Alaska Supreme Court Rules That “Total Pollution Exclusion” in Homeowners Insurance Policy Does Not Bar Coverage for Carbon Monoxide Poisoning
For decades, homeowners and other insurance policies have included broad pollution exclusions, often referred to as a “total pollution exclusion.” In a recent decision in Wheeler v. Garrison Prop. & Cas. Ins., No. S-18849 (Alaska Feb. 28, 2025), the Alaska Supreme Court held that a “total pollution exclusion” in a homeowners insurance policy did not apply to exclude coverage for injury arising out of exposure to carbon monoxide emitted by an improperly installed home appliance. Examining the breadth of the exclusion and applying the generally held principle that exclusions are to be construed narrowly, the court thus fulfilled the policyholder’s reasonable expectation of coverage for injuries resulting from the carbon monoxide exposure.
Background
A 17-year-old minor rented a cabin in Alaska and, during his tenancy, was found dead in the cabin’s bathtub. An autopsy and investigation by the deputy fire marshal determined that the tenant died of acute carbon monoxide poisoning caused by an improperly vented propane water heater installed in the same bathroom. Testing showed that the bathroom had accumulated high levels of carbon monoxide when the water heater was running.
The cabin owners’ homeowners insurance policy included a total pollution exclusion. The exclusion sought to bar coverage for, among other things, bodily injury or property damage “[a]rising out of the actual, alleged, or threatened discharge, dispersal, release, escape, seepage or migration of ‘pollutants’ however caused and whenever occurring.” The policy defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”
The cabin owners submitted a claim to their homeowners insurer, which denied coverage under the pollution exclusion. The insurer contended that any losses connected with the tenant’s death were excluded because carbon monoxide is a pollutant subject to the pollution exclusion. In denying coverage, the insurer declined to defend the cabin owners against a lawsuit brought by the tenant’s estate.
The owners signed a confession of judgment, which admitted that they negligently caused the tenant’s death. They also confessed to liability of $1,540,000 and assigned their right to seek coverage under the homeowners insurance policy from the insurer. The tenant’s estate then pursued recovery from the cabin owners’ insurer by filing suit in federal court.
The district court entered summary judgment for the insurer, holding that the tenant’s death was not covered under the cabin owners’ insurance policy. In support, the federal district court concluded that the Alaska Supreme Court’s prior decision in Whittier Properties, Inc. v. Alaska Nat. Ins. Co., 185 P.3d 84 (Alaska 2008), suggested that Alaska’s high court would interpret the pollution exclusion literally and conclude that the exclusion was unambiguous, precluding coverage. The district court further ruled that the owners could not have reasonably expected coverage for their tenant’s death because carbon monoxide fell within the definition of pollutant which was excluded under the plain language of the pollution exclusion.
The tenant’s estate appealed to the Ninth Circuit, which certified to the Alaska Supreme Court the question of how the pollution exclusion should be interpreted. The Alaska Supreme Court answered that question in its recent decision.
The Alaska Supreme Court Decision
The Alaska Supreme Court framed the certified question as follows: “Does the pollution exclusion in [the cabin owners’] insurance policy bar coverage for injury arising out of exposure to carbon monoxide by an improperly installed home appliance?” For several reasons, the court determined that a policyholder would reasonably expect coverage for carbon monoxide poisoning under the cabin owners’ policy and, therefore, the exclusion did not bar coverage for the submitted claim.
The court first distinguished the Whittier case on several grounds. That dispute, which involved gasoline leaking from a gas station into surrounding groundwater and soil, presented no ambiguity that gasoline was a pollutant under the insurance policy, and included evidence that the insured knew the policy did not cover damages arising from leaking gas tanks. In answering the certified question, the Alaska Supreme Court declined to simply follow the holding in Whittier and instead examined whether the cabin owners’ insurance policy created a reasonable expectation of coverage for the losses related to the carbon monoxide leak.
In performing that analysis, the court concluded that the pollution exclusion could reasonably be interpreted to cover liability from carbon monoxide poisoning from a water heater. The operative terms of the pollution exclusion—namely, “discharge, dispersal, release, escape, seepage, and migration”—are environmental terms of art relating to a pollutant passing from a container to the environment rather than the result of combustion such as was true in this claim with regard to carbon monoxide. Moreover, the subsections of the exclusion referencing “testing for, monitoring, cleaning up, removing, containing, treating, detoxifying or neutralizing, or in any way responding to, or assessing the effects of ‘pollutants,’” the court reasoned, further supported the policyholder’s reasonable expectation that the reach of the exclusion was limited to environmental pollution.
Finally, the court pointed to two other exclusions in the cabin owners’ insurance policy suggesting that the pollution exclusion did not apply to the type of carbon monoxide poisoning that led to the tenant’s death. Those exclusions applied to liability arising from exposure to lead paint or other lead-based products and exposure to asbestos. Although those exposures fell within the policy’s literal definition of pollutants, as well as the operative terms of the pollution exclusion regarding “discharge, dispersal, release, escape, seepage, and migration,” the insurer included those two additional exclusions, a point that helped confirm the true intent behind the exclusion. Accordingly, the specific exclusions for certain household pollutants, the court reasoned, supported a narrower interpretation of the pollution exclusion that it did not bar coverage for exposure to all toxic substances commonly found within a home.
Key Takeaways
Given the prevalence of pollution-related claims, there are several takeaways from the Alaska Supreme Court’s decision for policyholders to consider in navigating pollution exclusions in homeowners and many other insurance policies:
Facts and Policy Language Matter: No matter how broad an exclusion may appear on its face, whether an exclusion applies depends on a number of factors, including the specific policy language and the specific facts giving rise to the claim, not to mention the particular state’s law governing interpretation of the claim under the policy. In addition to the reasoning by the court here, a review of the “drafting history” of pollution exclusions shows that insurers, in seeking regulatory approval, testified that the exclusions were intended to preclude coverage for “true industrial pollution” and “would never be” applied to preclude claims like this one.
Consider Reasonable Expectations of Coverage: Even when the language of an exclusion, even a broadly worded total pollution exclusion, may appear unambiguous on its face, courts in many states may still consider the reasonable expectations of an insured to determine whether a policy exclusion applies. Not all jurisdictions place equal weight on the so-called “reasonable expectations” doctrine, so disputes over choice of law or venue may impact the relevance of the policyholder’s reasonable expectations.
Consider All Relevant Policy Language: Policy exclusions should not be interpreted in isolation. Rather, policies are read as a whole to interpret provisions in a manner where no language is interpreted in a way that renders other provisions superfluous or illusory. This is especially true when the dispute involves exclusions, as those provisions are construed narrowly and in favor of coverage.
Case-Specific Inquiry: Whether an exclusion bars coverage under an insurance policy ordinarily requires a case-specific inquiry, and prior decisions on the same or similar policy language are not always dispositive.
Appeals Court Says Disability Not Required in Order to Recover Back Pay for Violation of ADA’s Medical Inquiry and Examination Provisions
Most employers are aware that, under the Americans with Disabilities Act (ADA), disability-related inquiries and medical examinations of employees may only be required when such inquiries and examinations are “job-related and consistent with business necessity.” However, employers may be less familiar with the fact that the ADA’s limitations on medical inquiries and examinations apply to both employees with a disability and employees without a disability. Indeed, a recent appeals court decision highlights the fact that employers may be liable for monetary damages and other relief for violating the ADA’s medical inquiry and examination limitations, even if the employee subjected to the medical inquiry or examination does not have a disability or perceived disability.
In Nawara v. Cook County, John Nawara, a correctional officer for the Cook County Sheriff’s Office, was involved in multiple heated interactions with his supervisor, Human Resources, and an occupational nurse. Based on these incidents, the Sheriff’s Office placed Nawara on paid leave and required him to provide signed medical authorization forms and undergo a fitness-for-duty examination before returning to work. Nawara refused to submit the requested medical authorization forms and, as a result, was eventually transitioned to unpaid leave.
While on leave, Nawara filed suit alleging that the Sheriff’s Office had violated the ADA’s restrictions on medical inquiries and examinations for employees. After a trial, the jury concluded that the Sheriff’s Office’s requests for Nawara’s medical records and fitness-for-duty examination requirement violated the ADA, but it chose not to award any damages to Nawara. Nawara then asked the trial court to order the Sheriff’s Office to pay him back pay and restore his seniority. The trial court granted Nawara’s request to restore his seniority but denied his request for back pay, concluding that Nawara was required to have a disability or perceived disability in order to obtain back pay for a violation of the ADA’s medical inquiry and examination provisions. Both parties appealed the trial court’s decision.
On appeal, the U.S. Court of Appeals for the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin) noted that, during trial, Nawara had never claimed that he was disabled or that the Sheriff’s Office perceived him to be disabled. Nevertheless, the Seventh Circuit concluded that an employer’s violation of the ADA’s medical inquiry and examination provisions is discrimination on the basis of disability regardless of whether the employee has a disability or perceived disability. Consequently, the Seventh Circuit found that the ADA’s remedies applied to Nawara, and Nawara was authorized to recover back pay and have his seniority restored.
The Nawara case serves as a reminder that situations involving mandatory medical inquiries or examinations for employees are complex and are often difficult for employers to navigate. Employers with questions regarding the permissibility of medical inquiries or examinations should consult with experienced employment counsel before requiring an employee to provide medical information or submit to a medical examination to ensure that such actions do not violate the ADA.
New York State Releases Much Anticipated Guidance on Reporting Requirements for Material Healthcare Transactions as Budget Negotiations Near Conclusion, Potentially Expanding Law to Include Pre-Closing Review
On August 1, 2023, the New York State’s Department of Health (the “DOH”) began implementation of Public Health Law Article 45-A, the State’s new statutory requirement for advance notice and public disclosure of certain material health care transactions (the “Material Transactions law”). Now, in response to questions from the healthcare community regarding the reporting requirements and statutory interpretation, the DOH has released a set of Frequently Asked Questions (FAQs) to clarify the scope and application of the Material Transactions law.
As discussed in our prior post, the Material Transactions law applies to statutorily defined “health care entities” entering into “material transactions” and requires those entities to notify the DOH at least thirty (30) days prior to closing of the transaction. A “material transaction” includes mergers, acquisitions, affiliations, or the formation of certain partnerships that, individually or in the aggregate over a rolling twelve-month period, result in an increase of $25 million or more in gross in-state revenue. The FAQs provide important guidance regarding the types of transactions and entities that are covered under the law, how to evaluate the financial thresholds for reportability, and the expected content of the notice.
This update highlights key takeaways from the new guidance.
Expanded Interpretation of “Health Care Entity”
The FAQs clarify that the definition of a “health care entity” is to be interpreted broadly. While the statutory language already included a physician practice group, management services organization (MSO), provider-sponsored organization, health insurance plan, and any other kind of health care facility, organization, or plan that provides health care services in New York, the FAQs specify that “health care entity” includes dental practices, clinical laboratories, pharmacies, wholesale pharmacies (including secondary wholesalers), independent practice associations (IPAs), and accountable care organizations (ACOs). The DOH notes that the above list is not exhaustive, but illustrative of the types of entities covered under the Material Transactions law.
Clarification on the $25 Million Threshold and “De Minimis” Transactions
The FAQs provide greater detail on how the $25 million materiality threshold is to be calculated under the Material Transactions law. The DOH confirmed that this figure should be measured on an annual basis, based on a rolling twelve-month “lookback” period preceding the anticipated transaction closing date. Entities must evaluate both single transactions and any series of related transactions that occur, or will occur, within this period. The FAQs also emphasize that gross in-state revenue must be assessed for each transaction within the applicable lookback period, based on the actual or anticipated closing date of each individual transaction.
The DOH’s examples clarify that the $25 million threshold is not tied to revenue growth caused by the transaction, but rather to the combined gross in-state revenue of the parties to the transaction. For example, if Company A and Company B are planning to merge or if one is acquiring the other, and Company A generated $20 million and Company B generated $10 million in New York-sourced revenue during the lookback period, the combined in-state revenue of $30 million would exceed the threshold, rendering the transaction reportable. This is true even if the transaction does not independently increase the surviving entity’s in-state revenue by $25 million or more.
Similarly, if a health care entity completes multiple related transactions during a rolling twelve-month period—each involving different counterparties—the added in-state revenue attributable to each transaction must be aggregated for purposes of determining whether the threshold is met. The FAQs include illustrative scenarios where three separate deals, closed at different times within the lookback period, together exceed the $25 million mark and trigger a reporting obligation.
The DOH has also confirmed that a transaction may be reportable even if none of the parties are domiciled or licensed in New York, so long as the transaction would result in $25 million or more in gross in-state revenue attributable to New York operations.
Treatment of Transactions with Multiple Regulatory Components
The FAQs provide important clarification for transactions that include multiple components, where some portions are subject to existing regulatory review processes or approvals under other provisions of the Public Health Law (e.g., Articles 28, 30, 36, 40, 44, 46, 46-A, or 46-B), such as the Certificate of Need (CON) approval process.
According to the DOH, parties must separately evaluate those components of the transaction that are not subject to these existing review frameworks. If the gross in-state revenue attributable to the portions of the transaction that are not subject to another regulatory review process or approval equals or exceeds $25 million, then the transaction is still reportable under the Material Transactions law, even if other parts of the transaction are already being reviewed through another regulatory process.
The DOH places responsibility on the parties to perform a good faith estimation of the in-state revenue associated with each portion of the transaction and to determine whether the elements not otherwise subject to review independently trigger the reporting threshold.
Expectations for Transaction Impact Assessment
Until the DOH issues its electronic Material Transactions Notice Form, parties are expected to provide a good faith assessment of how the transaction may impact cost, quality, access, health equity, and competition. The FAQs outline illustrative factors for consideration, such as changes to services, insurance network participation, locations, staffing levels, and services to historically underserved populations as well as rate increases and any increase in market consolidation.
While the guidance does not mandate a particular methodology for evaluating impact, the inclusion of specific considerations provides stakeholders with a useful framework for preparing responsive disclosures.
Public Comment Process
The DOH also outlines the public comment process with respect to reported transactions. A summary of each reported transaction is posted on the DOH website, and interested parties may submit comments by email. Notably, there is no subscription list or automatic update service; stakeholders must check the DOH website regularly to stay informed.
Looking Ahead
The release of the FAQs coincides with proposed legislation included in Governor Hochul’s FY 2025-26 executive budget that would expand the Material Transactions law and the DOH’s authority under it. If enacted, the proposal would shift the law from a notice-only regime to one that includes a pre-closing preliminary review, at the discretion of the DOH, a cost and market impact review, and a required annual five-year post-closing reporting obligation of the parties to a transaction of the impact of the transaction on cost, quality, access, health equity, and competition. It would also require that notice be provided at least 60 days, rather than 30 days (as currently required), prior to the closing date of a material transaction.
The deadline for passing the New York State budget, which was due on April 1, 2025, has already been extended once to April 3, 2025, and is poised to be extended again today until April 9, 2025, as the Legislature and Governor Hochul continue budget negotiations. It remains to be seen if the proposed expansion of the Material Transactions law will be agreed upon in its current form, if at all.
While the FAQs provide an important first step in offering interpretive guidance, additional detail, particularly regarding the forthcoming electronic Material Transactions Notice Form, potential future rulemaking (if any), and the outcome of the proposed legislative changes, will be critical in shaping transaction strategies and reporting practices and obligations going forward.
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CMS Confirms Relocation of Physician-Owned Hospital Does Not Jeopardize Stark Law Exception
CMS confirmed that a physician-owned hospital proposing to move eight miles away from its original site and add an emergency department would continue to meet the whole hospital exception, provided all other conditions remain met.
CMS emphasized that the hospital must remain the same legal and operational entity post-relocation, with no changes in ownership or Medicare provider agreement.
The decision reflects CMS’s continued scrutiny of, yet possibly softening stance towards, physician-owned hospitals and the structural safeguards in place to protect against self-referral risks.
The Centers for Medicare & Medicaid Services (CMS) recently released Advisory Opinion No. CMS-AO-2025-1, addressing whether a physician-owned hospital’s proposed full-site relocation and addition of an emergency department would jeopardize its ability to continue to rely on the Stark Law’s “whole hospital exception.” In the advisory opinion, CMS concluded that relocation, by itself, is not necessarily disqualifying — and that no single factor is dispositive. Instead, the agency took a holistic approach in assessing whether the hospital remained the same entity post-relocation for purposes of the exception.
By retaining the same ownership, provider agreement, licensure, services, name, patient base, and bed count, CMS concluded that the hospital would remain the “same hospital” under Stark requirements and continue to qualify under the “whole hospital exception”— enabling the hospital to retain its protection for physician referrals.
This Advisory Opinion — the first issued since 2021 — provides noteworthy guidance and important considerations for hospital administrators, compliance officers, and legal counsel of physician-owned hospitals currently taking advantage of the exception considering structural changes or expansions.
Background and Legal Analysis
The Stark Law “Whole Hospital Exception”
In 2010, the Affordable Care Act tightened Stark Law rules to prevent the creation of new physician-owned hospitals (with limited exceptions) and restrict the expansion of existing ones.
According to the CMS Advisory Opinion, the hospital at issue had met the Stark Law’s whole hospital exception before the 2010 cutoff by having physician ownership and a Medicare provider agreement in place. The hospital requested that CMS confirm it would still qualify as the “same hospital” and remain in compliance with the Stark Law exception, despite its plans to relocate eight miles away and to add an emergency department.
The Hospital’s Proposal: A Relocation Without Disruption
CMS took a holistic approach in its analysis and reviewed the hospital’s comprehensive certification of facts in light of factors previously outlined in its CY 2023 OPPS/ASC proposed rule and reaffirmed in the FY 2024 IPPS final rule, namely:
Continuity of state licensure and Medicare provider agreement;
Consistent use of Medicare provider number and tax ID;
Same services and patient base;
No changes to ownership or scope of services (with some flexibility, such as adding an emergency room);
Same state regulatory framework.
The hospital certified that it had maintained physician ownership and a Medicare provider agreement continuously since December 31, 2010; the aggregate number of operating rooms, procedure rooms, and beds had remained the same since March 23, 2010 (and would remain unchanged post-relocation); the hospital’s services and patient base would remain unchanged; the hospital would continue to operate under the same name, branding, and tax ID number; there would be no ownership or leadership changes; and the hospital would continue under the same Medicare provider agreement.
Additionally, the hospital certified that its state’s law did not require a certificate of need for new construction, but any structural changes required prior notice and approval from that state’s health department. The requesting hospital also affirmed that discussions with its state officials confirmed the facility could maintain its existing state licensure after relocation.
Based on the certifications and documentation provided by the hospital, CMS concluded that neither the relocation of the facility or the addition of an emergency department would run afoul of the Stark Law’s referral and billing prohibitions. Specifically, the hospital would continue to meet the condition at 42 C.F.R. § 411.362(b)(1) as set forth in Stark’s Whole Hospital Exception.
Five Key Considerations for Hospital Leadership
One of the leading takeaways from the advisory opinion is CMS’s emphasis on a hospital’s continuity in legal identity, services, structure, and ownership when making a “whole hospital exception” determination. But beyond its specific facts, the opinion also serves as an important reminder for hospital administrators, compliance officers, and legal counsel of physician-owned hospitals that even operational changes—like relocation or new departments—can trigger significant legal and regulatory scrutiny.
Here are five strategic considerations hospital leadership should keep in mind:
Maintain Continuity: Ensure Medicare provider agreements, tax IDs, and licensure remain uninterrupted during transitions.
Document Everything: Detailed certifications and planning are crucial for regulatory assurance.
Avoid Ownership Changes: Even minor shifts in physician ownership could threaten compliance with the Whole Hospital Exception.
Engage Regulators Early: Involve CMS and state departments of health well in advance of any move or structural change.
Seek Advisory Opinions: Where doubt exists, requesting a formal CMS advisory opinion can offer clarity and protection.
Recent and Emerging Employment Law Changes Impacting Australian Employers
Not long after intentionally underpaying employees became a criminal offence on 1 January 2025, additional workplace changes have been announced or made by the federal Labor government to further protect workers and stimulate productivity.
Code of Practice on Sexual and Gender-Based Harassment
The Work Health and Safety (Sexual and Gender-based Harassment) Code of Practice 2025 (Code), which applies to all workplaces covered by the Work Health and Safety Act 2011 (Cth) (WHS Act), commenced on 8 March 2025.
The Code:
Gives examples of what sexual and gender-based harassment might look like;
Addresses ‘good practice’ in relation to investigations concerning sexual or gender-based harassment; and
Outlines a four-step risk management process that employers should proactively use to eliminate or minimise the risk of sexual and gender-based harassment as far as is reasonably practicable.
While the Code is not law, it is admissible in court proceedings under the WHS Act and Work Health and Safety Regulations 2011 (Cth) and courts may look to the Code:
As evidence of what is known about a hazard, risk assessment or control measures; and
To determine what is reasonably practicable in the circumstances.
The Code recognises that sexual and gender-based harassment often occurs in conjunction with other psychosocial hazards and therefore the Code should be read and applied with the Work Health and Safety (Managing Psychosocial Hazards at Work) Code of Practice 2024.
Work-From-Home Term to be Added to Clerks Award
In August 2024, the Fair Work Commission commenced proceedings on its own initiative to develop a work-from-home term in the Clerks—Private Sector Award 2020 (Clerks Award). The term is intended to facilitate the making of practicable ‘working from home’ arrangements and to remove award impediments to such arrangements.
The Commission has identified various issues to be determined, such as how ‘working from home’ should be defined and how the term should interact with the right to disconnect. The term is likely to serve as a model for incorporation in other modern awards, and therefore any interested party is invited to participate in the proceedings (not just parties with an interest in the Clerks Award).
Interested parties originally had until Friday 28 March to file proposals for a working from home clause, as well as submissions and evidence. This has now been extended until a date to be determined at the directions hearing listed for 6 June 2025. In the meantime, the matter has been listed for a conference on 11 April 2025 to discuss the substantive issues that will arise in the matter.
Ban on Non-Competes
The Labor government announced in last week’s 2025-26 Federal Budget that it plans to introduce a ban on non-compete clauses for workers earning less than the high-income threshold under the Fair Work Act 2009 (currently AU$175,000). Importantly, for the purposes of the high-income threshold, ‘earnings’ do not include incentive-based payments, bonuses or superannuation contributions. The government is still considering exemptions, penalties and transition arrangements.
At this stage, the proposed ban is just in relation to clauses preventing or restricting workers moving to a competing employer or starting a competing business. However, the Government has indicated that it will further consider and consult on non-solicitation clauses for clients and co-workers and non-compete clauses for high-income workers. The government also plans to restrict ‘no-poach’ agreements, where businesses agree not to hire workers from certain other businesses.
If the ban becomes law, it would take effect from 2027 and operate prospectively. In the meantime, employers should consider reviewing their employment contracts to ensure that their confidential information, trade secrets and intellectual property clauses continue to protect their business in the event the proposed ban on non-compete clauses proceeds.
Employers should also consider reviewing current notice periods, to ensure they are calibrated to provide sufficient protection, having regard to the nature of an employee’s role (including their level of access to customers and confidential information).
Anti-Vilification Protections to Expand Beyond Race and Religion
On 2 April 2025, Victoria’s Labor Government ‘s Justice Legislation Amendment (Anti-vilification and Social Cohesion) Bill 2024 (Bill) was passed by the Legislative Council and will shortly pass the Legislative Assembly without further amendment.
Currently, Victorians are protected from vilification on the grounds of their race or religion under the Racial and Religious Tolerance Act 2001. The Bill repeals the Racial and Religious Tolerance Act 2001 and a new section ‘Prohibition of vilification’ will be inserted into the Equal Opportunity Act 2010.
Victorians will be protected from unlawful vilification based on a broader range of attributes:
Disability;
Gender identity;
Race;
Religious belief or activity;
Sex, sexual orientation or sex characteristics; or
Personal association (whether as a relative or otherwise) with a person who is identified by reference to any of the above attributes.
The test to be applied will be based on whether a ‘reasonable person with the protected attribute’ would consider the conduct hateful or severely ridiculing. Vilification may occur in any form of communication, including for example by posting a photo on social media that severely ridicules someone with a protected attribute.
Additionally, serious vilification offences, such as threatening physical harm, will be criminalised and be punishable by up to five years’ imprisonment.
Whilst this is limited to Victorian law, it is possible that other States and Territories may enact similar legislation.
Preparing for the Implementation of Missouri Paid Sick Time: Key Deadlines and Compliance Requirements
The earned paid sick time provisions of Proposition A are set to take effect on May 1, 2025. Missouri Proposition A requires employers to provide employees working in Missouri at least 1 hour of sick leave for every 30 hours worked and allows carryover of up to 80 of such hours per year. The law applies to almost all Missouri employees, including full-time, part-time and temporary with limited exceptions. For more details on the requirements and background of this paid sick leave law, see our prior blog posts on Missouri Proposition A requirements here and litigation challenge here.
While ongoing litigation and legislative efforts seek to delay or modify certain aspects of the law, these initiatives are unlikely to affect the start date or the notice period required by the statute. Therefore, it is essential for employers to begin preparing for the implementation of the law to ensure compliance with the statutory requirements, including the mandatory notice and poster provisions.
Notice and Poster Requirements
Written Notice to Employees
Employers are required to provide written notice of the earned paid sick time policy to all employees by April 15, 2025. The notice must be provided on a single sheet of paper, using a font size no smaller than 14-point. This notice should be distributed along with the employer’s updated written policy.
The Missouri Department of Labor & Industrial Relations has provided a standardized notice for employers.
Poster Display Requirement
In addition to the written notice, Proposition A mandates that employers display a poster detailing the earned paid sick time policy in a “conspicuous and accessible place” at each workplace. This poster must be displayed starting April 15, 2025. The Missouri Department of Labor & Industrial Relations has also provided a poster for this purpose.
Litigation Update
On March 12, 2025, the Missouri Supreme Court heard oral arguments in a case brought by various business groups and associations challenging the constitutionality of Proposition A. The plaintiffs argue that the Proposition is unconstitutional due to its inclusion of both minimum wage and paid sick time issues on the same ballot.
While the Supreme Court has not yet issued a ruling, it typically takes between 100 and 200 days for the Court to render an opinion. Although the outcome of the case may ultimately affect certain provisions of the law, employers should continue preparing for the implementation of Proposition A as currently written, effective May 1, 2025.
Legislative Update
On March 13, 2025, House Bill 567 passed in the Missouri House of Representatives. This bill seeks to repeal the paid sick leave provisions of Proposition A, delay the scheduled minimum wage increase, and eliminate the annual adjustments to the minimum wage based on the price index. The bill cleared a public hearing in the Senate on March 26, and an executive session will be held on April 7.
If the bill passes the Senate and is signed into law by the Governor, it will not take effect until August 28, 2025. As a result, Proposition A will remain in effect beginning May 1, 2025, and employers should prepare for the law to be implemented as currently written.
Resources and Support
The Missouri Department of Labor & Industrial Relations has developed an overview and frequently asked questions (FAQ) section on its website to assist employers in understanding the requirements of Proposition A and the earned paid sick time benefits.
Missouri employers need to review and likely need to update their existing policies regarding sick time and/or paid time off to comply with Missouri paid sick leave requirements.
McDermott+ Check-Up – April 4, 2025
THIS WEEK’S DOSE
Reconciliation Moves Forward with Senate Introduction of Concurrent Budget Resolution. This move initiates the next stage in the reconciliation process, which requires House and Senate passage of a unified budget resolution.
Senate Confirms CMS Administrator. By a vote of 53 – 45, Mehmet Oz, MD, was confirmed as administrator of the Centers for Medicare & Medicaid Services (CMS).
Senate Judiciary Committee Holds Drug Legislation Markup. All six bills were passed by voice vote.
Senate Homeland Security and Governmental Affairs Committee Holds OPM Director Nomination Hearing. The hearing for Office of Personnel Management (OPM) director nominee Scott Kupor largely focused on the federal workforce.
House Energy and Commerce Health Subcommittee Holds Hearing on OTC Monograph Drugs. The hearing focused on the development of over-the-counter (OTC) sunscreen products.
House Energy and Commerce Oversight and Investigations Subcommittee Holds Hearing on Cybersecurity for Medical Devices. Witnesses advocated for increased cyber resilience of medical devices.
House Education and Workforce Health, Employment, Labor, and Pensions Subcommittee Holds Hearing on Employer-Sponsored Healthcare. The subcommittee sought to better understand the current landscape of employer-sponsored healthcare and discuss potential improvements.
HHS Begins Implementing Dramatic Restructuring, Cutting Agency Workforce and Consolidating Divisions. The US Department of Health and Human Services’ (HHS’s) initiative will eliminate or merge many divisions and offices, close five of the 10 regional offices, and create unprecedented changes that will have far-reaching consequences.
Laboratory-Developed Test Final Rule Struck Down. A federal court ruled that the US Food and Drug Administration could not regulate laboratory-developed tests as medical devices.
HHS Faces Legal Challenges to Rescinded Funding. Democratic attorneys general and governors in 23 states and Washington, DC, filed a lawsuit against HHS regarding the recent cancellation of $12 billion in state infectious disease and substance use grants.
CONGRESS
Reconciliation Moves Forward with Senate Introduction of Concurrent Budget Resolution. This move initiates the next stage in the reconciliation process, which requires the Senate and House to pass a unified budget resolution. Rather than resolving the different approaches of the previously passed resolutions in the two chambers, the resolution unveiled in the Senate this week takes the unusual, but permitted, approach of having the Senate and House stick with their preferred policies and funding levels. This would defer the tough decisions – including agreements on the level of spending cuts, tax extensions, and raising the debt limit – until later in the process.
In the healthcare space, this would mean that the House maintains its instruction to the Energy and Commerce Committee to cut $880 billion, much of which is anticipated to come from Medicaid, while the Senate instructs the Finance Committee (which has jurisdiction over Medicaid) to achieve a minimum of $1 billion in spending cuts.
The Senate cleared a procedural hurdle on the budget resolution and is moving toward advancing the measure by this weekend. President Trump met with Members and threw his strong support behind the effort. If the Senate passes the resolution, the House plans to advance it next week, which would likely require the intervention of the president, as near-unanimity among House Republicans would be necessary. Some conservative members of the House, including House Budget Committee Chair Arrington (R-TX), have come out in opposition to the Senate budget resolution, fearing that it would ultimately lead to a final reconciliation bill that does not achieve the level of spending cuts included in the House’s preferred plan.
Senate Confirms CMS Administrator. The full Senate confirmed Mehmet Oz, MD, as CMS administrator by a party-line vote of 53 – 45. Oz’s tenure begins amid significant restructuring and workforce reductions occurring at CMS and HHS.
Senate Judiciary Committee Holds Drug Legislation Markup. The six bipartisan bills listed below were all advanced out of the committee by voice vote. In the markup, senators emphasized the importance of lowering prescription drug prices.
S. 527, the Prescription Pricing for the People Act of 2025, would require the Federal Trade Commission (FTC) to study the role of intermediaries in the pharmaceutical supply chain.
S. 1040, the Drug Competition Enhancement Act, would prohibit product hopping.
S. 1041, A Bill to Amend Title 35, United States Code, to Address the Infringement of Patents That Claim Biological Products, and for Other Purposes, would address patent thickets.
S. 1097, the Interagency Patent Coordination and Improvement Act of 2025, would establish an interagency task force between the US Patent and Trademark Office and the US Food and Drug Administration (FDA) for patent-related information sharing and technical assistance.
S. 1095, the Stop STALLING Act, would enable the FTC to deter filing of sham citizen petitions.
S. 1096, the Preserve Access to Affordable Generics and Biosimilars Act, would prohibit pay-for-delay deals.
Senate Homeland Security and Governmental Affairs Committee Holds Nomination Hearing for OPM Director. In addition to considering OPM director nominee Scott Kupor, the hearing considered Eric Ueland’s nomination for deputy director of the Office of Management and Budget. Republican senators asked both nominees how they would address the federal government’s increasing size, as well as its hiring and firing processes. Democratic senators asked the nominees if they support the reduction of federal employees.
House Energy and Commerce Health Subcommittee Holds Hearing on OTC Monograph Drugs. During the hearing, witnesses urged the committee to improve FDA’s ability to develop safe and effective sunscreen products that can reduce the rates of skin cancer in the United States. Republican Members focused their questions on the regulation of OTC monograph drugs and how the United States can improve its clinical ability to produce sunscreens similar to those in other countries that have lower rates of skin cancer. Given the timing of the hearing, Democratic Members focused their questions on how the reorganization of HHS, specifically the FDA, will hinder the agency’s role to regulate and approve the efficiency and safety of OTC drugs and medical devices.
House Energy and Commerce Oversight and Investigations Subcommittee Holds Hearing on Cybersecurity for Medical Devices. In the hearing, witnesses emphasized the need for increased cyber resilience of medical devices and suggested various solutions, including improved coordination between stakeholders and the government and increased cybersecurity training and education. Democrats focused their comments on the ongoing HHS reorganization and reduction in force, and changes made to National Institutes of Health (NIH) funding. They expressed concerns about how those actions will affect medical device research, review, and regulation. Republicans focused on the potential for cyberattacks from foreign countries, including China, the risk of backdoor attacks, and barriers to cybersecurity faced by rural hospitals.
House Education and Workforce Health, Employment, Labor, and Pensions Subcommittee Holds Hearing on Employer-Sponsored Healthcare. Subcommittee members and witnesses discussed the current landscape of employer-sponsored healthcare and potential improvements. Republicans emphasized the importance of association health plans for small businesses and self-employed individuals, highlighting their potential to provide affordable and comprehensive health coverage by allowing small businesses to band together and negotiate better rates. Democrats expressed concerns about budget cuts to Medicaid and the layoffs occurring at HHS, stressing that they could potentially hurt small businesses and employer-sponsored insurance coverage.
ADMINISTRATION
HHS Begins Implementing Dramatic Restructuring, Cutting Agency Workforce and Consolidating Divisions. Following last week’s announcement of HHS’s “dramatic restructuring” that includes the elimination of 10,000 employees, the consolidation of 28 divisions into 15, the elimination of five of the agency’s 10 regional offices, and the creation of a new Administration for a Healthy America subdivision, HHS employees began to receive layoff notices this week. According to last week’s HHS announcement and subsequent anecdotal reports this week, significant workforce reductions are underway at FDA, NIH, CMS, and the Centers for Disease Control and Prevention, among others.
The action sent shockwaves across Capitol Hill and the healthcare sector. In Congress, Democrats swiftly expressed deep concerns, along with some Republicans. Senate Health, Education, Labor, and Pensions (HELP) Committee Chair Cassidy (R-LA) and Ranking Member Sanders (I-VT) formally invited HHS Secretary Kennedy to testify at a hearing on April 10, 2025, to update the committee on these actions. In the letter of invitation, they noted that during the confirmation process, Secretary Kennedy committed to coming before the committee quarterly, and that this is the first such invitation. While House Energy & Commerce Chair Guthrie (R-KY) and Health Subcommittee Chair Carter (R-GA) released a supportive statement, Chair Guthrie also requested a bipartisan staff briefing for HHS to explain the actions. Ranking Member Pallone (D-NJ) and Health Subcommittee Ranking Member DeGette (D-CO) called that action too little and wrote to Chair Guthrie, asking him to conduct oversight and hold hearings, including with Secretary Kennedy.
Democrats also sent multiple letters to Secretary Kennedy seeking more transparency:
Senate Finance Committee Ranking Member Wyden (D-OR), Senate HELP Committee Ranking Member Sanders, Senate Democratic Leader Schumer (D-NY), and Senator Warner (D-VA) led 34 Democratic senators in a letter requesting information about the fired employees by April 4, 2025, along with a detailed, staff-level briefing on the reduction in force plan.
House Energy and Commerce Committee Ranking Member Pallone, Health Subcommittee Ranking Member DeGette, and Oversight and Investigations Subcommittee Ranking Member Clarke (D-NY) sent a letter requesting documents and answers to a series of questions by April 15, 2025.
Lead Democratic appropriators from both sides of the Capitol sent a letter requesting specific information about HHS’s organizational structure by April 4, 2025.
No further details on the restructuring have been released as of the publication of this Check-Up, and Members of Congress are learning of the specific impacts only anecdotally through reports of specific terminations. Still unknown is the impact on HHS operations, the timing of regulations and agency guidance, and daily operations. We will continue to provide updates as we learn more.
COURTS
Laboratory-Developed Test Final Rule Struck Down. The US District Court for the Eastern District of Texas struck down the FDA’s final rule on laboratory-developed tests (LDTs), under which FDA would have started regulating LDTs as medical devices, with the initial phase starting May 6, 2025. Citing the new Loper Bright standard that has replaced the Chevron doctrine, the court concluded that the LDT final rule exceeded FDA’s authority under the Food, Drug, and Cosmetic Act, stating that FDA’s authority to regulate “devices” extends to tangible, physical products that are commercially distributed – not professional services that use such products.
HHS Faces Legal Challenges to Rescinded Funding. Last week, HHS canceled $12 billion in state infectious disease and substance use grants. Democratic attorneys general and governors in 23 states and Washington, DC, have filed a lawsuit against HHS seeking a temporary restraining order and injunctive relief to halt the funding cuts, stating that the cuts were unlawful and harmful. As legal challenges continue, it is being reported that the Trump administration is withholding tens of millions of dollars from Planned Parenthood clinics, claiming the clinics have violated Trump’s executive order on diversity, equity, and inclusion. In related news, the US Supreme Court heard oral arguments this week on South Carolina’s effort to exclude Planned Parenthood from its Medicaid program.
QUICK HITS
President Imposes Higher Tariffs. President Trump announced his plan to impose higher tariffs, including a 10% universal tariff on all goods imported into the United States, beginning April 5, 2025, and higher reciprocal tariffs on certain jurisdictions, including China, Japan, and the European Union, beginning April 9, 2025. The plan comes with certain exemptions, including pharmaceutical products, although that could change as the administration considers and advances additional trade policies.
CBO Releases Long-Term Budget Outlook. The Congressional Budget Office (CBO) predicts that the Medicare Hospital Insurance Trust Fund will run out of funds in 2052, which is 17 years later than previously estimated. According to CBO, expenditures from the trust fund are projected to be smaller and income to the trust fund is projected to be greater than projected last year because Part A spending was less than anticipated in 2024, payments to hospitals are expected to grow more slowly than they did in 2024, and modeling of federal payments to insurers in the Medicare Advantage program has been updated. Read the full report here.
NIH, FDA Nominees Sworn In. Jay Bhattacharya, MD, PhD, was sworn in as NIH director, and Martin Makary, MD, MPH, was sworn in as FDA commissioner.
ONDCP Releases Drug Policy Priorities. The White House Office of National Drug Control Policy (ONDCP) outlined six priorities for the Trump Administration:
Reduce the number of overdose fatalities, with a focus on fentanyl
Secure the global supply chain against drug trafficking
Stop the flow of drugs across borders and into communities
Prevent drug use before it starts
Provide treatment that leads to long-term recovery
Innovate in research and data to support drug control strategies
BIPARTISAN LEGISLATION SPOTLIGHT
Sens. Schatz (D-HI), Wicker (R-MS), Warner (D-VA), Hyde-Smith (R-MS), Welch (D-VT), and Barrasso (R-WY) reintroduced the CONNECT for Health Act this week. The bipartisan bill would make permanent the current Medicare flexibilities that are scheduled to expire on September 30, 2025, without further congressional action. The bill has a total of 59 original cosponsors. A press release from Sen. Schatz can be found here. Companion legislation in the House is expected imminently from Reps. Thompson (D-CA), Schweikert (R-AZ), Matsui (D-CA), and Balderson (R-OH).
NEXT WEEK’S DIAGNOSIS
The Senate and House will be in session next week, as Republican leaders continue efforts to advance the partisan budget reconciliation process. Hearings and markups of note next week include the following:
The House Energy and Commerce Committee will hold a markup that was postponed this week after Speaker Johnson abruptly cancelled votes for most of the week. The broadly bipartisan markup will include several health-related bills.
A Senate HELP Committee markup will include a pediatric cancer bill.
The House Ways and Means Health Subcommittee will hold a hearing on biosimilars.
House Energy and Commerce Chairman Guthrie stated that HHS Secretary Kennedy has agreed to a bipartisan briefing to answer questions about the HHS reorganization, but we are awaiting official confirmation. It is not yet known whether Secretary Kennedy will accept the Senate HELP Committee’s invitation to testify on April 10, 2025. We are also watching for the IPPS proposed rule and Medicare Advantage and Part D final rule, which are both pending release.
Unlocking the Secrets of the Endocannabinoid System: A New Frontier in Therapeutic Cannabis Research for Adolescents
Humans possess several well-established bodily systems, including the sympathetic nervous system, the central nervous system, and the endocrine system. A relatively recent discovery is the endocannabinoid system (ECS). Understanding the ECS is essential for comprehending the effects of cannabis and its compounds on the body, particularly in therapeutic applications.
Endocannabinoids are naturally occurring compounds in the body that bind to cannabinoid receptors located throughout the body. The ECS regulates physiological processes such as mood, appetite, sleep, immune response, pain sensation, memory, and growth and development. The ECS is present and active regardless of cannabis use. Compounds in cannabis, including THC (tetrahydrocannabinol) and CBD (cannabidiol), interact with the ECS by binding to the endocannabinoid receptors. THC can produce psychoactive effects when binding with these receptors, while CBD interacts indirectly and provides therapeutic benefits without causing a high. Current research is focused on the effects and benefits of cannabis-based medical products for adolescent diseases, including childhood cancer, treatment-resistant epilepsy, and Sturge-Weber Syndrome (SWS), a rare congenital disorder characterized by a facial birthmark, abnormal blood vessels in the brain, and eye abnormalities.
Current research is focused on the effects and benefits of cannabis-based medical products for adolescent diseases, including childhood cancer, treatment-resistant epilepsy, and Sturge-Weber Syndrome (SWS), a rare congenital disorder characterized by a facial birthmark, abnormal blood vessels in the brain, and eye abnormalities.
In 2018, the U.S. Food and Drug Administration approved Epidiolex oral solution (highly purified CBD) for the treatment of seizures associated with two severe forms of epilepsy, Lennox-Gastaut syndrome and Dravet syndrome, in patients two years of age and older. Since then, scientists have studied whether Epidiolex is effective in treating pediatric patients with SWS. In 2024, researchers summarized early data on Epidiolex’s efficacy for preventing and treating epilepsy and neurocognitive impairments in patients with SWS. In their review, researchers found that CBD interacts with endocannabinoids and produces an anti-inflammatory, neuroprotective, and anti-epileptic effect. In addition to reduced seizure activity, patients demonstrated improvements in cognitive, behavioral, and motor functions as well as quality of life.
In another recent study, researchers conducted a review of published literature evaluating the use of cannabis in pediatric oncology patients. The review evaluated the safety, dosing, and effectiveness of cannabis products for managing symptoms in children with cancer. After examining ten observational studies involving 1,529 children and nine interventional studies with 398 participants, the researchers determined that cannabinoids may be beneficial in managing pain, nausea, and vomiting in pediatric patients, particularly when traditional pharmaceuticals are ineffective. The researchers explained that cannabinoids bind to cannabinoid 1 receptors of the ECS and prevent the release of emetogenic neurotransmitters, the chemical messengers that trigger nausea and vomiting. Notably, no serious cannabis-related adverse events were reported across all studies, but researchers underscored the need for further investigation into the composition of cannabis products, appropriate dosages, and potential drug interactions.
Research on cannabinoids and the ECS is evolving, with promising therapeutic applications for various health conditions. We will keep monitoring this research to uncover its potential benefits for adolescents and adults.
We Aren’t in Kansas Anymore – Dr. Oz Confirmed as Head of CMS
Well, maybe they held off until after Medicarians, but the Senate has confirmed Dr. Mehmet Oz as the new head of the Center for Medicare and Medicaid Services (CMS).
Dr. Oz is probably most known for hosting a daytime TV-show. But, he is now in charge of the CMS and its substantial budget which equates to over 20 percent of federal outlays. Importantly, for TCPAWorld readers, CMS also is the primary regulator for the marketing of Medicare Advantage (MA) and Part D plans.
Dr. Oz has been vocal in his support for Medicare Advantage in the past and could work to make the MA process better for consumers. However, during his confirmation hearing, he did note that “We’re actually apparently paying more for Medicare Advantage than we’re paying for regular Medicare. So it’s upside down”.
With a proposed final rule still waiting to be finalized, it will be interesting to see how Dr. Oz’s leadership of the organization will affect agencies and marketers. One area of interest will be the finalization of the expansion of CMS’s oversight of “marketing” under the MA and Part D plans which will be bring even more advertising materials under the purview of CMS for review and approval. Prior to this proposed rule, whether a MA or Part D “communication” counted as “marketing” depended on two things: its content and its intent. “Content” meant it had to include details about plan benefits, costs, ratings, or MA-specific rewards.
Now, CMS is proposing a shift. They want to drop the content requirement entirely. If this rule is finalized, the only thing that will matter is the “intent” behind the communication. Does the communication intend to influence the consumer’s enrollment decision? CMS will figure this out by looking at objective factors like the audience and the message itself, not just the plan’s stated purpose. The expectation is that this will significantly increase the amount of materials that plans will need to submit for CMS review, leading to more comprehensive oversight of Medicare marketing.
Maybe under Dr. Oz’s leadership this rule will get another look. One thing is for certain, as Dr. Oz pointed out at his hearing, “There’s a new sheriff in town.”
New York State Department of Health Releases FAQs Regarding PHL 45-A, the Material Transactions Law
Roughly two years in the making, the New York State Department of Health (NYS DOH) has issued long-awaited guidance on its material transactions law.
Notably, the guidance provides clarity on how to calculate the “de minimis” exception to the material transaction law requirement—including an indication that “related” transactions only need to have a single party in common, which is an important consideration for providers and investors pursuing a “roll-up” strategy.
N.Y. Pub. Health Law Article 45-A, “Disclosure of Material Transactions,” took effect on August 1, 2023, and requires “health care entities” involved in a “material transaction” to provide written notice to the NYSDOH at least 30 days prior the proposed closing of a transaction. As our colleagues wrote at the time, the legislation grew out of concerns with the “proliferation of large physician practices being managed by entities that are investor-backed” (e.g., private equity).
These concerns have only increased in the past two years; more than a dozen states including New York have enacted health care transaction notice requirements. Currently, several state legislatures are attempting to either amend existing requirements or create new ones. New York is one state that is potentially amending its existing notice requirement. As we noted in March, proposed legislative changes to the New York law would include an extension of the notice deadline to 60 days; a statement as to whether any party to the transaction owns any other health care entity that within the past three years has closed operations, is in the process of closing operations, or has experienced a substantial reduction in services; and a statement as to whether a sale-leaseback agreement, mortgage or lease, or other payments associated with real estate are a component of the proposed transaction.
We discuss the existing New York law, and the recent guidance, below. The guidance is brief; if you have additional questions in this area, please reach out to the authors.
Who is required to report material transactions?
The first topic addressed in the NYS DOH’s FAQs is “[w]hich entities are required to report Material Transactions under PHL Article 45-A?” As described in PHL 45-A and the FAQs, PHL45-A applies to both in-state and out-of-state “health care entities.” Both Section 4550(2) and Q1-Q2 of the FAQs clarify that “health care entities” subject to the reporting requirements include, but are not limited to:
Physician practices or groups;
Management services organizations or similar entities providing all or substantially all the administrative or management services that are under contract with at least one physician practice;
Provider-sponsored organizations;
Health insurance plans;
Health care facilities, organizations, or plans providing health care services in New York;
Dental practices;
Clinical laboratories;
Pharmacies (including wholesale pharmacies and secondary wholesalers);
Independent practice associations (IPAs); and
Accountable care organizations (ACOs).
Notably, the NYS DOH FAQs do not specify any other healthcare professions under the list of “health care entities,” including applied behavior analysts, chiropractors, clinical social workers, occupational therapists or physical therapists. There have been open questions whether such professions are captured under this law or whether a management services organization that provides administrative services to such professions are considered “health care entities” and subject to the law. The NYS DOH did not list such professions in the FAQ but included a disclaimer that the professions listed are not exhaustive but illustrative of the types of entities covered under the law.
What constitutes a material transaction?
Both Section 4550(4)(a) and Q3 of the FAQs state that a “material transaction” means any of the following—occurring during a single transaction or in a series of related transactions in a rolling twelve-month time period—that result in a “health care entity” increasing its total gross-in-state revenues by $25 million or more:
A merger with a health care entity;
An acquisition of one or more health care entities, including but not limited to the assignment, sale, or other conveyance of assets, voting securities, membership, or partnership interest or the transfer of control;
An affiliation agreement or contract formed between a health care entity and another person; or
The formation of a partnership, joint venture, accountable care organization, parent organization, or management services organization for the purpose of administering contracts with health plans, third-party administrators, pharmacy benefit managers, or health care providers as prescribed by the commissioner by regulation.
Exemptions
Both Section 4550(4)(b) and Q4-Q6 of the FAQs state that a material transaction does not include
Clinical affiliations of health care entities formed for the purpose of collaborating on clinical trials or graduate medical education programs;
Transactions already subject to review under certain provisions; and
De minimis transactions, meaning a transaction or a series of related transactions which result in a health care entity increasing its total gross in-state revenues by less than $25 million.
De Minimis Exemption:
Likely in response to questions from industry stakeholders, the FAQs clarify—with relevant examples—the de minimis transaction exemption and how the $25 million threshold is calculated on an annual basis.
Calculating de minimis transaction exception for a single transaction:
The guidance indicates that the state will consider the de minimis exception in one of two ways depending upon the transaction structure.
If the transaction in question is an acquisition where the acquiring entity will remain an ongoing concern, the guidance indicates that the parties must assess whether the entity or entities being acquired had $25 million or more in gross in-state revenue in the prior 12-month period from the anticipated closing date (“lookback period”).
If the transaction is a merger that results in a new corporate entity, the guidance indicates that the parties must assess whether the whether their total combined gross in-state revenues from the 12-month lookback period is greater than or equal to $25 million.
Calculating de minimis exception for a series of related transactions:
The guidance indicates that the state considers a series of related transactions to be those where the acquiring party remains the same regardless of the identity of the selling or acquired party. Therefore, the guidance instructs the parties to assess the revenue associated with each of the acquirer’s transactions that took place, or will take place, during the 12-month lookback period to determine if the total added combined gross in-state revenue calculated across all of the transactions is greater than or equal to $25 million or more.
CON Exemption:
If elements of a transaction are subject to separate review/approval processes—including but not limited to certificate of need (CON) laws—the parties to the proposed transaction must report the non-CON portions of the transaction, if a good faith estimation of the total in-state gross revenues of the transaction less the total in-state gross revenues of those elements subject to CON review/approval is calculated to be more than $25 million.
Impact assessments
Expanding on the directive in § 4552(1)(f) to determine the material transaction’s impact on cost, quality, access, health equity and competition in the impacted markets, Q7 of the FAQs state that the parties should provide a good faith assessment of the impact of the proposed material transaction, including but not limited to whether:
Services will be eliminated, reduced, added, or expanded;
Contracts with certain insurance carriers will be added or eliminated, including whether Medicaid participation will be impacted;
Locations will open or close, or expand or reduce service availability;
Healthcare staffing changes are expected;
Contracted commercial payor rate increases are anticipated;
Changes in the share of services provided to historically underserved populations are anticipated; and
The parties expect any increase in market consolidation.
More to Know
Additional requirements not covered in the FAQs, including the submission of names, addresses, copies of definitive agreements, location of services and revenue, closing date, and nature and purpose may be found in Section 4552.
The NYS DOH encourages stakeholders, counsel and the public to review its Material Transactions webpage, which includes a link to summaries of reported transactions. Question 8 of the FAQs notes that interested parties may comment on a proposed material transaction by emailing comments to [email protected]. (Additional questions not covered by the FAQs may be emailed to the same address).
Minnesota Employment Legislative Update 2025, Part I: Breaking the Tie to Make the Law
After controlling Minnesota’s House, Senate, and governorship since 2023, the Minnesota Democratic–Farmer–Labor (DFL) Party’s legislative and gubernatorial “trifecta” at the state capitol is no more. The 2025 regular session of the Minnesota Legislature began with Democrats and Republicans tied at sixty-seven members each in the House and a slim DFL majority in the Senate, meaning no single party can push through its agenda alone.
With every vote carrying significant weight in the session, legislators must reach across the aisle to achieve the majority vote required to pass bills. The question is, who will compromise, and what will it take to break the tie?
Quick Hits
The Minnesota Legislature’s party divide creates uncertainty for employers, with amendments to key labor laws like Paid Family and Medical Leave and Earned Sick and Safe Time potentially facing delays or requiring bipartisan compromise.
Proposed amendments to Minnesota’s Earned Sick and Safe Time Law include delaying penalties for violations before January 1, 2026, making Earned Sick and Safe Time permissive, and changes to leave notice requirements and documentation for extended leave, but none have advanced past initial stages.
Various bills aim to modify or delay the Paid Family and Medical Leave Law, with some proposing exemptions for small employers and others seeking to repeal the law or delay its implementation until 2027.
This divide in the Minnesota Legislature means uncertainty for Minnesota employers. Critical issues, such as Minnesota’s Paid Family and Medical Leave and Earned Sick and Safe Time (ESST) laws, may either face delays or require bipartisan compromise to advance. Employers should stay alert until the end of the legislative session on May 19, 2025, as the legislature negotiates the future of Minnesota’s labor and employment laws.
This article previews key proposed bills that would impact employers if enacted. While it is too early to predict which bills will reach the governor’s desk, the nature of the proposed legislation offers insight into the extent of the legislative divide and the effort required by the legislature to pass any bills.
Minnesota Earned Sick and Safe Time
A handful of proposed bills would amend Minnesota’s ESST law, but none have advanced past their introduction and first reading. These bills sit in the Minnesota House of Representatives’ Workforce, Labor, and Economic Development Finance and Policy Committee and the Minnesota Senate’s Labor Committee, respectively.
House File (HF) 2025 / Senate File (SF) 2300 would create the most significant changes among the proposed bills. These companion bills, among other amendments, would:
exempt employers with fewer than fifteen employees from ESST requirements;
allow prorating ESST hours based on full-time or part-time employee status;
change employee notice for unforeseeable leave from “as soon as practicable” to “as reasonably required by the employer”;
allow employers to ask for documentation if ESST use exceeds two days;
remove certain paid time off (PTO) requirements; and
let employers ask employees to find replacements unless the leave is unforeseeable and permit employees to find replacements on their own.
Other proposed bills would exclude farm employees working for farms with five or fewer employees (HF 1057 / SF 310), Department of Transportation workers (HF 1905), and inmates of correctional facilities (SF 947) from certain requirements; exclude employees appointed to serve on boards or commissions from certain definitions (HF 758 / SF 494); and give employers the option to provide certain benefits (HF 1542 / SF 2572). HF 1325 / SF 2605 would prohibit penalties for violations before January 1, 2026, and provide various exemptions and proration options for small employers.
Paid Family and Medical Leave (Paid Leave)
Various proposed bills aim to change the Paid Leave Law, including potentially delaying its implementation for another year or repealing it altogether. Notably, HF 0011 / SF 2529 would delay the law’s implementation by one year, meaning employees would not receive benefits until January 1, 2027. Once it was sent to the House floor for debate and vote, the House laid HF0011 on the table. No further action will be taken until the House reconsiders the bill.
Other related bills to watch:
HF 1241 / SF 1771 and HF 1263 / SF 2277 would repeal the Paid Leave Law and return unspent money to the general fund.
HF 0260 / SF 1793 would exempt employers with twenty or fewer employees until January 1, 2028.
HF 2113 would exempt employers with fifty or fewer employees.
HF 2024 would exempt certain small employers; change the definition of a seasonal employee; allow private plans to provide shorter durations of leave and benefits under certain circumstances; and postpone benefits until January 1, 2027.
HF 1523 / SF 1849 would exempt certain agricultural workers.
HF 2269 would delay employer penalties for failure to notify employees of paid leave benefits until January 1, 2027.
HF 1976 / SF 2466 would exempt collective bargaining agreement employees from the definition of “covered employment” under certain conditions; remove individuals with personal relationships with employees from the definition of “Family Member”; change the definition of “small employer” to fifty or fewer employees; and require small employers to pay a 50 percent rate among other amendments.
Nondiscrimination
The legislature introduced numerous bills targeting nondiscrimination laws, which are summarized here.
HF 1672 / SF 2371 would expand nondiscrimination provisions to include medical cannabis patients.
HF 2182 / SF 200 would allow employers to justify adverse impact of discriminatory practices if related to the job or business purpose.
HF 0481 / SF 1529 would prohibit employment discrimination based on refusal of medical intervention.
HF 0282 / SF 407 would add political affiliation as a protected category under the Minnesota Human Rights Act. Similarly, SF 863 would prohibit employers from engaging in economic reprisals based on political contributions or activity.
HF 1427 / SF 1111 would require transportation network companies to make vehicles wheelchair-accessible and adopt nondiscrimination policies.
Independent Contractors
The legislature has taken up several bills related to independent contractors. Below is a summary of the key bills currently under consideration:
HF 1316 / SF 2306 would require employers to report newly hired independent contractors to the commissioner of children, youth, and families for child support purposes.
SF 2153 would expand “prohibited practices” to include “if an employer has a formal job classification and compensation plan, place an employee in a job classification or job category or provide a job title that misrepresents the employee’s experience or actual job duties and responsibilities.”
HF 2145 / SF 2361 woulddouble the potential penalty for employers that intentionally misrepresent an employee as an independent contractor in the unemployment insurance or paid family and medical leave programs.
Job Postings, Employment Agreements, and Unions
The legislature also introduced bills that would affect job posting requirements, employment agreements, and unions. Namely:
Job Postings
HF 1484 / SF 2235 would require job postings to disclose whether employee health plan options comply with cost-sharing limits.
Employment Agreements
HF 2567 / SF 2533 would prohibit stay-or-pay provisions as a condition of employment.
HF 1768 would provide more circumstances under which a covenant not to compete is valid and enforceable.
Unions
HF0107 / SF1532 would allow strikers who stop working due to a labor dispute to be eligible for unemployment benefits.
SF 1148 would allow applicants to be eligible for unemployment benefits if the employer hires a replacement worker for their position.
HF 2240 / SF 3050 would allow private employees to allocate their union dues to a local, state, or national organization of their choice.
Opposition to Renewed COPA Application in Indiana Reveals FTC Leadership’s Views on Hospital Merger Enforcement
The Federal Trade Commission (FTC) recently submitted comments in opposition to a renewed application for a certificate of public advantage (COPA) that would, if granted, allow two hospitals in Indiana to merge despite potential antitrust concerns.
In its submission, the FTC suggested that it had no institutional bias against COPAs but routinely objects because of the price increases, declines in quality, and lower wages that the FTC argues result from most mergers subject to a COPA.
The FTC also said that it takes “failing-firm” defense arguments (i.e., the claim that one of the parties to the transaction will fail unless the merger is permitted) seriously and “never wants to see a valued hospital exit a community.” Furthermore, the FTC stated that it “has not challenged mergers with hospitals that are truly failing financially and cannot remain viable without the proposed acquisition.”
Nevertheless, the FTC noted the potential for cross-market harms as a reason to object to the Indiana hospitals’ COPA application. The FTC identified businesses with employees in counties not directly in the hospitals’ service areas who might be adversely affected by the transaction, the impact on the cost of health care for state employees, and the purported effect on patients insured by Medicare and Medicaid as reasons to object to the proposed application.