‘I AM GOING TO ASK YOU NOT TO CALL MY HOUSE AGAIN”: Documents in TCPA Class Action Against Molina Healthcare Sealed– But It Doesn’t Seem Like that Will Help
So Molina Healthcare is facing a pretty serious TCPA class action up in Washington state.
At issue are claims a lady was tricked or duped or confused into switching to Molina from Aetna and then Molina kept calling her even after she said “I am going to ask you not to call my house again”–which is pretty clear in my view.
Plus Molina was using prerecorded calls which are automatically actionable when sent for marketing purposes without consent to either a cell phone or landline–not good for Molina.
Perhaps even worse news for Molina, they have #biglaw defending them against Avi Kaufman–one of the best class action attorneys in the nation. So I have a feeling I know where this is headed.
I mean, you can’t say BIG LOSS without big law…
But who knows, maybe they’ll pull off a big win. We’ll see.
The Plaintiff’s class certification effort is now fully briefed and the Court just issued an order sealing some of the material designated confidential by the parties. This means nosy operators of TCPA blogs can’t comb through all the records.
Too bad.
Sealing order is Ramey v. Molina, 2025 WL 1100632 (W.D. Wash March 20, 2025).
But what we do know is Molina (or someone acting on its behalf) allegedly called the Plaintiff and duped her into switching healthcare plans away from Aetna. When Plaintiff figured that out she switched back to Aetna but Molina kept calling. No way to know for sure if those facts are true.
Then again, according to Plaintiff’s expert Molina made hundreds of prerecorded calls to numbers within a sample set that were on the company’s internal DNC list. Plaintiff extrapolates there will be over 22,000 individuals in the full set who received approximately 200,000 prerecorded calls AFTER being asked to stop calling. Eesh.
No idea if any of this is true, of course, and a lot of the record is sealed but it seems Molina could be facing $1BB or so in exposure here. Eesh.
We’ll see what happens next.
But its just another example of how dangerous TCPAWorld can be folks. If you are using prerecorded calls to contact consumers you need to make absolutely sure your internal DNC practices are in great condition and be sure to retain TOP NOTCH TCPA counsel to defend any resulting class litigation.
NOW WE’RE TALKING!: Healthcare, Inc. Sues TCPA Plaintiff to Recover Damages for Frivolous Suit and I Love to See it
The only way we’re going to stop frivolous TCPA lawsuits– other than by deleting the most-abused TCPA provisions– is for victims of frivolous TCPA lawsuits to fight back.
And that is just what Healthcare, Inc. appears to be doing in Arizona right now.
In Healthcare, Inc. v. Doyle, 2025 WL 1094309 (D. Az April 11, 2025) a court refused to dismiss Healthcare’s suit against Doyle finding that the dispute is worth more than $75k for jurisdictional purposes– which is a pretty stunning finding all on its own.
But let’s back up and look at the facts here.
Per the court’s order:
Doyle [filed suit] in the District of New Jersey against HCIS for allegedly violating the Protection Act. (Id. ¶ 19.) Doyle alleged in his complaint that he received a call from an agent of HCIS and believed the call was both unconsented to and either prerecorded or otherwise artificial. (Id.) HCIS filed a motion to dismiss Doyle’s complaint for lack of personal jurisdiction and attached a declaration stating HCIS did not call the phone number listed in Doyle’s complaint. (Id. ¶ 20.) Doyle subsequently amended his complaint to change the listed defendants but did not address HCIS’s declaration. (Id. ¶¶ 21–22.) Doyle then voluntarily dismissed his complaint in New Jersey and refiled his complaint in the District of Arizona with no substantive changes. (Id. ¶¶ 24–27.)
Months after filing in Arizona and over eight months after filing his first complaint, Doyle advised HCIS that he listed the wrong phone number in all prior complaints. (Id. ¶ 28.) Upon receiving the correct phone number, HCIS checked its records and determined that someone filled out a Form with that phone number and Doyle’s first and last name. (Id. ¶¶ 28–31.) HCIS also determined the phone call described in Doyle’s complaint was made by a real person. (Id. ¶¶ 41–45.) HCIS then advised Doyle of these facts and attempted to compel arbitration with Doyle pursuant to the arbitration clause in the agreement embedded in the Form. 3 (Id. ¶¶ 32–48.)
While Doyle refused to engage in arbitration, he recognized the lack of a prerecorded message was fatal to his case and that it would be “pointless” to continue his litigation (Id. ¶¶ 51–54.) Doyle first attempted to engage in settlement negotiations, but they ultimately failed. (Id. ¶¶ 54–57.) Doyle nonetheless agreed to dismiss his complaint with prejudice. (Id.)
Get it?
Doyle filed a lawsuit in the wrong jurisdiction over the wrong phone number and on the wrong theory. By the time he figured it out it was months into the second lawsuit. He eventually dismissed the case but not before Healthcare, Inc. was out a bunch of money on fees.
Rather than take matters lying down, Healthcare, Inc. filed its own lawsuit against Doyle for, inter alia, fraud and malicious prosecution. Fun!
Doyle moved to dismiss arguing less than $75k was at issue in the suit so the federal court lacked jurisdiction but the Court disagreed. Healthcare, Inc.’s lawyers attested Healthcare spent more than $75k defending the prior suit– so the case moves on.
Doyle’s arguments were all focused on the merits of the suit but even a perfect defense would not deprive the court of jurisdiction. Since over $75k is at issue the suit moves forward.
Again love to see the aggressive posture by Healthcare, Inc. Will keep a close eye and see where this goes.
UK Employment Rights Bill: Amendments Employers Should Know
On Thursday, March 6, 2025, amendments to the UK government’s Employment Rights Bill were announced. The bill was laid before the UK Parliament in October 2024, but further amendments have now been made as a result of the published responses to the four statutory consultations that were commenced since then. We have summarised some of the changes below.
Quick Hits
On March 6, 2025, the UK government announced amendments to the Employment Rights Bill, which outlined updates to the bill relating to zero-hours and agency workers, changes to statutory sick pay (SSP), and expanded bereavement leave entitlements.
The amended Employment Rights Bill proposes the establishment of a Fair Work Agency with the authority to enforce employment rights and issue underpayment notices, potentially imposing penalties for unpaid wages, holiday pay, and SSP.
The bill, which has passed its first and second readings in the House of Lords, is expected to become law by summer 2025, with many changes anticipated to take effect from spring 2026, subject to further consultations and amendments.
Zero Hours Measures: Extension to Agency Workers
The initial draft of the bill included complex provisions granting zero hours and low hours workers the right to a guaranteed hours contract, reasonable shift notice, and compensation for cancelled, shortened, or rescheduled shifts. Although there is no longer a proposal for an outright ban on “exploitative” zero contracts, a series of protections are set to be introduced.
Through consultation and mounting criticism by trade unions, these zero hours provisions have now been extended to include agency workers. New clauses in the bill would insert a new schedule into the Employment Rights Act 1996 which would mean that end hirers must also offer guaranteed hours to qualifying agency workers, although the minimum number of hours remains unconfirmed. Responsibility for providing guaranteed hours would be shared between employment agencies and end hirers.
Employment agencies would also be required to compensate workers for shifts cancelled or changed at short notice. This includes agency work arrangements made more than two months before the bill comes into force, as they may be eligible to recover certain backdated costs from end hirers. For arrangements made after the bill is enacted, cost recoveries would be subject to negotiation between agencies and end hirers.
Statutory Sick Pay
Statutory sick pay (SSP) has also been amended, with the original proposal to remove the lower earnings limit now scrapped during consultations.
This amendment seeks to achieve a balance whereby lower earners are excluded from the scheme, but equally are not financially better off receiving SSP than they are while at work. Therefore, workers earning less than the lower earnings limit (currently £123 per week) would have the right to SSP at 80 percent of their normal weekly earnings or the existing flat rate of SSP whichever is lower. This change would only take effect after further secondary regulations are published, likely coming into force in 2026.
The bill is also set to abolish the “waiting days” rule, meaning SSP would be payable from the first day of absence (instead of after the first three days, as is the current rule).
Fair Work Agency
It was previously stated in the bill that a Fair Work Agency (FWA) would be established. Further consultations have now expanded on this area and clarified the powers the FWA may hold, including the power to bring employment tribunal proceedings on an employee’s behalf and provide legal assistance during proceedings.
Initially, the FWA’s powers will take over specific areas that are already covered by existing enforcement agencies, with the addition of holiday pay enforcement for inaccurate records. The bill would also grant the government a broad authority to expand the FWA’s mandate to include other forms of work rights.
However, under the amended bill, the secretary of state would also gain new powers to issue underpayment notices for unpaid wages, holiday pay, and SSP. This could result in penalties of 200 percent of the sum due (capped at £20,000 per individual) being payable to the secretary of state, if the payment is not resolved within the timeframe.
The FWA is unlikely to be fully functional before Autumn 2026 at the earliest.
Right to Switch Off
There is speculation that the proposed “right to switch off,” which was featured in the original bill, may now be scrapped due to concerns that it will negatively impact business activities, however, no formal announcement has been made.
Day One Rights
New day one rights, such as for unfair dismissal, would apply from the first day of employment, although an “initial period of employment” would allow for a lighter-touch dismissal process. This period is expected to range from three to nine months, though the exact duration has not yet been announced and will be examined further in a separate consultation.
The changes to day one rights are unlikely to come into effect before Autumn 2026 at the earliest.
Bereavement Leave
Bereavement leave was set to be expanded in the original bill, as the amendments propose to grant one week of leave for all grieving employees. Further regulations are expected to set out eligibility for this leave and how the leave can be taken.
Currently, employees have a right to take two paid weeks off work for the death of a child under the age of eighteen or for pregnancy loss after twenty-four weeks of pregnancy. The bill may extend this to provide two weeks of leave for mothers and their partners who experience pregnancy loss before twenty-four weeks of pregnancy. The amendments to the bill could now mean the right could encompass a wider scope of employees who have experienced bereavements, including those who suffer pregnancy loss as a result of a miscarriage, ectopic pregnancy, molar pregnancy or termination, or unsuccessful in vitro fertilization (IVF) as a result of embryo transfer loss.
Next Steps
The bill has now progressed through its first and second readings in the House of Lords and will proceed to the committee stage on 29 April 2025. Subject to further consultations and possible amendments, the bill is expected to be given Royal Assent and to become the Employment Rights Act in the summer of 2025, with many changes expected to come into force from spring 2026. The bill will continue to undergo extensive parliamentary scrutiny before it can be passed. Consultations on most reforms are due later this year, and it is likely that more details will be addressed in secondary legislation. This topic is therefore likely to continue evolving for some time.
The current bill amendments signal a move towards enhanced agency worker protections, but they also impose substantial new responsibilities on employers, whether through day one rights, expanded leave entitlements, SSP changes, or compliance obligations under the FWA. Employers should continue to keep aware of the possible changes and may want to review their current policies and procedures to ensure their compliance with any changes.
Old North State Report – April 14, 2025
UPCOMING EVENTS
April 14, 2025
Raleigh Chamber Business After Hours – Raleigh
April 16, 2025
Federalist Society Housing Policy and Regulation in NC – Raleigh
April 17, 2025
NC Chamber Building NC – Durham
April 22, 2025
NC Chamber Spring Member Roundtable – Asheville
April 24, 2025
Raleigh Chamber Young Professionals Network Social – Raleigh
RTAC – Association of Corporate Counsel Spring Reception – (Raleigh)
April 28, 2025
Thinkers Lunch: Rob Christensen
LEGISLATIVE NEWS
SENATE BUDGET TO BE RELEASED NEXT WEEK
The Senate is set to release its budget bill Monday afternoon, according to Republican Senate leader Phil Berger (R-Rockingham), who spoke to reporters after the Senate session on Tuesday evening.
This budget is a two-year spending plan that will likely exceed $30 billion, funding raises for state employees and teachers, and replenish the rainy-day fund to get back to the $4.75 billion it contained before Hurricane Helene.
Leadership in the House and the Senate have agreed the budget can grow by 2.75% in fiscal 2025-2026 and 2.25% above that in fiscal 2026-2027. The current budget appropriated $29.7 billion for general fund spending in fiscal 2023-2024 and $30.8 billion in fiscal 2024-2025.
The process begins with the Senate version going through committees on Tuesday, with floor votes on Wednesday and Thursday. The House is expected to pass its version in May, followed by negotiations among Republican leaders for a final budget.
Read more by Under the Dome/The News & Observer
LAST-MINUTE HOUSE PROPOSALS FILED AHEAD OF BILL FILING DEADLINE
Offering on-site childcare for state employees, allowing private school students to take classes at local public schools, addressing issues with loose dogs, and dealing with slow drivers in the left lane are among the last-minute proposals filed by House members before the Thursday deadline. House lawmakers had a deadline to file bills by 3 p.m., resulting in more than 100 new proposals. This brings the total number of bills introduced this session to nearly 2,000, reflecting emerging policy goals.
Education and public safety were key themes among the last-minute bills, with many aimed at attracting and keeping teachers. There were also efforts to increase penalties for loose dogs and new rules for domestic violence cases. A unique proposal allows tax payments in cryptocurrencies, amid fluctuations in the market. Some proposals from Democrats, like those focusing on environmental issues, may not succeed in the Republican-majority legislature, though a few may have potential.
Bipartisan sponsors back some bills, including Jesse’s Law, which would provide training for judges and mediators on recognizing signs of domestic violence and child abuse. This initiative is inspired by the tragic murder of a 3-year-old boy.
Other important bills include reforms to liquor laws to allow Sunday openings for ABC stores, legalizing video poker, creating a disaster response fund, and increasing penalties for various public safety violations. Additional initiatives aim to expand childcare options, support social conservative causes like restrictions on gender-reassignment lawsuits and abortion, and enhance educational transparency and teaching standards. There are also bills addressing drug arrests, protecting teenagers’ social media data, exploring cryptocurrency and AI research, directing the Legislative Research Commission to study the abolition of contributory negligence, and proposing the removal of barriers to employment due to court debt.
The crossover deadline, the date set by the legislature for a bill to be approved in its originating chamber to continue being reviewed by the opposite chamber, is May 8. Lawmakers are anticipated to increase their activity in the weeks ahead to make certain that any important legislation stays eligible for consideration during this session.
Read more WRAL News
PROPOSED HOUSE BILL TO EXPAND AUDITOR’S INVESTIGATIVE POWERS
A North Carolina House panel approved a bill on Tuesday that expands the investigative powers of the state auditor’s office, despite some concerns about which agencies and individuals could be investigated. The Judiciary 1 Committee voted for House Bill 549 after hearing from its sponsor, Representative Brenden Jones (R-Columbus), and Kirk O’Steen, the Director of Government Affairs for the auditor’s office. The bill will next go to the Committee on State and Local Government for further consideration.
If passed, the bill would allow the auditor to investigate any entity receiving state or federal funds for reports of improper activities, including fraud and misappropriation. It would also grant the auditor unrestricted access to necessary databases and exempt the office from certain regulations. Additionally, the Senate approved Senate Bill 474 to create a new team to oversee state spending and job openings.
Read more by NC Newsline (Kingdollar)
Read more by NC Newsline (Bacharier)
SENATE’S PBM BILL APPROVED BY HEALTH CARE COMMITTEE
The Senate is entering the debate over pharmacy benefits managers (PBMs) with the approval of Senate Bill 479 by the Health Care Committee. This bill provides an alternative to the House’s approach regarding PBMs, which act as intermediaries between drug manufacturers and insurers or drugstores. Unlike the House’s proposal, Senate Bill 479 does not include a provision that would require PBMs to pay drugstores a $10.24 dispensing fee. Senator Benton Sawrey (R-Johnston), a lead sponsor of the bill known as the SCRIPT Act, prefers to avoid any cost increases for consumers.
The bill is supported by key Senate leaders, and it will undergo further revisions as it progresses through additional committees. Key aspects of the Senate bill include allowing insurers to offer higher reimbursements to drugstores in areas without pharmacies, licensing pharmacy services administrative organizations, and requiring PBMs to provide more data to state officials. It also prohibits PBMs from paying pharmacies less than their acquisition costs for medications and from treating independent pharmacies unfairly compared to their owned drugstores. Independent pharmacies could refer patients to other drugstores if necessary.
The bill does not currently impact the State Health Plan, a point of concern for some senators. Meanwhile, the House’s PBM legislation remains under discussion in committee, with its previous iteration receiving unanimous approval before being stalled in the Senate without a counterproposal.
Business North Carolina (Ray Gronberg – [email protected])
LOWER LEGAL ALCOHOL LIMIT FOR DRIVERS PROPOSED
North Carolina lawmakers are collaborating to support a bill introduced this year to reduce the legal blood alcohol concentration limit for driving from 0.08 to 0.05.
House Bill 108 will also increase penalties for adults who help minors buy alcohol, particularly in cases of serious injury, and will allow repeat offenders to regain limited driving privileges by proving sobriety. Additionally, the measure mandates the recording of district court proceedings and public reporting on impaired-driving cases.
Representative Eric Ager (D-Buncombe) will hold a press conference on Tuesday at noon regarding the bill, joined by Ellen Pitt from the WNC Regional DWI Task Force, law enforcement, and families impacted by drunk driving.
Ager and Representative Mike Clampitt (R-Jackson) are the primary sponsors, along with Representatives Keith Kidwell (R-Beaufort) and Brian Echevarria (R-Cabarrus). The bill is currently in the House Alcoholic Beverage Control Committee.
Read more by Under the Dome/The News & Observer
TRAUMATIC BRAIN INJURIES TREATMENT FOR VETERANS
A bill that would enable treatment of traumatic brain injuries in veterans was introduced on March 27. House Bill 572 allows the Department of Military and Veterans Affairs to create a pilot program for veterans, first responders, and their immediate families to treat traumatic brain injuries as well as sleep disorders and substance abuse.
Representative David Willis (R-Union), mentioned that the treatment called eTMS, or electroencephalogram combined transcranial magnetic stimulation, was suggested by veterans seeking similar programs in other states. Willis noted that the program aims to support both first responders and veterans, citing successful outcomes in other states.
Representative Grant Campbell (R-Cabarrus), a former Army Lieutenant Colonel, also endorsed the bill. “There is significant data to show that there are high rates of these patients being able to discontinue current chronic therapy once they undergo this. This is an incredibly promising intervention,” Campbell said.
On Tuesday, the bill received a favorable report and has been referred to the Health Committee.
Read more by State Affairs Pro
Circuit Split on Anti-Kickback Causation Poses Complications for Whistleblowers, But First Circuit Ruling Also Provides a Path Forward
In February, a panel of three judges in the U.S. Court of Appeals for the First Circuit issued a decision in United States v. Regeneron Pharmaceuticals, Inc. ruling that “but-for” causation is the proper standard for False Claims Act (FCA) cases alleging improper kickbacks and referrals in violation of a 2010 amendment to the Anti-Kickback Statute (AKS). This decision deepens a circuit split on the issue, as the Sixth Circuit and Eighth Circuit have adopted a but-for causation standard, while the Third Circuit ruled that the kickback only needs to be a contributing factor.
The circuit split is likely to be resolved by the Supreme Court, but in the meantime, its impact on FCA enforcement poses complications for whistleblowers looking to report kickbacks under the FCA’s qui tam provisions.
However, the First Circuit panel in Regeneron also clarified that there still exists a key route for whistleblowers and the government to pursue AKS-based FCA cases under the implied false certification theory. The court held that there still remains FCA liability when compliance with the AKS is a recognized precondition of payment under a federal healthcare program and a provider falsely certifies compliance with those requirements to get a claim paid by Medicare or Medicaid. Notably, the court held that there is no but for causation required when such an implied false certification claim is pursued under the FCA.
The Anti-Kickback Statute, False Claims Act and Whistleblowers
Dating back to the Civil War, the False Claims Act targets fraud among government contractors. It holds that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government’s damages plus a penalty.
A key element of the FCA is its qui tam provisions, which empower whistleblowers with knowledge of FCA violations to come forward and file lawsuits on behalf of the government, which then has the option to intervene and take over the lawsuit. Regardless of whether the government intervenes, whistleblowers whose qui tam suits result in successful cases are eligible to receive between 15-30% of the funds collected in the case.
The Anti-Kickback Statute prohibits the exchange (or the offer to exchange) of any form of remuneration to induce or reward referrals for services or items reimbursable by federal healthcare programs. In violating the AKS, a company or individual can also be liable under the FCA. While the AKS imposes criminal liability on violations, the FCA adds civil liability.
Over the years, the government and whistleblowers have aggressively enforced violations of the AKS and FCA in tandem. For example, in July 2024, the Department of Justice announced that DaVita Inc., a healthcare company providing kidney dialysis services, agreed to pay $34 million to settle allegations that it violated the FCA through the illegal payments of kickbacks to induce referrals to DaVita’s dialysis centers and DaVita Rx, a former subsidiary that provided pharmacy services for dialysis patients. The settlement resolved a qui tam whistleblower suit filed by Dennis Kogod, a former Chief Operating Officer of DaVita Kidney Care, who received a $6,370,000 whistleblower award from the settlement proceeds. Over the years, many of the largest False Claims Act whistleblower recoveries have been based on alleged AKS violations in the health care industry.
First Circuit Ruling and Circuit Split
The First Circuit’s ruling in Regeneron centered around a provision in the 2010 amendments to the AKS which states that “a claim that includes items or services resulting from a violation of [the AKS] constitutes a false or fraudulent claim for purposes of [the FCA].” (Emphasis added)
In Regeneron, the government alleged that drug manufacturer Regeneron Pharmaceuticals paid tens of millions of dollars in kickbacks for its macular degeneration drug Eylea by using a foundation as a conduit to cover Medicare co-pays for Eylea.
The issue before the First Circuit in Regeneron was the level of causation required to satisfy the “resulting from” language. The First Circuit ruled that that “but-for” causation is the proper standard, meaning that there is no FCA liability if the claim would have been submitted regardless of the illegal kickback.
In Regeneron therefore, the Court ruled that Regeneron Pharma was not liable under the FCA because the government could not prove that doctors prescribing Eylea would not have done so “but for” the alleged kickbacks covering the co-pay cost.
According to the First Circuit, “The Supreme Court has held that a phrase like ‘resulting from’ ‘imposes… a requirement of actual causality,’” and “Accordingly, ‘it is one of the traditional background principles ‘against which Congress legislate[s]’ that a phrase such as ‘result[ing] from’ imposes a requirement of but-for causation.” While the Court notes that textual or contextual indications may suggest a different standard of causation, it ruled that none were present in the 2010 AKS amendment.
The First Circuit ruling deepens a circuit split on the issue. The Sixth and Eighth Circuits had also previously adopted the more stringent “but-for” causation standard for AKS-based FCA claims. The Third Circuit on the other hand has rejected the “but-for” causation standard and instead adopted a broader standard allowing for FCA liability if the kickback was merely a contributing factor to the submission of the claim.
Implications and Routes Forward for Whistleblowers
The circuit split on the causation standard for AKS-based FCA claims poses some complications for whistleblowers looking to hold fraudsters accountable through qui tam lawsuits. Firstly, the split will cause confusion about what standard applies for which justifications. But even more importantly, the “but-for” causation standard will make it much harder for whistleblowers and the government to prove False Claims Act liability in kickback cases.
There still remains a key route for whistleblowers and the government to pursue AKS-based FCA cases: the false certification theory. Under the false certification theory, a violation of the AKS can give rise to FCA liability when compliance with the AKS is a recognized precondition of payment under a federal healthcare program and a provider falsely certifies compliance with the law when it submits a claim, or causes the submission of a false claim.
The false certification theory predates the 2010 amendments at issue and is considered a distinct pathway towards proving FCA liability. In Regeneron, the First Circuit clearly states that “claims under the 2010 amendment run on a separate track than do claims under a false-certification theory” and that “there is nothing in the 2010 amendment that requires proof of but-for causation in a false certification FCA case.”
Barring a Supreme Court decision striking down “but-for” causation or a Congressional amendment clarifying a different standard of causation, FCA whistleblower claims can still survive if they can file qui tam suits based upon the false certification theory. Additionally, many whistleblower qui tam FCA cases alleging illegal kickbacks and violations of the AKS can meet the but for causation test. Consequently, whistleblowers and their counsel will need to evaluate the possible routes available when there are allegations of illegal kickbacks being paid in the context of providing health care that is reimbursed by Medicare, Medicaid or other government healthcare programs.
The government has made AKS enforcement a major FCA priority in recent years and the Deputy Assistant Attorney General Michael Granston recently promised that under the Trump administration the Department of Justice “plans to continue to aggressively enforce the False Claims Act.”
Individuals looking to blow the whistle on illegal kickbacks should contact an experienced False Claims Act whistleblower attorney.
Geoff Schweller also contributed to this article.
One Year Later, FTC’s Noncompete Ban Remains on Life Support, as FTC Mulls Pulling the Plug
As readers of this blog will recall, last April, the Federal Trade Commission (FTC) voted along party lines to finalize a rule (the Noncompete Ban) that would have banned the vast majority of employee noncompete agreements across the country. Shortly after the FTC’s vote, the Noncompete Ban was challenged in three separate lawsuits: first in Texas, then in Pennsylvania, and then in a third case in Florida. The court in Pennsylvania ruled for the FTC, finding the Noncompete Ban lawful and supported by the FTC’s administrative record. By contrast, the courts in Texas and Florida ruled against the FTC, both finding the Noncompete Ban to be unlawful (albeit on somewhat different grounds). And, importantly, the Texas court issued a broad, universal order, preventing the Noncompete Ban from taking effect nationwide.
In the closing months of the Biden Administration, the FTC appealed the Texas and Florida decisions to the Fifth and Eleventh Circuit Courts of Appeals, respectively. Since Inauguration Day, however, the Trump administration has brought rapid changes to the makeup and direction of the FTC. Within hours of taking office, President Trump appointed a Republican, Andrew Ferguson, to serve as FTC Chair. Two weeks later, the Democratic former FTC Chair, Lina Khan, resigned her seat at the FTC, leaving the FTC with two Republican Commissioners and two Democratic Commissioners. Then, on March 18, President Trump fired the two remaining Democrats — a controversial move that is being challenged in court. Most recently, on April 10, President Trump’s nominee to serve as the third Republican Commissioner, Mark Meador, was confirmed by the Senate, giving the Republicans control of the FTC.
All the while, the fate of the Noncompete Ban still remains with the Fifth and Eleventh Circuits. Given the rapid changes to the FTC, on March 7, the FTC asked the two courts to hold the appeals “in abeyance” for 120 days, to allow the FTC to reassess whether to continue defending the Noncompete Ban. Both courts granted these requests, ordering the FTC to submit a “status report” by July 10 (in the Fifth Circuit) and July 18 (in the Eleventh Circuit) to advise on how the FTC intends to move forward.
Given that both now-Chair Ferguson and his Republican colleague, Commissioner Melissa Holyoke, opposed the vote last year on the Noncompete Ban on grounds that they found it unlawful, it seems like only a matter of time before the FTC’s defense of the Noncompete Ban is officially abandoned. Given the uncertainty over President Trump’s termination of the two Democratic Commissioners, there was speculation that Chair Ferguson was waiting for the Senate to confirm Mark Meador as the third Republican Commissioner before moving forward with an official vote to abandon the appeal. Now that Commissioner Meador has been confirmed, such a vote could happen in the near future, in which case the Noncompete Ban will officially be dead.
Even if the FTC pulls the plug on the Noncompete Ban, Chair Ferguson has made clear that the FTC intends to continue its efforts to promote competition in labor markets. In February, in announcing the appointment of Daniel Guarnera as Director of the FTC’s Bureau of Competition, Chair Ferguson cited Guarnera’s “experience using the antitrust laws to promote competition in labor and healthcare markets—two of my top priorities.” Chair Ferguson added that Guarnera would help “fulfill President Trump’s promise … to protect the interests of American workers.” Later that same month, Chair Ferguson directed the formation of a “Labor Markets Task Force” to “prioritize rooting out and prosecuting unfair labor-market practices that harm American workers.” In addition to noncompete agreements, the Labor Markets Task Force is charged with investigating and challenging conduct like “no poach” agreements, “wage-fixing” agreements, unfair or deceptive trade practices that harm gig economy workers, and false or deceptive job advertisements. Interestingly, Chair Ferguson also directed the Labor Markets Task Force to investigate and challenge labor practices that implicate more traditionally conservative issues such as “harmful occupational licensing requirements” and “collusion or unlawful coordination on DEI metrics.” Therefore, even if the Noncompete Ban seems unlikely to survive in its current form, you can expect the FTC to continue policing labor practices on a case-by-case basis as vigorously as ever.
HHS Restructuring and Workforce Reductions – Key Implications for the Health Care Industry
As spring arrived in the mid-Atlantic region, the Department of Health and Human Services (HHS) under Robert F. Kennedy, Jr. followed through with a previously announced Reduction in Force (RIF) that reduced the department’s workforce by a reported 10,000 employees and started the process of restructuring the organization as a whole. Now that the dust is starting to settle, we are beginning to analyze the RIFs and how they could impact key health care stakeholders, including Medicare Advantage Plans, providers, and biopharmaceutical and medical device manufacturers. This post provides a brief overview of the restructuring to date, HHS’s reduction in workforce, and their potential impacts. We will continue to monitor these developments and provide future updates to Mintz clients and friends.
Overview of Restructuring & Workforce Reductions
As part of the department-wide restructuring plan, HHS is in the process of consolidating 28 different divisions into 15 divisions. As of April 4, 2025, it had also reduced the number of Regional Offices from ten to five. The March 27th press release initially announcing the restructuring stated that the current HHS organization contains many “redundant” units and that the restructuring plan will “centralize core functions” of the department, such as Human Resources, Information Technology (IT), Procurement, External Affairs, and Policy. Separately, on March 14th, HHS published an announcement about a reorganization with its Office of the General Counsel (HHS-OGC).
Although HHS has not released a comprehensive list of the offices directly impacted by the RIF as of the date of this post, HHS or independent news outlets have reported the following:
HHS Regional Offices: As noted above, HHS has reduced the number of Regional Offices to five. The remaining offices include those located in Philadelphia, Denver, Kansas City, Dallas, and Atlanta. Accordingly, it appears that HHS has closed its Regional Offices in New York, Boston, Chicago, Seattle, and San Francisco. The HHS-OGC also closed its office in Dallas.
Centers for Medicare & Medicaid Services (CMS): CMS reportedly lost approximately 300 employees. CNN reported that the RIFs included the entire Office of Equal Opportunity and Civil Rights. The Medicare-Medicaid Coordination Office lost its office of Models, Demonstrations and Analysis. At this time, it appears that the CMS central office divisions directly responsible for overseeing and setting policy for Medicare and Medicaid policy were not significantly impacted by the RIF. Further, numerous staff of the Administration of Community Living were terminated and that particular office may end up being shuttered.
Food & Drug Administration (FDA): The HHS press release announced that 3,500 full-time employees – or about 19% of FDA’s workforce – would be cut. All of the agency’s product centers experienced staffing reductions when the RIF began, with the drug, biologic, device, and tobacco centers hit particularly hard. Many of the individuals in longstanding FDA career leadership positions either have been terminated or have departed as part of the recent RIF or in the weeks leading up to it, including directors of the Center for Biologics Evaluation and Research (CBER), the Office of New Drugs within the Center for Drug Evaluation and Research (CDER), and the Digital Health Center of Excellence within the Center for Devices and Radiological Health (CDRH). HHS also terminated the FDA Chief Information Officer, a new leadership position created by the agency through planned modernization activities. Between the recent RIFs, voluntary retirements, and the earlier firings of probationary workers, CDER has apparently lost more than 1,000 employees over the past three months. Reports emerging from affected FDA staff also indicate that artificial intelligence experts have been disproportionately affected, with approximately 40 individuals out of the over 260 fired from CDRH coming from CDRH’s recently established Digital Health Center of Excellence, where very little knowledge redundancies existed. Policy-focused offices such as CDER’s Office of Medical Policy, CBER’s Office of Regulatory Operations, the CDRH Office of Women’s Health, and the Division of Policy Development within the Office of Generic Drug Policy, have been rendered effectively non-functional and are expected to be terminated during the departmental restructuring.
Centers for Disease Control and Prevention (CDC): Reports indicate that the CDC lost divisions related to workplace health and safety, HIV, injury prevention, reproductive health, smoking, and violence prevention, among others. All of the CDC’s staff working to process Freedom of Information Act (FOIA) requests were also terminated, per CBS reporting.
National Institutes of Health (NIH): There were a reported 1,300 employees laid off at the NIH, with NPR reporting that most of the cuts were to individuals with support positions such as communications, IT, and human resources. Grant and contract management officers were also affected, which may make it more difficult for research grantees – including those that are part of large academic medical centers – to obtain timely responses and information from the NIH.
In addition to these recent actions taking place within HHS, detailed agency-specific restructuring plans were due to be submitted to the White House Office of Management and Budget (OMB) on April 14, 2025, per an OMB memorandum issued in late February.
Potential Near-Term Impact on Selected Stakeholders
The RIFs and large-scale restructuring of HHS will impact the entire health care industry, with certain stakeholders facing more of the brunt in the short term. We address each of those stakeholder groups briefly below.
Medicare Advantage and Part D Plans
As of the date of this post, we understand that most CMS offices addressing Medicare Part C and Part D operations remain intact and were not significantly impacted by the RIF. However, all Medicare Advantage plans’ account managers are located in the HHS Regional Offices. Many Medicare Advantage (MA) and Part D plans likely lost their account managers and will need to be assigned new ones. This will result in those remaining account managers having increased caseloads, and being responsible for more plans. This is likely to result in delays in communication with account managers.
Health Care Providers
The consolidation of the Regional Offices will likely impact provider enrollment processes, provider surveying, Change of Ownership (CHOW) determinations and approvals, and the processing of CMS-specific enforcement activities, including reasonable assurance determinations. While CMS had previously transitioned certain Regional Office enrollment and survey functions for some provider types to CMS’s Center for Program Integrity and to the Medicare Administrative Contractors (MACs), the Regional Offices still play a key role in enrollment, surveys, and CHOW functions. For example, the Regional Offices of HHS-OGC advise on challenging CHOW questions and issues. HHS Regional Offices also still process and determine reasonable assurance periods. The consolidation of Regional Offices could create delays and bottlenecks for CHOW approvals, especially with more challenging CHOWs that require input from HHS-OGC.
The Regional Office consolidation will also impact provider audits performed by MACs, Unified Program Integrity Contractors, and other contractors. HHS-OGC provides oversight and training to these contractors and helps ensure uniformity in enforcement across regions. Consolidation and reduction in legal support to these entities may result both in delays in enforcement and inconsistent enforcement across providers.
Biopharmaceutical and Medical Device Manufacturers
The cuts to date of FDA staff have caused profound disruption at the agency and, in the short term, will almost certainly result in delays and longer timelines for approving new drugs, biological products, and innovative medical devices. With the firings of staff focused on digital health and artificial intelligence, it also seems likely that FDA will become more conservative when it comes to making policy, regulatory, and enforcement decisions in that space, depending upon the level of uncertainty at play. Developers of gene therapies, cell therapies, and rare disease treatments – who had benefitted from FDA’s increasing willingness to exercise “regulatory flexibility” and approve such products in the face of scientific uncertainty – also may see a marked shift now that the agency’s institutional expertise and leadership in those areas have been decimated. This puts more cutting-edge and innovative products at greater risk of not receiving FDA marketing approvals than they had pre-RIF. Concerns about delays in medical product reviews and a potential increase in denied applications are being exacerbated by the likelihood that developers will have a more difficult time getting informal and formal feedback from the agency, as a result of fewer employees and the fact that reviewers will no longer have regulatory policy, research, or administrative colleagues (among others) to support that complex work. Indeed, around April 11, 2025 a nonpartisan and highly experienced group of investors and executives from the medical products research and development enterprise sent a letter to Senate leadership expressing their alarm at what is occurring at FDA and describing slowdowns and bottlenecks that are already manifesting as a result of the RIF.
In addition, although HHS’s restructuring announcement stated that “those with roles in drug, medical device or food reviews or inspections” would not be adversely affected, in reality, the continuity and timeliness of both review activities and inspections will be harmed by the loss of nearly 25% of FDA’s workforce since January 2025. For example, inspections of manufacturing facilities cannot take place if the teams can’t get to the site – but press reports indicate that support staff in the Office of Inspections and Investigations that handle travel and other logistics have been terminated. Facility inspections occur not only to monitor the safety of American foods, medicines, and devices but also to support new product approvals, so delays in the agency’s inspectional functions may negatively affect the approval and launch of medical products. The ability to convene advisory committee meetings, which in some cases are required by law prior to a new product approval, is also likely to be adversely impacted without support staff to organize such large-scale events.
Finally, from a general FDA mission standpoint, the apparently haphazard nature of the RIF also means that industry complaints about non-compliance by competitors will likely go un-investigated and enforcement actions will decrease across the board. While the possibility of less enforcement may sound good to a regulated company, in practical effect a weaker FDA will make patient injuries, tort lawsuits, and expensive legal challenges by competitors much more likely. And the significant loss of FOIA and public communications staff from the agency will make obtaining documents about competitors, similar products, FDA’s analyses of certain regulatory issues, and other such valuable information much slower, if not impossible, for industry and the public alike.
U.S. State Employment Law Developments, Reminders, and (Rapidly Approaching) Deadlines (US)
As we reported at the end of 2024, there are a number of critical employment law developments that will affect U.S. employers in the next several months, and, for some employers, in the next several days. Though not an exhaustive list, we focus here on some key upcoming deadlines for employers in Q2 and Q3 2025.
Paid Sick Leave
Missouri: Last Election Day, Missouri voters passed a ballot initiative requiring employers to provide employees with one hour of paid sick leave for every 30 hours worked, which leave can be capped at 40 hours per year (for employers with 1-14 employees) or 56 hours per year (for employers with 15 or more employees). By April 15, 2025, employers must provide a written notice to current employees about the new paid sick leave law, which will become effective May 1, 2025, the same date that paid sick leave must begin to accrue. New employees must receive notice of the law within fourteen (14) calendar days of commencing employment. Employers also must display a poster in the workplace informing employees about the law. (Note: The law is the subject of a pending constitutional challenge before the Missouri Supreme Court, which heard oral arguments on March 12, 2025. There is also a bill moving through the Missouri legislature to remove the paid sick leave component of the law. Despite these challenges, as of this writing, the law is still slated to go into effect on May 1, 2025.)
Alaska: Alaska voters similarly adopted a paid sick leave law in November 2024 via ballot initiative, but the law does not become effective until July 1, 2025 (the same day the state minimum wage increases to $13/hour). Alaska employers should prepare now to provide their employees with paid sick leave at the rate of one hour for every 30 hours worked, which leave can be capped at 40 hours per year (for employers with fewer than 15 employees) or 56 hours per year (for large employers with 15 or more employees). Employers shall give written notice at the later of the commencement of employment or August 1, 2025 that, beginning July 1, 2025, they are entitled to paid sick leave and the amount of leave; the terms of its use; and that retaliation against employees for exercising their paid sick time rights is prohibited. The Alaska Department of Labor has published FAQs for employers about the law.
Michigan: For Michigan employers that may have missed the news, the Earned Sick Time Act was reinstated, effective February 21, 2025 for employers with more than ten employees and October 1, 2025 for employers with ten or fewer employees. If Michigan employers have not already done so, they must allow employees to accrue one hour of paid sick leave for every 30 hours worked, with no accrual cap; provided, however, that employers are not required to permit an employee to use more than 40 hours per year if they employ 10 or fewer employees, or 72 hours of paid sick leave per year if they employ 11 or more employees. There is also a notice posting requirement.
Nebraska: Last November, voters in Nebraska passed Initiative Measure 436, creating a new statewide paid sick leave law. Employees accrue one hour of leave for every 30 hours worked, with accrual caps of 40 hours per year for employers with 1-19 employees and 56 hours per year for employers with 20 or more employees. Although there is still some time to prepare before the law’s effective date (accrual of paid sick leave begins October 1, 2025), employers must provide notice to employees of the new law by September 15, 2025; however, as of this writing, the Nebraska Department of Labor has not yet published a model notice.
City of Chicago: Pursuant to Chicago Municipal Code §§ 6-130-005 et seq., employees who work at least 80 hours for an employer in Chicago within any 120-day period are eligible to accrue one hour of paid leave and one hour of paid sick leave for every 35 hours worked in Chicago, with accrual capped at 40 hours of paid leave and 40 hours of paid sick leave per 12-month period. Payout of paid sick leave is not required, but beginning July 1, 2025, employers with 51 or more employees must pay out all unused, accrued paid leave upon termination. (Employers with 101+ employees are already subject to this requirement.)
As a reminder: Connecticut adopted a paid sick leave law that went into effect on January 1, 2025, and New York employers were required to provide employees 20 hours of paid prenatal personal leave per year beginning January 1, 2025. New York’s COVID-19 leave law will be repealed effective July 31, 2025.
Family Leave
Maryland: We previously reported that payroll deductions to support Maryland’s family and medical leave insurance (FAMLI) program would begin on July 1, 2025, with employers required to remit the first payments to the state in October 2025. This remains the law, and if unchanged, employee benefits will become available on July 1, 2026. However, the Maryland General Assembly recently passed a bill to further defer implementation dates for the program. If passed, the law would delay benefits eligibility to January 3, 2028. We will continue to track legislative developments, and Maryland employers also should consider registering for legislative alerts that might postpone payroll deduction requirements.
Pay Transparency
New Jersey: Under the New Jersey Wage Transparency Act,beginning June 1, 2025, employers with ten or more employees that do business, have employees, or take applications for employment in New Jersey must make certain internal and external pay disclosures. Covered employers must disclose, in new job postings and transfer opportunities advertised externally or internally, the hourly wage or salary (or wage/salary range) and a general description of benefits and other compensation programs for which the employee would be eligible. Noncompliance with the Act carries civil penalties from $300 to $600 per violation.
Vermont: Effective July 1, 2025, Vermont employers with five or more employees, at least one of which works in the state of Vermont, must include the compensation or range of compensation in each job advertisement. The law applies to any job posting for a position physically located in Vermont or to be filled by a remote worker outside the state who predominantly performs work for an office or work location located in Vermont. Vermont employers must therefore include the good faith expectation of the minimum and maximum annual salary or hourly wage range for all positions for which they are hiring, including ones open to internal or external candidates and ones into which current employees may be transferred or promoted. There are special rules for commissioned and tipped jobs.
Massachusetts: Beginning October 29, 2025, the “Massachusetts Act Relative to Salary Range Transparency” requires employers with 25 or more employees in Massachusetts to (1) disclose the pay range for a “particular and specific employment position” in the job posting, and (2) provide the pay range for a “particular and specific employment position” to an employee who is offered a promotion or transfer to such position, and (3) upon request, provide the pay range for a “particular and specific employment position” to an employee holding that position or an applicant for the position.
As a reminder: Pay transparency laws also went into effect on January 1, 2025 affecting employers in Illinois and Minnesota.
Biometric Data Collection
Colorado: Beginning July 1, 2025, the Colorado Privacy Act will require employers to obtain consent from employees or applicants before collecting or processing their biometric data. Biometric identifiers include, among other things, fingerprints, voiceprints, eye retina or iris scans or records, facial maps, facial geometry or facial templates, or “other unique biological, physical, or behavioral patterns or characteristics,” but do not include digital or physical photographs or audio or voice recordings or related data unless used for identification purposes.
Restrictive Covenants
Wyoming: With the introduction of Wyo. Stat. § 1-23-108, Wyoming has banned most non-compete agreements signed on or after July 1, 2025, with several key exceptions. Although the majority of new non-compete covenants will be unenforceable, the state statute permits employers to continue using non-compete agreements with “executive and management personnel” and their professional staff, phrases that are undefined by the law. Noncompetes also remain valid in the sale-of-business context and when necessary to protect trade secrets. Employers may also require employees to repay training, education, or relocation costs if they leave within four years of employment, but on a graduated schedule: up to 100% if employment lasts fewer than two years; up to 66% for employment lasting between two and three years; and up to 33% for employment between three and four years. Non-compete agreements with physicians are prohibited outright. Agreements signed before July 1, 2025 are not affected by the law, so employers should consider their options before the law takes effect.
Beltway Buzz, April 11, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
Wilcox Reinstatement Legal Back-and-Forth Keeps Her Off the NLRB. For Now. For the second time in a matter of weeks, Gwynne Wilcox was poised to return as a member of the National Labor Relations Board (NLRB). Until she wasn’t. Here is what happened this week. On April 7, the full U.S. Court of Appeals for the District of Columbia Circuit vacated a three-panel decision that upheld Wilcox’s termination while the litigation challenging her removal proceeds. This decision would have allowed Wilcox to return to the Board. However, Supreme Court Chief Justice John Roberts subsequently stayed the initial district court order that had returned Wilcox to the Board. All of this procedural back-and-forth means that Wilcox will remain off the NLRB for the time being. As the Buzz has been predicting, ultimately, the Supreme Court of the United States will determine whether the president can remove members of independent federal agencies that operate as boards and commissions.
Samuels Sues. Jocelyn Samuels, who President Donald Trump removed from her position as commissioner on the U.S. Equal Employment Opportunity Commission (EEOC) in January 2025, has filed a legal challenge to her removal. Samuels, who was first appointed to the EEOC in 2020 by President Trump, maintains that “the EEOC’s structure, mission, and functions, along with the terms set for Commissioners, demonstrate Congress’s intent to provide the Commission continuity, stability, and insulation from political pressure exerted by the president.” Former chair of the Commission, Charlotte Burrows, has also filed a lawsuit challenging her removal. Currently, the Commission consists of Acting Chair Andrea Lucas and Commissioner Kalpana Kotagal.
Administration Seeks Quick Repeal of “Unlawful” Regulations. As a follow-up to his February 19, 2025, Executive Order 14219 (“Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative”), this week, President Trump issued a memorandum instructing executive branch agencies to “take steps to effectuate the repeal of any regulation, or the portion of any regulation, that clearly exceeds the agency’s statutory authority or is otherwise unlawful.” According to the memorandum, agencies should prioritize regulations that conflict with ten prescribed Supreme Court decisions (all issued in 2020 or later), including Loper Bright Enterprises v. Raimondo,Securities and Exchange Commission v. Jarkesy, and Students for Fair Admissions, Inc. v. President and Fellows of Harvard College. The memorandum further instructs agencies, when repealing such regulations, to proceed under the “good cause” exemption of the Administrative Procedure Act, which allows agencies to bypass the normal “notice and comment” process.
House Passes Bill Limiting Nationwide Injunctions. On April 9, 2025, the U.S. House of Representatives passed the No Rogue Rulings Act of 2025, by a vote of 219–213. Only one Republican—Michael R. Turner of Ohio—joined with all Democrats to vote against the bill. The bill would prohibit federal district courts from issuing injunctions that apply beyond the parties to the case, except in multistate challenges. Of course, federal district court nationwide injunctions blocked the implementation of the Obama administration’s 2016 persuader and overtime rules, as well as the NLRB’s 2023 joint employer rule, and the U.S. Department of Labor’s (DOL) 2024 overtime rule.
House Committee Explores College Athletes’ Employment Status. On April 8, 2025, the House Committee on Education and the Workforce’s Subcommittee on Health, Employment, Labor, and Pensions held a hearing entitled, “Game Changer: The NLRB, Student-Athletes, and the Future of College Sports.” The hearing focused on the changing landscape of college athletics, and specifically explored the question of whether college athletes should be considered employees. Republicans maintained that college athletes are students and promoted the Protecting Student Athletes’ Economic Freedom Act, which would prohibit student-athletes from being classified as employees while retaining the ability to benefit from their name, image, and likeness.
FMCS: And Then There Were Four? It has been several weeks since the Trump administration effectively dismantled the Federal Mediation and Conciliation Service (FMCS), and the fate of the labor dispute-settling agency is now coming into clearer focus. This week, it was reported that the agency is down to just four employees. According to FMCS data, last year, the agency helped mediate more than 2,000 collective bargaining negotiations.
RIFs at DOL, USCIS. According to media reports, this week, Secretary of Labor Lori Chavez-DeRemer offered more DOL employees the opportunity to resign or retire as part of the administration’s efforts to shrink federal government agencies. This offer was reportedly made ahead of expected layoffs at the agency. Employees at U.S. Citizenship and Immigration Services (USCIS) reportedly received a similar offer. In February 2025, about fifty USCIS employees were separated as part of a broader purge at the U.S. Department of Homeland Security (DHS). At this time, it is unclear how reductions in force (RIFs) at DOL might impact the department’s rulemaking and enforcement agenda. On the other hand, RIFs at USCIS are very likely to result in backlogs and delayed processing times.
“Time Stand Still.” This week, the U.S. Senate Committee on Commerce, Science, and Transportation held a hearing entitled, “If I Could Turn Back Time: Should We Lock the Clock?” We are happy to Cher the details. The hearing dealt with a bit of an evergreen topic here at the Buzz: Congress’s role in setting time policy (we’ve previously discussed the issue here and here). Specifically, the hearing focused on legislation that would make daylight savings time permanent in the United States. Proponents of the concept maintain that making daylight savings time permanent leads to increased economic activity, more time for exercise, and safer roads. Opponents claim that such a move would push sunrise to after 8:00 a.m. in many parts of the country, leading to circadian misalignment and reduced health outcomes. While experts and laypeople alike can debate the pros and cons of the issue, our senators clearly have an opinion: in 2022, the Senate passed the Sunshine Protection Act (making daylight savings time permanent) by unanimous consent.
The Buzz will be on hiatus next week but will publish again on April 25, 2025.
Washington State Enacts Antitrust Pre-Merger Notification Act
What Happened: On April 4, 2025, Washington was the first state to enact the Uniform Antitrust Pre-Merger Notification Act (the Act). The Act requires certain parties with a nexus to the state that make a Hart-Scott-Rodino (HSR) filing to also submit the filing to the state’s attorney general (AG).
The Bottom Line: Adoption of the Act requires direct notice of large transactions to the state AG’s office. The Act also promotes sharing of the information submitted among states that have enacted the Act. As more states pass their own versions of the Act, state involvement in the review of such transactions may increase. Recently, some state AGs have taken a more active role in merger enforcement, including filing their own state court cases separately from the federal antitrust agencies. Certain state AGs have also said they stand ready to fill in gaps, if the federal agencies under President Trump become more lenient on antitrust enforcement.
The Full Story: Washington’s law requires a person making a Hart-Scott-Rodino (HSR) filing that (a) has its principal place of business in the state; (b) has annual net sales of 20 percent of the HSR threshold (adjusted annually, currently $126.4 million) of the goods or services involved in the transaction in the state; or (c) is a healthcare provider conducting business in the state, to also submit the HSR filing and attachments to the state AG’s office. The statute requires notice only, does not require payment of a filing fee and does not include additional enforcement powers or impose a waiting period on the transaction before the parties can close (as under HSR). Nor does the statute require both parties to submit their HSR filings to the state AG, as they must under HSR to the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ). The statute authorizes a civil penalty of $10,000 per day of noncompliance. The statute contains confidentiality measures, including exempting the information submitted from the state FOIA law. In certain merger investigations where state AGs join their federal enforcer counterparts (FTC or DOJ), state AGs will request waivers from the merging parties to allow for the federal enforcers to share material obtained from the merging parties (including their HSR filings) with state AG offices. Washington’s law is mandatory and obviates the need for the Washington AG to obtain a waiver to gain access to the HSR filing of a party with one of the above connections to the state.
Washington is the first state to enact the Uniform Antitrust Pre-Merger Notification Act (the “Act”), which was adopted last year by the Uniform Law Commission. Other states have introduced bills with versions of the Act, including California, Nevada, Utah, Colorado, West Virginia, and the District of Columbia. This is in addition to other state laws requiring pre-merger notification (baby HSRs) for certain transactions in the healthcare industry including in California, Colorado, Connecticut, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Nevada, New York, New Mexico, Oregon, Rhode Island, Vermont, and Washington.
Conclusion: As state-specific pre-merger notification regimes are adopted, state antitrust review of mergers is expected to become more active. During the first Trump administration, several blue state AGs challenged the T-Mobile/Sprint merger after DOJ and several red state AGs settled the case. Also, during the Trump 1.0, the California AG challenged Valero’s proposed acquisition of petroleum terminals from Plains All American Pipeline and obtained a settlement in the Cedars-Sinai/Huntington Memorial Hospital transaction after the FTC declined to take action. Under the Biden administration, the Washington AG and Colorado AG challenged the Kroger/Albertsons merger separately in state courts and chose not to join the FTC (and nine other state AG co-plaintiffs) in the FTC’s case brought in federal court. The New York AG just recently won its challenge of Intermountain Management’s acquisition of Toggenburg Mountain ski resort, a case brought under New York state antitrust law. AGs from Colorado, California, and Michigan have stated that they are committed to take independent enforcement action if warranted regardless of what their federal enforcer counterparts decide to do. Companies need to stay apprised of new state merger filing requirements, as well as increased state antitrust review of transactions. This is especially true for industries that are localized in nature such as healthcare and retail.
False Claims Act Settlements in Q1 Shows Scope of Frauds Targeted by Government as DOJ Official Promises “Aggressive” Enforcement
During the first quarter of 2025, the U.S. Department of Justice (DOJ) announced a number of False Claims Act (FCA) settlements and judgements, many of which resolved qui tam lawsuits filed by whistleblowers. The settlements and judgements showcase the variety of frauds which the government is pursuing and which False Claims Act whistleblowers can report.
Under the False Claims Act’s qui tam provisions, whistleblowers can file a qui tam lawsuit alleging violations of the FCA on behalf of the government, which then has the option to intervene and take over the lawsuit. Regardless of whether the government intervenes, whistleblowers whose qui tam suits result in successful cases are eligible to receive between 15-30% of the funds collected in the case.
The types of fraud targeted in settlements and judgments announced in the first quarter of 2025 include Medicare Part C fraud, cybersecurity fraud, illegal kickbacks and defense contract fraud.
In a keynote address at the Federal Bar Association’s annual qui tam conference in February, Deputy Assistant Attorney General Michael Granston promised that moving forward the Department of Justice “plans to continue to aggressively enforce the False Claims Act.”
$62 Million Settlement Over Medicare Part C Fraud Allegations
On March 26, the DOJ announced that Seoul Medical Group Inc., its subsidiary and majority owner, and Renaissance Imaging Medical Associates Inc., a radiology group that worked with Seoul Medical, agreed to pay a total of $62 million to resolve False Claims Act allegations relating to the submission of false diagnosis codes for two spinal conditions to increase payments from the Medicare Advantage program (Medicare Part C).
According to the DOJ, Seoul Medical and its owner “submitted diagnoses for two severe spinal conditions, spinal enthesopathy and sacroiliitis, for patients who did not suffer from either of these conditions” and “enlisted the assistance of Renaissance Imaging Medical Associates to create radiology reports that appeared to support the spinal enthesopathy diagnosis.”
These diagnoses allegedly led to the increased payment to Seoul Medical under Medicare Part C.
“Medicare Advantage is a vital program for our seniors and the government expects healthcare providers who participate in the program to provide truthful and accurate information,” said Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division. “Today’s result sends a clear message to the Medicare Advantage community that the United States will zealously pursue appropriate action against those who knowingly submit false claims for taxpayer funds.”
The settlement resolved a qui tam whistleblower suit filed by Paul Pew, the former Vice President and Chief Financial Officer of Advanced Medical Management. Pew’s share of the recovery had not been determined at the time of the settlement.
$4.6 Million Settlement Over Cybersecurity Fraud Allegations
On March 26, the DOJ also announced a $4.6 million settlement MORSECORP Inc. resolving allegations that MORES violated the FCA by failing to comply with cybersecurity requirements in its contracts with the Departments of the Army and Air Force.
According to the DOJ, MORSE “submitted false or fraudulent claims for payment on contracts with the Departments of the Army and Air Force” and “those claims were false or fraudulent because Morse knew it had not complied with those contracts’ cybersecurity requirements.”
Among other things, the DOJ accused MORSE of “use[ing] a third-party company to host MORSE’s emails without requiring and ensuring that the third party met security requirements equivalent to the Federal Risk and Authorization Management Program Moderate baseline and complied with the Department of Defense’s requirements for cyber incident reporting, malicious software, media preservation and protection, access to additional information and equipment necessary for forensic analysis and cyber incident damage assessment.”
“Federal contractors must fulfill their obligations to protect sensitive government information from cyber threats,” said U.S. Attorney Leah B. Foley for the District of Massachusetts. “We will continue to hold contractors to their commitments to follow cybersecurity standards to ensure that federal agencies and taxpayers get what they paid for, and make sure that contractors who follow the rules are not at a competitive disadvantage.”
The settlement stemmed from a qui tam lawsuit filed by a whistleblower who is set to receive an $851,000 share of the settlement amount.
$15 Million Settlement Over Defense Contract Fraud Allegations
On April 1, the DOJ announced that DRI Relays Inc. agreed to pay $15.7 million to resolve allegations that it violated the FCA by supplying military parts that did not meet military specifications.
According to the DOJ, “between 2015 and 2021, under various Department of Defense (DoD) contracts and subcontracts, DRI invoiced for military grade electrical relays and sockets when it knew those parts had not met the testing requirements to be deemed military grade.”
“It is essential to the safety and operational readiness of our military that contractors comply with applicable military specifications,” said Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division. “We will continue to hold accountable those who knowingly supply equipment to the U.S. military that fails to meet their contract obligations.”
$1.9 Million Settlement Over Kickback Allegations
On March 6, the DOJ announced that a group of health care providers and laboratory marketers agreed to pay a total of $1.9 million to resolve FCA allegations arising from their involvement in laboratory kickback schemes.
According to the DOJ, “health care providers received kickbacks in return for their referrals to a laboratory in Anderson, South Carolina” and “a marketer and his marketing company received kickbacks from that South Carolina laboratory to arrange for laboratory testing referrals.”
For example, according to the DOJ, one doctor and his medical practices “agreed to pay $400,000 to resolve allegations that from May 2016 to November 2021, they received thousands of dollars in remuneration disguised as purported office space rental and phlebotomy payments from the South Carolina laboratory in return for ordering testing.”
These alleged kickbacks were in violation of the Anti-Kickback Statute.
“Integrity must be the standard in our health care system,” said Acting U.S. Attorney Brook B. Andrews for the District of South Carolina. “Kickback schemes divert funds and focus away from patients and their medical needs.”
Conclusion
As these settlements show, the False Claims Act remains America’s number one anti-fraud law, covering a wide range of fraud affecting the federal government. Since 1986, the FCA has allowed the government to recover over $78 billion, with more than $55 billion stemming from qui tam whistleblower lawsuits.
Individuals looking to file a qui tam lawsuit alleging False Claims Act violations should consult an experienced whistleblower attorney.
Geoff Schweller also contributed to this article.
McDermott+ Check-Up: April 11, 2025
THIS WEEK’S DOSE
House Passes Concurrent Budget Resolution for Reconciliation Process. Passage of the resolution didn’t resolve the policy differences between the House and the Senate. Those still need to be addressed as the reconciliation package is developed.
House Ways and Means Health Subcommittee Discusses Lowering Costs of Biosimilars. Witnesses included physicians and biosimilar manufacturers, and members discussed their views on the biosimilar market.
House Oversight Committee Examines FDA Reform. Democrats criticized the Trump administration’s restructuring of the US Food and Drug Administration (FDA), while Republicans pushed for further FDA reform.
CMS Releases Two MA Final Rules. The regulations increase plan payments for 2026 but omit several significant proposals.
Trump Administration Takes Further Deregulation Actions. The administration directed federal agencies to repeal, without notice and comment, regulations that do not comply with Loper Bright, and sought public comment on which regulations to repeal.
CMS Notifies States of Intent to Deny Future Funding of DSHPs and DSIPs. The Centers for Medicare & Medicaid Services (CMS) believes providing federal funding for designated state health programs (DSHP) and designated state investment programs (DSIP) is not in line with the mission of Medicaid.
Federal Judge Strikes Down Biden-Era Nursing Home Staffing Rule. The ruling could impact ongoing reconciliation discussions as Republicans look for policies that would save money.
Supreme Court, Fourth Circuit Rule on Firing of Probationary Workers. Both rulings held that the plaintiffs lacked legal standing to bring the cases.
CONGRESS
House Passes Concurrent Budget Resolution for Reconciliation Process. Over the weekend, the Senate passed the concurrent budget resolution by a 51 – 48 vote, with Sens. Paul (R-KY) and Collins (R-ME) joining Democrats in voting no. The resolution includes differing instructions for House and Senate committees, requiring the committees to continue debating spending and savings levels. Democrats introduced 800 amendments, including a bipartisan amendment from Sens. Wyden (D-OR) and Hawley (R-MO) to strike instructions for the House Energy and Commerce Committee to find at least $880 billion in savings, likely to come from Medicaid. The amendment failed, but Sens. Collins, Hawley, and Murkowski (R-AK) voted with Democrats in support.
House Republican leadership’s plan to pass the resolution before leaving for the two-week Easter recess was complicated by opposition from multiple members of the party, including House Budget Committee Chairman Arrington (R-TX). Those members were opposed to separate spending cut instructions for the House and Senate, as they wanted to stick with the House’s version of a budget resolution, which called for at least $1.5 trillion in federal spending cuts. Leadership repeatedly postponed a Rules Committee meeting to discuss the resolution, and President Trump met with House Republicans to urge them to support the concurrent resolution. Ultimately, a vote on the concurrent resolution was brought to the House floor Wednesday night but was cancelled amid strong opposition.
Senate Majority Leader Thune (R-SD) stated on Thursday that the Senate is “aligned with the House . . . in terms of savings,” noting that some senators believe the $1.5 trillion threshold is a minimum and that the Senate will “do everything we can to be as aggressive as possible to see that we are serious about the matter.” While this still leaves wiggle room as reconciliation continues, the House passed the resolution by a 216 – 214 vote. Reps. Spartz (R-IN) and Massie (R-KY) were the only Republicans to oppose it. As the vote was happening, Senate Democrats issued a letter to the public criticizing the budget resolution, arguing that it would provide a tax cut for the wealthy while cutting Medicaid. In related news, the Congressional Budget Office (CBO), in response to a request from Sen. Merkley (D-OR), released a report showing that if the Trump-era tax cuts were made permanent, the federal deficit would increase by $6 trillion over the next 10 years.
House Ways and Means Health Subcommittee Discusses Lowering Costs of Biosimilars. During the hearing, Democrats continued to express their concerns about National Institutes of Health grant reductions and the US Department of Health and Human Services (HHS) reorganization and reductions in force. Democrats were concerned about the implications of these actions for biosimilar market research and approvals. Republicans discussed disincentives and barriers to the development of new life-saving drugs, as well as issues with the current reimbursement system in Medicare and the role of pharmacy benefit managers (PBMs) in the biosimilar market. Witnesses included physicians and biosimilar manufacturers who discussed the importance of biosimilars and threats to a healthy biosimilar market, including actions from insurance companies and PBMs, cuts to federal research grants, and federal regulations.
House Oversight Committee Examines FDA Reform. Republicans in the hearing expressed the need for FDA reform, while Democrats criticized the Trump administration’s current efforts to restructure the agency. Members from both parties emphasized that relying on foreign countries for drug manufacturing poses dangers to the domestic supply chain. Witnesses provided suggestions for how to improve FDA product review and regulation of products such as hemp, e-cigarettes, and anti-obesity medications.
ADMINISTRATION
CMS Releases Two MA Final Rules. CMS released the Medicare Advantage (MA) and Part D contract year 2026 policy and technical changes final rule late on April 4, 2024. The Biden administration had issued the proposed rule in November 2024. CMS did not finalize proposals from the Biden administration to expand coverage of anti-obesity medications in Medicare and Medicaid, modify health equity policies, or increase guardrails on artificial intelligence. CMS noted that it may consider future rulemaking on these issues. Read the fact sheet here.
On April 7, 2024, CMS released the 2026 MA capitation rates and Part C and D payment policies, known as the final rate announcement. Released on an annual basis, the rate announcement is used to calculate MA plan payments and includes other payment policies that impact Part D. CMS projects that the payment policies and updates in the final rate announcement will result in a net 5.06% increase in payments to MA plans in 2026. This percentage is an increase from the advance notice, which proposed a 2.23% increase. After accounting for expected trends in coding, CMS projects a net payment increase of 7.16%. This projection is an average across the industry and will vary for each plan. Read the press release here and the fact sheet here.
Trump Administration Takes Further Deregulation Actions. The Office of Management and Budget (OMB) issued a Deregulation Request for Information (RFI) asking for suggestions for rules and regulations that can be rescinded that are unnecessary, unlawful, or unduly burdensome, along with reasons to support the rescission. OMB particularly seeks information on regulations that are inconsistent with statute, unconstitutional, or have costs that exceed benefits. Comments are due May 11, 2025. This follows the January 2025 executive order (EO) “Unleashing Prosperity Through Deregulation,” which states that the Trump administration will repeal 10 regulations for every new regulation issued.
President Trump also sent a memo to federal agencies in follow-up to the February 2025 EO “Ensuring Lawful Governance and Implementing the President’s Deregulatory Initiative,” which directed agencies to identify unlawful and potentially unlawful regulations and begin efforts to repeal them by mid-April. The memo directs federal agencies to prioritize repeal of regulations that do not comply with various US Supreme Court decisions, including Loper Bright. The memo directs agencies to take such actions without notice and comment where doing so is in line with the “good cause” exception of the Administrative Procedure Act. That means that rules could begin being rescinded without any public input as soon as April 19, 2025.
On April 9, 2025, President Trump issued a new EO, “Reducing Anti-Competitive Regulatory Barriers,” which directs agencies to identify regulations that create monopolies, impose unnecessary barriers to market entry, or limit competition, and to recommend recission or modification. The EO also directs the Federal Trade Commission to issue an RFI within 10 days seeking public input on anticompetitive regulations, and to create within 90 days a list of anticompetitive regulations to be rescinded or modified.
CMS Notifies States of Intent to Deny Future Funding of DSHPs and DSIPs. In a State Medicaid Director Letter, CMS notes it will not approve new requests or extend existing requests for federal matching funds for Section 1115 waivers that authorize DSHPs and DSIPs. The letter notes that CMS takes issue with federal matching funds being provided to support DSHP and DSIP which have not necessarily been tied directly to services provided to Medicaid beneficiaries, unlike traditional Medicaid matching funds. Specific examples cited include funding housekeeping for individuals not eligible for Medicaid and internet for rural providers. CMS notes it will conduct direct outreach to states with existing DSHP and DSIP authority to emphasize that it will not be extended beyond the currently approved period. Read the press release here.
COURTS
Federal Judge Strikes Down Biden-Era Nursing Home Staffing Rule. A US District Court for the Northern District of Texas judge ruled that the Biden administration’s CMS exceeded its authority when issuing the regulation, citing the Supreme Court’s Loper Bright decision. The final rule in question required nursing homes to have a registered nurse onsite 24 hours a day, seven days a week, and to implement a nurse staffing standard so that each resident received 3.48 hours of nursing care per day. Plaintiffs argued that the staffing mandate would close nursing homes because they face workforce shortages. Repealing the regulation through congressional action would save an estimated $22 billion, and House Republicans have considered it as a cost-saver in the budget reconciliation process. It is unclear if the Trump administration will appeal the court’s decision and how it might impact Congress’ ability to capture those savings for reconciliation.
Supreme Court, Fourth Circuit Rule on Firing of Probationary Workers. The Supreme Court’s ruled, in a case brought by multiple nonprofits, that the nonprofits lacked legal standing to sue over the firing of probationary employees at the US Departments of Defense, Treasury, Energy, Interior, Agriculture, and Veterans Affairs. In a separate case, the US Court of Appeals for the Fourth Circuit ruled that the plaintiff states lacked legal standing to sue against firings at 18 federal agencies, including HHS. The Fourth Circuit’s decision overrules a lower court’s decision this month that the agencies must reinstate fired probationary employees in plaintiff states.
QUICK HITS
HHS Secretary Kennedy Visits Southwestern States in MAHA Tour. The Make America Healthy Again (MAHA) tour made stops in Utah, Arizona, and New Mexico, where Secretary Kennedy met with state, tribal, and local leaders about their initiatives to improve nutrition and food supply, reform the Supplemental Nutrition Assistance Program, and ban fluoride in drinking water.
Trump Pauses Tariffs, Signals Potential Pharmaceutical Tariffs. President Trump announced a 90-day pause on his administration’s reciprocal tariffs for all countries, except China, which will now be subject to a 145% tariff. Although pharmaceuticals were exempt from the original tariff policy, President Trump indicated that they may soon be subject to a separate tariff. Twenty-six Democratic representatives sent a letter to the administration expressing concern about the impact of tariffs on the medical supply chain.
HHS Secretary Kennedy Publishes Op-Ed Defending HHS Reforms. In the New York Post opinion article, he discusses the Trump administration’s goal of addressing chronic diseases and outlines the HHS restructuring announced in March.
CMS Administrator Oz Publishes Vision for the Agency. The vision notes CMS will implement President Trump’s EO on healthcare transparency, reduce unnecessary paperwork for providers, eliminate fraud, waste, and abuse, and focus on chronic disease prevention and management.
MedPAC Holds Final Meeting of 2024 – 2025 Cycle. The Medicare Payment Advisory Commission (MedPAC) meeting included a vote on a draft recommendation to reform and improve the physician fee schedule. Additional sessions focused on Part D plans, MA supplemental benefits, rural hospitals, software technologies, hospice services, and nursing home quality.
MACPAC Holds Final Meeting of 2024 – 2025 Cycle. The Medicaid and CHIP Payment and Access Commission (MACPAC) meeting included a vote on recommendations for the June 2025 report to Congress, along with sessions focused on home- and community-based services, substance use disorder and mental health, artificial intelligence in prior authorization, Medicare-Medicaid plans, and children’s healthcare.
GAO Releases Report on Drug Shortages. The US Government Accountability Office (GAO) report describes trends in drug shortages since the COVID-19 pandemic and includes two recommendations for HHS to improve its coordination of drug shortage activities across agencies.
Senate Homeland Security and Governmental Affairs Committee Advances OPM Director Nomination. Scott Kupor’s nomination for director of the Office of Personnel Management (OPM) advanced to the full Senate floor by a party-line vote of 7 – 4.
House Energy and Commerce Democrats Send Letter on HHS Hire. Ranking Member Pallone (D-NJ), Health Subcommittee Ranking Member DeGette (D-CO), and Oversight and Investigations Subcommittee Ranking Member Clarke (D-NY) posed seven questions to HHS and expressed concern about the hiring of David Geier to lead a study on the link between vaccines and autism.
NEXT WEEK’S DIAGNOSIS
The first series of proposed Medicare payment regulations are expected soon, including the Inpatient Prospective Payment System proposed rule. Both chambers have left town for the annual Easter and Passover recess and are scheduled to return on April 28, 2025. The M+ Check-Up will be on hiatus next week and will return April 25, 2025, to recap the two-week recess.