News and Insights
Visit regularly for up-to-date information on relevant news, firm announcements and additions to our AZ Health Law Blog.
On July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the American Economy.” The Executive Order takes aim at non-compete agreements, and affirms the Biden Administration’s policy “to enforce the antitrust laws to combat the excessive concentration of industry, the abuses of market power, and the harmful effects of monopoly and monopsony.” It underscores the authority of the Sherman Antitrust Act (15 U.S.C. §§ 1 et seq.), the Clayton Antitrust Act (15 U.S.C. §§ 12 et seq.) and other laws that challenge transactions that lead to excessive market concentration.
Among other things, the Executive Order asks the Federal Trade Commission (“FTC”) to use its regulatory authority prescribed by Federal Trade Commission Act to “curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” See Executive Order, Section 5(g).
A non-compete is a type of employment contract or restrictive covenant that limits an individual’s ability to work in a particular industry. Non-competes may be stand-alone documents or incorporated into the individual’s employment contract. They typically limit the geographical locations that an individual can work in for a certain period after they leave a job. Critics of non-competes note that, although intended to be a “shield” to protect employers, over the years, they are more often used as a “sword” by employers to control their workers with excessive and unreasonable terms.
Because the Executive Order is not particularly specific, the FTC has the discretion to tackle the problem of unfair non-compete agreements as it sees fit. The Executive Order does not suggest a complete ban on non-competes, so long as such agreements reasonably protect businesses. However, the Executive Order demonstrates the Biden Administration’s determination to protect workers from abusive restrictive covenants.
The business industry is likely to challenge any FTC regulations that follow the Executive Order. It is unclear whether such regulations will survive constitutional scrutiny in federal litigation. However, there appears to be some public and Congressional support for restricting the use of non-competes. For example, the bipartisan Workforce Mobility Act of 2021 (“WMA”) has been introduced in the House of Representative and the Senate. If enacted, it would limit the use of non-competes to sales or dissolutions of business, authorize the U.S. Department of Labor to educate the general public about the use of non-competes, and give workers a private right of action to sue for violations of the WMA.
In Arizona, reasonable non-compete agreements may be enforceable. That includes physician non-competition agreements. In determining reasonableness, Arizona courts look at the duration, geographic scope, and type of activity prohibited by the agreement. Arizona law concerning non-competes is complex. Employers should ensure non-compete agreements are carefully drafted with reasonable terms specifically addressing the business interests of the employer for which the agreement is designed to protect. Employees, including physicians, should seek legal advice regarding the enforceability of non-compete clauses and potential consequences for violating them.
For more information, please contact John Conley or Chelsea Gulinson at 602-792-3500.
 The Executive Order is not directed at the use of non-competes to protect owners in business sales. The Executive Order’s purpose is to protect an employee’s ability to work.
 Section 5(g) may potentially apply to other types of restrictive covenants, e.g., non-solicitation and non-disclosure agreements.
On August 11, 2021, the U.S. Department of Justice (DOJ) issued a press release announcing a $350,000 settlement between the federal government, Cornell Scott Hill Health Corporation (“Cornell”), a Federally Qualified Health Center (“FQHC”), and the State of Connecticut to settle Medicaid fraud claims asserted against Cornell.
As a FQHC, Medicaid pays Cornell for certain services on an “encounter-based” reimbursement structure. Per federal law, claims for dental services, paid on an encounter-basis, are limited to one all-inclusive encounter per day, which should include all dental services rendered to a patient during his or her visit. The government alleged that Cornell improperly billed Connecticut’s Medicaid program for prophylactic cleaning and dental exams by requiring Medicaid patients to receive prophylactic cleanings and dental exams on different days so that Cornell would receive payment for two encounters instead of one. To resolve the allegations against it, Cornell paid $350,000 to the federal and Connecticut state governments. It also agreed to change its policy by offering Medicaid patients the option of scheduling their prophylactic cleaning and dental examination for the same day.
Earlier this year, in a January 2021 press release, the DOJ announced that it obtained more than $2.2 billion in settlements and judgments from civil fraud cases in the fiscal year that ended in September 30, 2020. $1.8 billion of that amount represented federal losses that were recovered from the health care industry. Many cases also included the recovery of millions of dollars for state Medicaid programs. This recent settlement with Cornell should prompt healthcare providers who are serving Medicaid beneficiaries to proactively assess their billing practices and policies to ensure that their policies are compliant with federal and their state’s Medicaid laws.
To review the August 11, 2021 Press Release from the U.S. Department of Justice, visit https://www.justice.gov/usao-ct/pr/health-center-pays-350k-settle-improper-billing-allegations-related-medicaid-dental.
On June 11, 2021, the U.S. Department of Health and Human Services (HHS) issued new guidance on the use and reporting of Provider Relief Fund (PRF) payments, and announced that PRF reporting will begin on July 1, 2021.
Many health care providers have been anxiously awaiting additional HHS guidance on their obligations regarding reporting of their use of PRF funds. Since January 15th, providers have been able to register their reporting accounts in the PRF Reporting Portal, but the portal has not yet been open for reporting. In its recent guidance, HHS adopted a multiphase reporting system, pursuant to which the deadlines for the provider’s use and reporting of PRF funds are based on the specific dates on which the provider received the PRF payments..
Summary of PRF Use and Reporting Deadlines
|Period||Payment Received Period||Deadline to Use Funds||Reporting Time Period|
|Period 1||April 10 – June 30, 2020||June 30, 2021||July 1 – September 30, 2021|
|Period 2||July 1 – December 31, 2020||December 31, 2021||January 1 – March 31, 2022|
|Period 3||January 1 – June 30, 2021||June 30, 2022||July 1 – September 30, 2022|
|Period 4||July 1 – December 31, 2021||December 31, 2022||January 1 – March 31, 2023|
.The reporting deadlines apply to all recipients who received one or more payments exceeding $10,000 in the aggregate during a Payment Received Period. Recipients who received PRF payments during multiple Payment Received Periods will be required to submit multiple reports.
- The reporting requirements are also now applicable to recipients of the Skilled Nursing Facility (SNF) and Nursing Home Infection Control Distribution, which were not included in prior Post-Payment Notices.
- As set forth in the table above, there are four new deadlines by which providers must use PRF funds, and four new deadlines by which providers must submit their reports to HHS as to how they used the PRF funds.
- The guidance replaces all prior versions of HHS’s Post-Payment Notice of Reporting Requirements documents.
- The reporting requirements set out in the guidance apply to past and future PRF General and Targeted Distributions.
- The reporting requirements set out in the guidance do not apply to recipients of funds from the Rural Health Clinic (RHC) COVID-19 Testing Program, the HRSA COVID-19 Uninsured Program, or the HRSA COVID-19 Coverage Assistance Fund.
- The updated guidance extends the time in which providers are required to complete their report from 30 days to 90 days after the end of the Payment Received Period.
- HHS issued updated PRF FAQs, clarifying PRF funding and reporting. HHS added some new FAQs, and removed some previously issued FAQs.
- HHS issued an updated Reporting Portal FAQ. In this FAQ, HHS announced that the PRF Reporting Portal will open July 1, 2021.
- Failing to report within the applicable time period(s) is a breach of the Terms and Conditions applicable to the recipient of the PRF distribution, and may result in recoupment of PRF funds received.
If you have questions or would like additional information about this topic, please contact Miranda Preston at email@example.com, or your primary Milligan Lawless attorney.
 The Terms and Conditions applicable to the recipients of each type of PRF distribution require the recipient to submit reports as specified by HHS in future program instructions. The Terms and Conditions also provide that non-compliance with the Terms and Conditions is grounds for HHS to recoup PRF funds. To view the Terms and Conditions applicable to the various PRF distributions, click here.
Since HIPAA’s creation almost 25 years ago, many have long suspected that, eventually, a provider’s failure to comply with HIPAA might result in a patient’s recovery of economic damages as a result. Although HIPAA violations can lead to economic penalties imposed by the U.S. Department of Health and Human Services Office for Civil Rights, HIPAA does not include a mechanism for patients to seek economic damages from non-compliant providers. However, the Arizona Supreme Court recently determined that HIPAA standards can be used in the context of a patient’s claim against a provider for negligently disclosing protected information.
Understanding when and how a provider may disclose a patient’s information is tricky. Typically, a provider discloses an individual’s protected health information to the individual, the individual’s family or specifically-authorized representatives, or pursuant to a subpoena. However, in each instance, a provider can only disclose such information pursuant to Arizona’s medical records statute and HIPAA.
In a case decided earlier this month, the Arizona Supreme Court clarified that Arizona’s medical records statute “affords healthcare providers immunity from liability for damages if they acted in good faith when disclosing medical information pursuant to applicable law.” However, although HIPAA does not include a private right of action, the Court concluded that HIPAA is applicable to defining the standard of care in a state law negligence claim. Thus, although Arizona law may protect against liability for good faith disclosures of a patient’s protected information, understanding when and how disclosures are allowed under HIPAA and Arizona’s medical records statute is essential.
For any questions on the above, please contact Jim Taylor or Chelsea Gulinson at 602-792-3500.
 A.R.S. § 12-2296.
 Shepherd v. Costco Wholesale Corp., 2021 WL 941432.
Hot Topics in Risk Management | Considerations for Requiring
COVID-19 Vaccinations for Medical Practice Staff
As COVID-19 vaccines become more widely available, health care organizations, medical practices, and other employers may consider whether, and under what circumstances, they will require employees to be vaccinated. Employers who address this issue must balance the interests of patients and employees, who have a right to a safe office environment, with the interests of employees who have or claim to have legitimate objections to being vaccinated. Finding balance will raise legal, ethical, and policy issues.
As to the legal issues, the U.S. Equal Employment Opportunity Commission (EEOC) recently released guidance regarding the extent to which federal laws permit employers to require employees to be vaccinated. The general rule is pretty straightforward: subject to certain exceptions, employers may require employees to be vaccinated. As you might expect, the exceptions are less straightforward, relying on terminology that is susceptible to conflicting interpretations.
The Americans with Disabilities Act (ADA) permits employers to impose “a requirement that an individual shall not pose a direct threat to the health or safety of individuals in the workplace.” However, if requiring vaccinations “tends to screen out an individual with a disability,” the employer must show that (a) an unvaccinated employee would pose a “direct threat” due to a significant risk of substantial harm to the health and safety of the individual or others, and (b) the threat cannot be eliminated or reduced by a “reasonable accommodation” (which may include remote work or a temporary leave of absence).
Title VII of the Civil Rights Act of 1964 (Title VII) imposes a religious belief exception, which requires employers to provide “a reasonable accommodation” for an employee’s “sincerely held religious belief, practice or observance,” unless the accommodation would pose an “undue hardship.” For purposes of this religious belief exception, undue hardship is defined as “more than a de minimis cost or burden to the employer.”
If an employee cites a medical or religious basis for objecting to the vaccine, the employer must engage in a “flexible, interactive process” to determine whether it is possible to accommodate the employer’s and the employee’s interests. This will not be a simple or clear-cut exercise, given the vagaries of the words and phrases used in the ADA, Title VII, and the EEOC guidance, all of which call to mind Humpty Dumpty’s comments about what words mean.
Unfortunately, there is no easy way out for employers deciding on whether and how to require employees to get vaccinated. Employers who do not require vaccinations may face claims by patients and employees who contract, or are concerned about contracting, COVID-19; employers who require vaccinations may face claims by employees who object to that requirement. Imposing a vaccination requirement seems to be a relatively low-risk option. Significant difficulties will arise, however, if an employee claims a medical or religious exemption to the requirement. At that point, seek legal advice to divine the meaning and application of the terms used in the ADA and Title VII, e.g., is a particular accommodation “reasonable,” is a burden “de minimis,” etc.
This article is informational only and is not, nor should it be taken as, a substitute for, legal advice.
 Gostin, L., et al., Mandating COVID-19 Vaccines, JAMA. Published online Dec. 29, 2020. doi:10.1001/jama.2020.26553.
 The Importance of COVID-19 Vaccination for Healthcare Personnel, Centers for Disease Control and Prevention, December 28, 2020; https://www.cdc.gov/coronavirus/2019-ncov/vaccines/recommendations/hcp.html.
 What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws
Technical Assistance Questions and Answers, US Equal Employment Opportunity Commission; updated Dec. 16, 2020, https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=.
 42 U.S.C. § 12113(b).
 42 U.S.C. § 12112(b)(6); 42 U.S.C. § 12113(a).
 42 U.S.C. § 12111(3).
 42 U.S.C. § 12111(9); 42 U.S.C. § 12113(a).
 42 U.S.C. § 2000e-2(a); 42 U.S.C. § 2000e(j); Commission Guidelines, 29 C.F.R. § 1605.2(c).
 Commission Guidelines, 29 C.F.R. § 1605.2(e)(1).
 29 C.F.R. § 1630.2(o)(3); see 29 C.F.R. pt. 1630 app. § 1630.9.
 “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”