BONDie & Clyde: Superseding a Non-Monetary Judgment

2 minute read

In re Bonnie Elizabeth Parker

Dallas Court of Appeals, No. 05-24-00809-CV (August 27, 2025)

Chief Justice Koch (Opinion, linked here), and Justices Goldstein and Garcia

In memory and in lore, Bonnie Parker and Clyde Barrow are inseparable. In fact, however, Bonnie was interred at Crown Hill Memorial Park, while Clyde rests in a Western Heights Cemetery plot several miles away. Invoking Texas Health & Safety Code § 711.004, Bonnie’s niece sought to reunite the two by having Bonnie’s remains removed from Crown Heights and reinterred next to Clyde at Western Heights. But § 711.004(a) allows for disinterment only “with the written consent of the cemetery organization operating the cemetery,” and Crown Hill refused. Subsection 711.004(c), however, provides nevertheless that, when the consents required by subsection 711.004(a) cannot be obtained, remains “may be removed by permission of a county court of the county in which the cemetery is located.” So, off to county court went Bonnie’s niece, where she obtained a permanent injunction ordering Crown Hill to enter into arrangements for Bonnie’s disinterment within 10 days after the judgment.

Crown Hill appealed. When the trial court refused to stay its judgment pending appeal, Crown Hill sought emergency relief in the Dallas Court of Appeals, and that Court obliged.

Treating Crown Hill’s filing as a motion for review under TRAP 24.4, the appeals court held that when a judgment is for something other than money or an interest in property, the trial court ordinarily “must set the amount and type of security that the judgment debtor must post” and allow the appellant to supersede, per TRAP 24.2(a)(3). Here, the Court said, the “appeal will become moot if Crown Hill is not permitted to suspend enforcement of the judgment.” By contrast, allowing Bonnie’s remains to remain at Crown Hill where they have been since 1945 “perfectly preserves the status quo and the parties’ rights pending appeal.” So, the Court reversed the trial court’s order denying a stay, set the amount of Crown Hill’s bond at $0, and suspended enforcement of the trial court’s judgment pending disposition of the appeal—leaving Bonnie and Clyde apart, at least for a little while longer.

Another Permissive Appeal Bites the Dust

2 minute read

FCA US LLC v. Adient US, LLC

Dallas Court of Appeals, No. 05-25-00836-CV (July 28, 2025)

Justices Smith, Clinton (Opinion, linked here), and Barbare

Petitions to pursue permissive appeals continue to fare poorly, with the Courts of Appeals insisting on strict compliance with TRCP 168 and TCPRC § 51.014(d) and denying petitions that don’t dot every  “i” and cross every “t.” 

Adient secured a summary judgment dismissing FCA’s claims against it. The trial court denied FCA’s motion to reconsider, but granted its request for leave to pursue a permissive interlocutory appeal pursuant to TRCP 168 and TCPRC § 51.014(d). The court found (1) that its “rulings involve a controlling question of law on which there is substantial ground for difference of opinion”—specifically, the scope and application of “the component-part-supplier doctrine, announced in Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681 (Tex. 2004)” and an exception to that doctrine—and also (2) that an interlocutory appeal of the issue “may materially advance the ultimate termination of this litigation”—i.e., it addressed both prongs of Rule 168 and § 51.014(d), or so it thought.

The Dallas Court of Appeals rejected FCA’s petition to pursue its permissive interlocutory appeal. The Court explained that it “strictly construe[s] applications for permissive appeals because statutes allowing for interlocutory appeals are an exception to the general rule that only final judgments are appealable.” Here, the Court said, the trial court’s order did not comply with Rule 168’s requirement that it “state why an immediate appeal may materially advance the ultimate termination of the litigation.” It just broadly asserted that an interlocutory appeal might advance ultimate termination of the litigation, without saying why that was so.  The appeals court held that, “The order’s rote recitation of possible material advancement—without an explanation of ‘why’ immediate appeal may advance ultimate termination of the litigation—fails to satisfy an express requirement of Rule 168.” The appeals court rejected FCA’s argument that the “why” could be inferred from the trial court’s order and its context—i.e., that absent an interlocutory appeal, the purported “summary-judgment error could result in an unnecessary trial without Adient as a party.” Strict compliance with Rule 168 requires that the trial court’s order “state” why an interlocutory appeal may materially advance termination of the litigation.

“There Is No Such Thing as a Public-Interest Exception to Mootness in Texas.”

2 minute read

Texas Dep’t of Family and Protective Services v. Grassroots Leadership, Inc.

Supreme Court of Texas, No. 23-0192  (May 30, 2025) 

Opinion by Justice Young (linked here)

Ken Carroll

Faced with deciding “whether Texas courts are constitutionally authorized to adjudicate moot cases that raise questions of considerable public importance,” the Supreme Court of Texas emphatically said, “No.” 

The Texas Department of Family and Protective Services adopted a rule that authorized state licenses for two residential facilities at which the federal government detained mothers and children after their illegal entry into the United States. Grassroots, a nonprofit civil-rights organization, and several mothers detained in the licensed facilities sued to challenge that rule under the Administrative Procedure Act, seeking to prohibit the detention of children there. The trial court granted summary judgment, declaring the rule invalid, and enjoined the department from granting licenses under it. The State appealed. 

The Texas Department of Family and Protective Services adopted a rule that authorized state licenses for two residential facilities at which the federal government detained mothers and children after their illegal entry into the United States. Grassroots, a nonprofit civil-rights organization, and several mothers detained in the licensed facilities sued to challenge that rule under the Administrative Procedure Act, seeking to prohibit the detention of children there. The trial court granted summary judgment, declaring the rule invalid, and enjoined the department from granting licenses under it. The State appealed. 

By the time that appeal neared resolution, however, the plaintiffs were no longer detained at the facilities. The court of appeals therefore concluded that the entire case was “moot by definition.” But rather than dismissing, the appeals court invoked a “so-called ‘public-interest exception’ to mootness, under which it could reach the merits despite having no live dispute [before it] involving the parties to the litigation.” The public-interest exception, the court explained, “allows appellate review of a question of considerable public importance if that question is capable of repetition between either the same parties or other members of the public but for some reason evades appellate review.” Here, “the evidence establishe[d] that the average length of detention [at the facilities] is eleven days, a period too short to complete litigation.” So, the court ruled, the exception applied. It then agreed with the trial court on the merits, finding the rule invalid. 

The Supreme Court of Texas reversed, holding that a “‘public-interest exception’ violates the Texas Constitution’s justiciability limitations.” “Mootness is a constitutional limitation on judicial authority,” the Court emphasized, and not “a matter of judicial administration or prudence.” The Court provided a lengthy analysis of the concept of constitutional justiciability, of which mootness and “the core requirement of a live dispute” (and the corollary ban on advisory judicial opinions) are one part. “[T]he only proper judgment in a moot case,” the Supreme Court said, “is one of dismissal for lack of jurisdiction”—regardless of whether the case is on appeal or still in the trial court—which the Court ruled is the disposition the court of appeals should have reached in this case. 

The Court explained that the “capable-of-repetition-yet-evading-review exception” also did not allow the court of appeals to proceed to the merits. That exception, the Supreme Court said, “applies only in rare circumstances.” Specifically, “a plaintiff must prove that ‘(1) the challenged action was too short in duration to be litigated fully before the action ceased or expired; and (2) a reasonable expectation exists that the same complaining party will be subjected to the same action again.’” The Court rejected application of that doctrine where, as here, the identical question is capable of repetition, even likely to be repeated, but involving other persons. 

Prior Cash Deposit Fulfills the Purpose of a Supersedeas Bond

2 minute read

Harris v. Covey

Dallas Court of Appeals, No. 05-24-01291-CV

Justices Goldstein (opinion available here), Garcia, and Clinton

Kelli Hinson

After a justice court rendered judgment against Harris in a breach-of-contract suit, Harris appealed to the county court and deposited $7,838.93 in lieu of a bond pursuant to TRCP 506.1. Under that rule, “a judgment debtor may appeal by depositing cash in lieu of an appeal bond that is ‘payable to the appellee’ and is ‘conditioned on the appellant’s prosecution of its appeal to effect and payment of any judgment and all costs rendered against it on appeal.’” Following a trial de novo, the county court also rendered judgment against Harris, awarding Covey $3,919.46 in damages, $14,000 in attorney’s fees, interest, and costs of court. Harris appealed again but did not file a supersedeas bond to suspend enforcement of the judgment.

Attempting to stave off post-judgment discovery, Harris filed a motion to stay in the appellate court. Covey objected, arguing Harris had failed to supersede the judgment. Under TRAP 24, a judgment debtor may supersede a money judgment by depositing with the trial court clerk cash in lieu of bond in an amount equal to the sum of compensatory damages and costs awarded as well as interest for the estimated duration of the appeal. Attorneys’ fee awards do not need to be superseded.

Harris argued that, even though she had not literally superseded the judgment, “the purpose of a supersedeas bond has been fulfilled” by the cash she deposited to appeal from justice court to county court. The Dallas Court of Appeals agreed, concluding that the cash deposit rule, TRCP 506.1, and the supersedeas rule, TRAP 24, served the same purpose of ensuring the judgment creditor is paid if the appeal is resolved in the judgment creditor’s favor. It therefore granted Harris’s motion to stay.

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Summary Judgment Evidence Need Not Be Attached to Summary Judgment Response

less than a minute

State v. $3,774.28 U.S. Currency

Supreme Court of Texas, Nos. 24-0258 (May 16, 2025)

Opinion by Justice Lehrmann (linked here)

Ken Carroll

The Supreme Court of Texas holds that a party opposing a no-evidence motion for summary judgment need not actually attach to its MSJ response controverting evidence that is already contained in the record, as long as the response specifically points out and discusses that evidence. 

In a civil-forfeiture action growing out of alleged opioid trafficking, the owners of the funds at issue filed a no-evidence summary judgment motion against the State. The State submitted a short response that attached no controverting evidence but that referenced and discussed a 44-page affidavit that had been filed with the Notice of Seizure and Intended Forfeiture that commenced the case. The trial court granted summary judgment, saying it “could not consider the affidavit as summary judgment evidence because it understood the rules to require that the nonmovant attach its evidence to the initial response for the trial court’s consideration.” The court of appeals agreed. 

The Supreme Court did not. The Court noted that TRCP 166a(i) “requires a nonmovant to ‘produce’ evidence, not ‘attach’ it,” in responding to a no-evidence MSJ. Further, the comment to that rule“ explains that the nonmovant ‘need only point out’ the evidence that raises a fact issue.” The Supreme Court therefore held that “a response to a no-evidence motion for summary judgment that discusses and calls the court’s attention to evidence already in the court’s record ‘points out’ and thus ‘produces’ that evidence,” as required by Rule 166a(i), and that a trial court abuses its discretion by not considering such evidence. Because the State’s response sufficiently “pointed out” the controverting affidavit that was already in the trial court’s file, the Court reversed and vacated the summary judgment.

Read more here.

SCOTx: A Motion for Sanctions Is Not a “Legal Action” Subject to the TCPA

2 minute read

Ferchichi v. Whataburger Restaurants LLC

Supreme Court of Texas, Nos. 23-0568 & 23-0993 (May 9, 2025) 

Opinion by Justice Lehrmann (linked here)

Ken Carroll

Resolving a disagreement among the State’s courts of appeals, the Supreme Court of Texas holds that “a motion to compel and for sanctions does not present a substantive underlying claim for relief and therefore is not a ‘legal action’ subject to dismissal under the TCPA.” 

Under the TCPA, a party may move to dismiss a “legal action” that “is based on or is in response to” a TCPA-protected right or that “arises from” certain protected communications or conduct. TCPRC § 27.003(a). “The TCPA defines ‘legal action’ as ‘a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal, declaratory, or equitable relief.’” Id. § 27.001(6). 

The Supreme Court acknowledged that the catch-all phrase at the end of § 27.001(6)—“any other judicial pleading or filing that requests legal, declaratory, or equitable relief”—is  “undeniably broad.” “But,” the Court said, “broad is not limitless.”

Applying the doctrine of ejusdem generis—i.e., that “when ‘more specific items are followed by a catchall “other,” … the latter must be limited to things like the former’”—the Court concluded that “the catch-all phrase … should be limited to filings that are ‘like’” the specific items listed in the statute—“a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim.” It  explained that the specifically enumerated filings “are connected by their function of commencing (or materially amending) a proceeding on a substantive legal claim—e.g., negligence, fraud, or deceptive trade practices—against another party.” By contrast, the Court said, motions to compel and for sanctions “are not remotely ‘like’ a ‘lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim.’ Rather, they are ‘based on conduct ancillary to the substantive claims in the case’ and cannot stand on their own.” The fact that motions for sanctions seek monetary relief does not alter that analysis. Consequently, the Supreme Court held, a “motion to compel and for sanctions … is not a ‘legal action’ subject to dismissal under the TCPA.”  

SCOTx: Trial Court Can Reconsider and Grant TCPA Motion to Dismiss after that Motion Has Been Denied by Operation of Law

2 minute read

First Sabrepoint Capital Management, L.P. v. Farmland Partners Inc. 

Supreme Court of Texas, No. 23-0634 (April 24, 2025) 

Opinion by Justice Huddle (linked here)

Ken Carroll

Applying and extending its ruling in In re Panchakarla, 602 S.W.3d 536 (Tex. 2020), the Supreme Court of Texas holds that a trial court retains jurisdiction to grant a motion to dismiss under the TCPA even after that motion has been denied by operation of law, per statute.

Sabrepoint moved to dismiss Farmland’s claims under the TCPA, which requires the trial court to rule not later than 30 days after the hearing on such a motion. TCPRC § 27.005(a). The trial court didn’t rule before the 30-day deadline expired, and so the motion was deemed to have been denied by operation of law pursuant to TCPRC § 27.008(a). Five days after that deadline, however, the trial court issued an order granting the TCPA motion to dismiss. Farmland appealed, and the court of appeals held the trial court’s order granting the TCPA motion was void because it was issued after the statutory deadline and after the motion was deemed to have been denied by operation of law. TCPRC §§ 27.005(a) & .008(a). 

The Supreme Court disagreed, however. Referencing its decision in Panchakarla, the Court explained that “the expiration of the deadline for a trial court to rule on a TCPA motion does not extinguish the court’s plenary power to later reconsider that ruling.” And the text of TCPRC § 27.008(a), providing that motions not ruled on within 30 days after hearing are denied by operation of law, does not change that. The Court noted that when the trial court issued its order granting Sabrepoint’s TCPA motion, five days after the deadline, no appeal had been taken and there was no final judgment. “Under those circumstances,” the Court said, “nothing in the TCPA extinguished the trial court’s plenary power to reconsider the TCPA motion’s merits”—which, in practical effect, is what happened here. The Supreme Court therefore reversed and remanded for the court of appeals to reconsider the TCPA dismissal on the merits.  

SCOTx: Separation of Powers Bars Disciplinary Commission’s “Collateral” Review of Attorney Conduct by AG’s Office

2 minute read

Webster v. Commission for Lawyer Discipline

Supreme Court of Texas, No. 23-0694 (December 31, 2024) 

Opinion by Justice Young (linked here); Dissent by Justice Boyd (linked here)

Ken Carroll

Unwilling to abide the results of the 2020 presidential election, the State of Texas tried to invoke the original jurisdiction of the United States Supreme Court to challenge the election processes and results in Pennsylvania, Georgia, Michigan, and Wisconsin. The bill of complaint and other filings were signed by Ken Paxton as Texas Attorney General and also listed Brent Webster, his First Assistant, as counsel of record.

Four days after Texas filed, the Supreme Court dismissed for lack of standing. Soon thereafter, various individuals filed grievances against Paxton and Webster with the Commission for Lawyer Discipline, alleging they had violated Disciplinary Rule 8.04(a)(3)—which prohibits Texas lawyers from “engag[ing] in conduct involving dishonesty, fraud, deceit, or misrepresentation”—by making false statements in the Supreme Court filings. The Commission then filed a disciplinary petition against Webster in state district court in Williamson County. Webster responded with a plea to the jurisdiction, arguing the Commission’s petition was barred by the separation-of-powers doctrine and by sovereign immunity. The district court ruled that separation of powers deprived it of subject-matter jurisdiction, but the El Paso Court of Appeals (to which the case had been transferred for docket-equalization purposes) reversed. 

The Supreme Court, however, agreed with the trial court and ordered the case dismissed for lack of jurisdiction. “The separation-of-powers problem in this case involves two specific powers, both of which are valid,” the Court said: “[1] the judiciary’s authority to regulate the practice of law and [2] the attorney general’s exclusive authority to determine the arguments and assess the evidence that warrant bringing suit on behalf of the State.” Seeking to reconcile these competing powers, the Court drew a distinction between review and sanctions by a court in which alleged misrepresentations are made—what the Court characterized as “direct scrutiny”—and a challenge by the Commission in a separate proceeding and a different court—which the Court labeled “purely collateral review.” The Court held that in “the narrow circumstances before [it],” attacks on allegations in initial pleadings, “direct scrutiny by a court to whom representations are made wholly accommodates the legitimate interests of all branches of government,” while “collateral attacks like the Commission’s lawsuit … would improperly invade the executive branch’s prerogatives and risk the politicization and thus the independence of the judiciary.” 

Justice Boyd, joined by Justice Lehrmann, dissented. While the “disciplinary proceeding against … Webster could easily fail for many reasons,” Justice Boyd said, “separation of powers is not one of them.” He argued the majority’s “freshly minted direct/collateral distinction is unheard of in separation-of-powers jurisprudence” and “lacks both legal support and logical sense.” “If the United States Supreme Court had decided to sanction Webster for filing the pleading at issue here (as the [majority] concedes it could have done without violating the separation of powers),” Justice Boyd explained, “its actions would have interfered with Webster’s attempt to discharge his duties at least as significantly as this ‘collateral’ disciplinary proceeding.”

On a related note, a parallel disciplinary proceeding against Paxton is pending review before the Texas Supreme Court on similar issues. Paxton v. Commission for Lawyer Discipline, No. 24-0452 (Tex.). It’s a fair bet that matter will soon be summarily disposed of in the same manner as the Webster case.  

Wade’s Health Law Highlights for December 17, 2024

8 minute read

Centers for Medicare & Medicaid Services

  • On November 1, the Centers for Medicare & Medicaid Services (CMS) finalized an extension of virtual direct supervision through real-time audio-visual technology until December 31, 2025, and permanently for certain “incident to” services. These changes are part of the CY 2025 Medicare Physician Fee Schedule (MPFS) and Medicare Hospital Outpatient Prospective Payment System (OPPS) final rules, which revise regulations to balance patient safety and program integrity with expanded access to care. CMS has permanently extended virtual direct supervision for specific low-risk services typically performed by auxiliary personnel, such as those described by CPT code 99211. CMS is considering further expanding permanent virtual direct supervision for additional low-risk services like diagnostic tests and behavioral health. Stakeholders have generally supported the extension, though concerns about patient safety and billing barriers remain.
  • Medicaid involves a complex five-year lookback period where any unexplained transfers of assets can result in penalty periods affecting eligibility. The penalty period length is calculated by dividing the transferred asset value by the state’s determined nursing home cost, with the period beginning when the applicant is otherwise eligible for benefits while in a nursing facility. Several exemptions exist, including transfers between spouses, transfers to young or disabled children, and specific cases involving primary residence transfers to siblings or caretaker children who meet certain criteria. Applicants can avoid penalties by proving the transfer was intended for fair market value, was made for purposes other than qualifying for Medicaid, or if the transferred assets are returned. The process is particularly challenging for elderly residents with diminished cognitive function, often requiring nursing facility staff or consultants to handle the documentation and appeals process.
  • CMS Issues Final Rules for Medicare Parts A and B Overpayments: Key and Lingering Questions outlines significant changes to Medicare overpayment rules effective January 1, 2025. The Centers for Medicare & Medicaid Services released a final rule in November 2024 that modifies overpayment requirements in two key ways: allowing a 180-day suspension of the return deadline during good-faith investigations and changing the standard for identifying overpayments to align with the False Claims Act’s knowledge standard. The new rule removes the requirement to quantify overpayment amounts before identification, though CMS notes that practical considerations still require calculation within 60 days of identification. While appearing to extend timeframes for providers, the rule may actually reduce available time for identifying and returning overpayments, and leaves several critical questions unanswered regarding notice requirements and handling of incomplete investigations after the 180-day period.

Compliance Programs

  • The Office of Inspector General (OIG) issued new Industry-Specific Compliance Program Guidance (ICPG) for nursing facilities, updating its previous guidance from 2000 and 2008 to address modern compliance challenges. The guidance focuses on four main risk areas: quality of care and life, Medicare/Medicaid billing requirements, Federal Anti-Kickback Statute compliance, and other risks including HIPAA and civil rights. Quality of care issues highlighted include staffing levels, infection control, emergency preparedness, and medication use, with the OIG noting these were particularly problematic during the COVID-19 pandemic. The guidance addresses billing compliance under the prospective payment system, warning against common issues like duplicate billing and fraudulent cost reports, while also providing recommendations for avoiding kickback risks in referral arrangements with various healthcare entities. The OIG encourages nursing facilities to use this guidance to identify their own risk areas and implement appropriate compliance and quality programs to mitigate these risks.

Hospital Outpatient Practices

HIPAA

  • The U.S. Department of Health and Human Services “Reproductive Health Care Privacy Rule” becomes effective on December 23, 2024. To enhance privacy protections for reproductive health services, including abortion, the rule prohibits Covered Entities and Business Associates from disclosing protected health information (PHI) for investigations or liability related to reproductive health care if it is lawful or protected under federal law. Requests for PHI related to reproductive health care require a signed attestation confirming the information will not be used for prohibited purposes. Covered Entities must update their Notice of Privacy Practices to reflect these changes and ensure disclosures to law enforcement are only made when legally required and compliant with HIPAA. Professional organizations advise caution in disclosing PHI to prevent or lessen serious threats, recommending legal consultation for such decisions.
  • The Office of the Inspector General (OIG) has called for enhancements to the HIPAA audit program due to increasing cyberattacks on healthcare organizations, resulting from the narrow scope and ineffective oversight of previous audits conducted by the Office for Civil Rights (OCR) in 2016-2017. In response, OCR plans to resume HIPAA audits by late 2024 or early 2025, with an expanded focus on physical and technical safeguards, and the development of criteria for compliance reviews. While OCR agreed to most of OIG’s recommendations, it did not concur with the recommendation to ensure deficiencies are corrected, citing limitations in legal authority and resources. OCR also intends to define metrics for monitoring audit effectiveness and will survey past audit participants to track compliance improvements. The enforcement process for potential HIPAA violations involves reviewing complaints, investigating breaches, and potentially referring criminal violations to the Department of Justice.
  • HHS-OIG anticipates recovering $7.13 billion in FY 2024 from investigations and audits, including $4 billion from activities between April and September 2024, resulting from 1,548 criminal and civil enforcement actions. The June 2024 National Health Care Fraud Enforcement Action charged 193 individuals in schemes totaling $2.75 billion in losses, while 3,234 individuals were added to the HHS-OIG exclusion list, barring them from federal healthcare programs. Notable cases included two brothers ordered to pay $424 million in restitution for DME fraud and a nurse practitioner ordered to pay $192 million, with HHS-OIG consistently achieving a $10 return on every $1 invested in investigations. The agency’s investigations revealed significant issues in durable medical equipment fraud schemes, involving telemarketing strategies and physician bribes for unnecessary equipment orders. Beyond financial recoveries, HHS-OIG identified systemic issues including states’ inability to monitor maltreatment in foster care facilities and the need to improve maternal healthcare access through MCO provider coverage requirements.
  • Even public-facing healthcare websites can present significant privacy risks through seemingly innocent features like contact forms, appointment requests, and symptom checkers. Unauthenticated pages can inadvertently capture Protected Health Information (PHI) through web forms, tracking technologies, cookies, and web beacons, which may collect user data including IP addresses and browsing history. Healthcare organizations must implement proper safeguards including data encryption, secure storage, explicit consent mechanisms, and careful evaluation of third-party tracking technologies to maintain HIPAA compliance. Organizations should consider minimizing PHI collection on public pages by providing general inquiry options instead of detailed health information forms, while maintaining clear privacy notices and readily accessible contact information for privacy-related concerns. The protection of PHI requires ongoing vigilance and consistency, as even basic data points can constitute protected health information when linked to an individual’s healthcare activities.

OIG Fraud Alert

GLP-1 Drugs

Insurance Coverage

  • A federal judge blocked a Biden administration rule allowing DACA recipients to enroll in health insurance through the Affordable Care Act, siding with 19 state attorneys general who argued it violated a law against providing public benefits to those without legal immigration status. This ruling affects DACA recipients in the 19 states that filed the lawsuit, leaving the rule in effect elsewhere. The decision prevents thousands of DACA recipients in those states from accessing subsidized health coverage, forcing many to rely on employer-provided insurance, state programs, or remain uninsured. The Kansas Attorney General, who led the legal challenge, praised the ruling as upholding the rule of law.

Physician Compensation

  • It is vital to use nationally published compensation and productivity survey data correctly to set provider compensation at fair market value (FMV). Misconceptions about using survey data for FMV provider compensation are common, including the belief that compensation under the 75th percentile is always FMV or that compensation above the 90th percentile is impermissible. Relying solely on productivity ratios like compensation per wRVU or compensation-to-collections can also be misleading, as they don’t fully capture the complexity of provider compensation. To ensure FMV compensation, organizations should analyze individual arrangements, consider regional variations, and seek expert guidance from valuation firms like VMG Health.

Fraud & Abuse

Medicare Advantage Organizations

  • The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a special fraud alert on December 11, 2024, focusing on potentially abusive marketing arrangements between Medicare Advantage Organizations (MAOs), healthcare professionals (HCPs), and brokers/agents. The alert specifically addresses two concerning arrangements: MAOs providing payments to HCPs for patient referrals, and HCPs paying agents/brokers for patient recommendations, both of which could violate the federal anti-kickback statute and other laws. OIG identified several suspect characteristics that may indicate fraud risk, including payments contingent on patient demographics or health status, and remuneration that varies with referral numbers. Following recent settlements with MCS Advantage ($4.2 million) and Oak Street Health ($60 million), this alert emphasizes the need for careful structuring of relationships between MAOs, HCPs, and brokers/agents to ensure compliance with federal laws and prevent improper steering, inappropriate enrollments, and anticompetitive conduct. The guidance aims to protect Medicare Advantage beneficiaries from enrolling in unsuitable plans or choosing inappropriate healthcare providers based on financially motivated recommendations rather than their actual healthcare needs.
  • The Centers for Medicare and Medicaid Services released a 240-page Proposed Rule on December 10, 2024, introducing significant changes to Medicare Advantage (MA), Medicare Part D, Medicaid, Medicare cost plans, and PACE programs. Key changes include stricter requirements for medical loss ratio (MLR) reporting, requiring incentives and bonuses to be tied to measurable clinical or quality improvement standards, and new regulations for quality improvement activity expenses. The rule proposes new guidelines for supplemental benefits administered through debit cards, including restrictions on usage and marketing, while expanding the definition of “marketing” under MA and Part D regulations to enable stronger CMS oversight. Additional proposals include enhanced agent/broker disclosure obligations, new pharmacy network contracting requirements including mandatory notification deadlines and reciprocal termination rights, and required pharmacy enrollment in the Medicare Transaction Facilitator Data Module. The proposals aim to improve transparency, reduce excessive spending, and enhance beneficiary protections across Medicare programs.

Unlicensed Practice of Medicine

  • Texas Attorney General Ken Paxton has filed a lawsuit accusing a New York doctor of prescribing abortion drugs to a Texas resident in violation of state law. The lawsuit targets Dr. Margaret Carpenter, who allegedly mailed abortion pills to a 20-year-old woman in Collin County, Texas, when she was nine weeks pregnant, with Paxton seeking $100,000 for each violation of Texas’ near-total abortion ban. The case represents the first test of conflicting state abortion laws, with New York’s shield law protecting providers from out-of-state investigations while Texas vows to pursue such cases regardless. Dr. Carpenter, who is not licensed in Texas, founded the Abortion Coalition for Telemedicine and works with organizations that help provide telemedicine consultations and abortion pills to patients in states with abortion bans. Legal experts are divided on the outcome, with New York’s shield law designed to prevent Texas from bringing New York providers into Texas courts, potentially leaving Texas without a defendant to prosecute.

Wade’s Healthcare Privacy Advisor for December 11, 2024

6 minute read

AI Governance

  • At the HLTH health innovation conference, a panel of AI experts expressed skepticism about appointing a chief AI officer in health organizations, advocating instead for improving AI literacy across the board. Some providers have established an AI oversight committee and an AI Enablement Center to democratize AI governance and ensure responsible integration of AI technologies. The widespread use of AI in radiology for diagnostic support and the growing adoption of ambient AI scribes have significantly reduced administrative burdens for physicians. The use of AI in administrative tasks, such as drafting patient communications, has shown positive results, with patients reportedly preferring AI-generated responses for their empathetic tone. Nevertheless, it is important to maintain a human element in AI applications, ensuring that AI supports rather than replaces clinical decision-making.
  • The FDA has issued final guidance on regulating changes to AI-enabled medical devices through pre-determined change control plans (PCCPs), allowing for post-market modifications while maintaining safety and effectiveness. PCCPs, first introduced in 2019, enable performance enhancements by outlining specific, verifiable modifications and include a description of planned changes, a modification protocol, and an impact assessment. The guidance, consistent with a 2023 draft, now includes a section on version control and maintenance. While no adaptive AI-enabled devices have been authorized yet, PCCPs have been approved for devices through various regulatory pathways. Modifications under a PCCP must stay within the device’s intended use, and significant changes, such as altering a device’s user base or core functionalities, require new marketing submissions.
  • The rapid evolution of AI in healthcare presents challenges for physicians and legal compliance, with shifting regulations and emerging laws at both federal and state levels. A federal rule effective July 2024 requires healthcare providers to comply with anti-discrimination regulations by May 2025, while various state bills focus on transparency, bias elimination, and AI limitations. Organizations like HIMSS and the AMA provide guidance on AI implementation, emphasizing human oversight and ethical considerations to enhance patient care and reduce costs. Legal risks associated with AI, such as data privacy, potential bias, and the unlicensed practice of medicine, necessitate legal expertise for healthcare providers. Despite these challenges, AI has the potential to generate actionable insights and improve healthcare operations, provided it is used responsibly and with appropriate legal guidance.
  • A recent study published in npj Digital Medicine outlines comprehensive guidelines for the responsible integration of AI into healthcare, developed by a team from Harvard Medical School and the Mass General Brigham AI Governance Committee. The study emphasizes nine principles, including fairness, robustness, and accountability, and highlights the need for diverse training datasets and regular equity evaluations to reduce bias. A pilot study and shadow deployment were conducted to assess AI systems, focusing on privacy, security, and usability in clinical workflows. The study also stresses the importance of transparent communication regarding AI systems’ FDA status and a risk-based monitoring approach. Future efforts will expand testing to ensure AI systems remain equitable and effective across diverse healthcare settings.

Medical Judgment

Employment

Data Privacy

HIPAA Penalties

Quantum Computing