownership or membership interest in the other party to the agreement; where “the medical licensee does not engage directly in providing medical services, health care services or clinical care”; or where the professional medical entity provides the medical licensee with documentation of a “protectable interest” (SB 951) or a “recruitment investment” (HB 3410), defined as costs to the professional medical entity equivalent to at least 20 percent of the annual salary of the medical licensee that are incurred for (a) “marketing to and recruiting the licensee”; (b) “providing the licensee with a sign-on or relocation bonus”; (c) “educating or training the licensee in the entity’s procedures”; (d) providing the licensee with “support staff, technology acquisitions or upgrades and license fees related to the employee’s employment”; or (e) “similar or related items.” In some circumstances, both measures place limits on the length of time a noncompetition agreement can remain in effect.
Limitations on Nondisclosure and Nondisparagement Agreements With Medical Licensees
In addition to its limitations on noncompetition agreements, SB 951 also limits nondisclosure and nondisparagement agreements between medical licensees and management services organizations, or between medical licensees and hospitals or hospital-affiliated entities, if the licensee is an employee of the hospital or hospital-affiliated entity. These limitations apply to agreements entered into on or after the date of the law’s passage. There are also some important exceptions.
Nondisclosure Agreements
SB 951 defines a “nondisclosure agreement” as any written agreement that restricts a medical licensee from disclosing (a) a policy or practice that the licensee was required to use in patient care other than individually identifiable health information protected from disclosure under the Health Insurance Portability and Accountability Act of 1996 (HIPAA); (b) a policy, practice, or other information about or associated with the licensee’s employment, conditions of employment, or rate or amount of pay or other compensation; or (c) any other information the licensee possesses or to which the licensee has access by reason of the licensee’s employment by, or provision of services for or on behalf of, the other party to the agreement.
Nondisparagement Agreements
SB 951 defines a “nondisparagement agreement” as any written agreement that requires a medical licensee to “refrain from making to a third party a statement about another party to the agreement or about another person specified in the agreement as a third-party beneficiary of the agreement, the effect of which causes or threatens to cause harm to the other party’s or person’s reputation, business relations or other economic interests.”
Exceptions to the Limitations on Nondisclosure and Nondisparagement Agreements
The limitations on nondisclosure and nondisparagement agreements expressly do not apply to information subject to protection by applicable trade secret law or to information that is proprietary to the other party or other third-party beneficiary of the agreement. The limitations also do not apply to statements by medical licensees that constitute actionable libel, slander, tortious interference with contractual relations, or other established tort, so long as a claim against the medical licensee does not depend upon or derive from a breach or violation of the agreement.
The new law also permits a nondisclosure or nondisparagement agreement with a medical licensee under the following two circumstances:
The medical licensee’s employment with the other party has terminated, voluntarily or involuntarily, and the licensee is not restricted from making a good faith report of information that the licensee believes is evidence of a violation of a law, rule, or regulation to a hospital, hospital-affiliated clinic, or state or federal authority.
The nondisclosure or nondisparagement agreement is part of a negotiated settlement between the medical licensee and the other party.
Antiretaliation Protections
The new law prohibits a management services organization or a professional medical entity from taking an “adverse action” against a medical licensee in retaliation for, or as a consequence of, the licensee’s violation of a nondisclosure or nondisparagement agreement or because the licensee in good faith disclosed or reported information that the licensee believed was a violation of law, rule, or regulation to the management services organization, a hospital, a hospital-affiliated clinic, or a state or federal authority.
An “adverse action” is broadly defined to include “discipline, discrimination, dismissal, demotion, transfer, reassignment, supervisory reprimand, warning of possible dismissal or withholding of work, even if the action does not affect or will not affect a medical licensee’s compensation.”
Next Steps
With SB 951, Oregon joins other states, such as Colorado, Wyoming, Pennsylvania, Louisiana, Maryland, and Connecticut, that are considering or have taken steps to significantly limit or prohibit restrictive covenants with healthcare practitioners.
In light of the changes, employers of healthcare practitioners in Oregon may want to consider reviewing and revising their employment contracts and evaluating alternative strategies for protecting their business interests.
Indiana Adds More Restrictions on Physician Noncompete Agreements
Last month we reported on physician and healthcare noncompete laws enacted in 2025. Shortly after the article was posted, another state joined the ranks: Indiana.
Indiana recently enacted Senate Enrolled Act No. 475 (the “Act”), which amended Indiana’s preexisting physician noncompete statute. The amendment prohibits certain physicians from entering noncompete agreements with hospitals, parent companies of hospitals, affiliated managers of hospitals, or hospital systems. The Act is Indiana’s third law restricting physician noncompetes, building upon existing legislation passed in 2020 and 2023.
Backdrop: Indiana’s 2020 and 2023 Physician Noncompete Restrictions
In 2020, Indiana took its first step toward restricting physician noncompete agreements with the passage of Indiana Code section 25-22.5-5.5. Under the 2020 law, a physician noncompete agreement is only enforceable if it satisfies certain requirements, such as ensuring patient notification of the physician’s contact information, ensuring the physicians’ access to medical records, and giving the physician the option to purchase a release from the terms of the noncompete covenant at a “reasonable price.”
In May 2023, Indiana took a second step toward restricting physician noncompete agreements with the passage of Senate Enrolled Act No. 7 (“SEA 7”). Most notably, SEA 7 prohibits noncompete agreements between an employer and a primary care physician. SEA 7 also renders noncompete agreements with all other types of physicians unenforceable where (1) the employer terminates the physician’s employment without cause, (2) the physician terminates their employment for cause, or (3) the physician’s employment contract expires, and the physician and employer have fulfilled their obligations under the employment contract. SEA 7 also clarified the “reasonable price” buyout provision in the 2020 law by specifying a process for negotiating a reasonable buyout price.
Senate Enrolled Act No. 475
This year, on May 6, 2025, Governor Mike Braun signed into law Senate Enrolled Act No. 475. Effective July 1, 2025, the Act prohibits noncompete agreements between a physician and a hospital, parent company of a hospital, affiliated manager of a hospital, or hospital system. The Act does not repeal, replace, or reduce any aspect of the 2020 or 2023 laws. It only applies to agreements entered into on or after July 1, 2025.
The Act defines a “noncompete” as any contract or contractual provision that restricts or penalizes a physician’s ability to practice medicine in any geographic area for any period of time after a physician’s employment ends. The Act provides further illustration: the definition explicitly includes restrictive covenants that impose financial penalties or repayment obligations pursuant to practicing medicine with a new employer, provisions requiring employer consent to practice medicine with a new employer, and provisions that impose indirect restrictions that limit or deter a physician from practicing medicine with a new employer.
The Act does not apply to:
Agreements in the sale-of-business context where the physician owns more than 50% of the business entity at the time of sale;
Nondisclosure agreements protecting confidential business information and trade secrets; or
Non-solicitation agreements, so long as the non-solicitation agreement only lasts for a one-year term post-employment and does not restrict patient interactions, patient referrals, clinical collaboration, or a physician’s professional relationships.
Importantly, the Act’s definition of “hospital” does not include freestanding health facilities, rural emergency hospitals, and institutions specifically intended to diagnose and treat mental illness and developmental disabilities.
In light of these new restrictions, employers expecting to enter noncompete agreements with physicians in Indiana should work with counsel to make sure their agreements meet these new standards.
Safety Perspectives From the Dallas Region: Challenging OSHA’s Judicial Process [Podcast]
In this episode of our Safety Perspectives from the Dallas Region podcast series, shareholders John Surma (Houston) and Frank Davis (Dallas) discuss pending litigation regarding the constitutionality of the Occupational Safety and Health Review Commission (OSHRC) administrative law judges (ALJs). Frank and John review the arguments supporting the claim that the current system for handling workplace safety disputes is unconstitutional. They specifically highlight issues such as the absence of the right to a jury trial, improper appointments of judges, restrictions on the president’s authority to remove judges, and an insufficient number of OSHRC members to adequately review cases.