On June 27, 2024, the U.S. Supreme Court issued a decision in Moyle v. United States, in which it affirmed that the Emergency Medical Treatment and Labor Act (EMTALA) necessitates the performance of emergency medical treatment for abortion, and thus, it preempted an Idaho law that restricted medically necessary abortions. As background, enacted in 1986, EMTALA requires any hospital with an emergency room that receives Medicare funds (virtually all hospitals) to provide stabilizing treatment to anyone who comes to the hospital experiencing an emergency medical condition.

On June 28, 2024, the U.S. Supreme Court overturned the long-standing doctrine of “Chevron deference,” a doctrine that gave significant power to government agencies in interpreting and implementing statutory rules for the statutes those agencies administer. Chevron deference required courts to defer to agencies’ reasonable interpretations of statutory language. While the Court made this decision prospectively, it also specified that previous decisions implementing Chevron deference would not be overturned. Given that most benefits-related rules and regulations are implemented by government agencies, the Court’s decision could spark litigation surrounding benefits rules that have been in place for a long time.

On July 3, 2024, a federal district court in Mississippi issued a nationwide preliminary injunction prohibiting the U.S. Department of Health and Human Services (HHS) from enforcing the gender identity provisions of HHS’ final rule implementing Section 1557 of the Affordable Care Act (ACA). The new final rule under Section 1557 of the ACA (discussed in our E-Alert here) was set to go into effect on July 5, 2024. On the same day, ruling on a separate lawsuit against the same final rule, a federal district court in Texas granted another preliminary injunction against the rule as it applied to Texas and Montana. These injunctions come on the heels of Loper Bright Enterprises v. Raimondo, the recent U.S. Supreme Court decision that overturned 40 years of precedent by ending the Chevron doctrine (also known as “Chevron deference”), a doctrine which required courts to defer to government agencies’ reasonable interpretations of statutory language for statutes those agencies administer. The courts in these decisions reasoned that HHS had overstepped its authority when creating this regulation.

On July 30, 2024, former Wells Fargo employees filed a class action lawsuit against Wells Fargo alleging that the bank and its plan fiduciaries breached their fiduciary duties and mismanaged the bank’s prescription drug benefits program, costing their plan and their employees millions of dollars. Among other allegations, the lawsuit alleges that the plan failed to fulfill their fiduciary duties in selecting Express Scripts as the plan’s pharmacy benefits manager (PBM). One example of mismanagement alleged in the complaint was a plan participant paying nearly $10,000 for a 90-day supply of a generic drug used in the treatment of multiple sclerosis, a prescription that would have cost around $650 without insurance.

This complaint’s allegations closely mirror those made in a class action filed against Johnson & Johnson in February (see our e-Alert here). This lawsuit is the second in what is expected to be a new wave of ERISA class action lawsuits focusing on excessive plan costs and service provider fees.

Louisiana Governor Jeff Landry signed a new bill into law which will take effect October 1st that reclassifies two medications commonly used in abortions as Schedule IV drugs. The two drugs—mifepristone and misoprostol—are drugs used to induce abortions up to ten weeks into a pregnancy. Possessing these drugs without a valid prescription can now be punishable with up to 10 years in prison.

On June 13, 2024, the U.S. Supreme Court ruled in FDA v. Alliance for Hippocratic Medicine that a group of doctors challenging the FDA’s approval of the abortion medication mifepristone lacked legal standing, thus preserving access to the widely used abortion pill. Mifepristone is used in about two-thirds of U.S. abortions. This decision does not preclude other challenges to mifepristone’s legality. Therefore it is possible that the Court could still rule against continued access to the medication in a later court decision.

On May 13, 2024, the 11^th Circuit Court of Appeals affirmed in Lange v. Houston County a lower court’s decision holding that a self-insured health plan’s exclusion of gender-affirming healthcare violated Title VII of the Civil Rights Act of 1964. The lawsuit was brought by a transgender employee whose physician recommended gender-affirming surgery and hormone therapy to treat gender dysphoria. The employee’s healthcare provider determined that her gender-affirming healthcare was medically necessary. However, her request for coverage was denied based on the health plan’s exclusion of gender-affirming care. The district court granted summary judgement confirming the health plan’s exclusion was discriminatory under Title VII and the 11^th Circuit affirmed the district court’s ruling.

On April 30, 2024, the U.S. Department of Labor issued a final regulation (“Final Rule”) formally rescinding its 2018 Association Health Plan (AHP) rule (“Former Rule”) making it more difficult to form an AHP. The 2018 Former Rule was previously invalidated through a series of lawsuits brought by 11 states and the District of Columbia. These suits claimed that the standards in the Former Rule strayed too far from the statutory definition of an employer under ERISA. As background, AHPs allow multiple unaffiliated employers without common control or ownership to form an association to provide health coverage and thereby receive the cost benefits of a large single employer group health plan. The Final Rule removes the Former Rule’s alternative criteria to define an employer in AHPs and replaces it with the more rigid pre-2018 criteria. The Final Rule will go into effect on July 1, 2024.

As the month of May begins, it is important to remember that the Prescription Drug Data Collection (RxDC) Reporting deadline is just a month away – June 1^st. Required under the Consolidated Appropriation Act, 2021 (CAA), this annual reporting of certain prescription drug and healthcare spending from the prior year aims to improve transparency. For additional information, see our prior eAlert that discusses updates to this year’s reporting requirements.

On April 23, 2024, the Department of Health and Human Services (HHS) released an Update on their progress with the Advanced Explanation of Benefits (AEOB) requirement under the Consolidated Appropriation Act, 2021 (CAA). Part of the CAA’s goal to ensure greater transparency, the CAA requires health plans to produce an AEOB and distribute it to plan enrollees and beneficiaries. The AEOB must include a Good Faith Estimate (GFE) of the cost to the enrollee as well as what the plan is expected to pay and network status. The AEOB and GFE requirement is still under review and will not be enforced until the proper infrastructure and technology are in place for transmitting the requisite data.

On April 19, 2024, the Department of Health and Human Services (HHS) issued FAQ guidance (“Guidance”) providing clarifications and updates regarding their investigation of the Change Healthcare cybersecurity incident. In February 2024, Change Healthcare, a subsidiary of UnitedHealth Group (“United”), was hacked by a group of cyber criminals who breached patient records, stealing large amounts of HIPAA protected health information (PHI). The cyber criminals involved claim to have stolen millions of medical records, impacting United’s commercial and Medicare/Medicaid plans. HHS is working to repair service and ensure that billing for the Medicare and Medicaid accounts handled by Change Healthcare can continue to bill, in addition to re-securing the breached PHI.

The deadline for filing 2023 annual reporting form (ARF) for the San Francisco Health Care Security Ordinance (HCSO) is just around the corner – May 3, 2024. The ARF requires, among other items, that employers subject to this ordinance report on total healthcare expenditures paid on employees’ behalf for each quarter of 2023.

As background, employers with at least one employee within the city of San Francisco who works more than 8 hours per week for more than 90 days are subject to the HCSO and are required to spend a certain amount on healthcare for their covered employees (called an “expenditure”). These funds can be used toward employer-sponsored medical, dental or vision insurance, paid to the city or contributed toward programs that reduce employee out-of-pocket healthcare costs.

The IRS has released new FAQs to clarify which medical expenses can qualify as “medical care” under the tax code, and thus should be covered by HSAs, health FSAs, HRAs and Archer MSAs. Some of the expenses discussed in the new guidance include foods that are diet specific for diabetes management or weight loss. These items were aggressively marketed as covered expenses when in fact, they are not.

New York has enacted a bill that will require additional transparency regarding prescription drug prices effective June 19, 2024. This bill will amend the New York Insurance Law to require drug manufacturers to inform the New York Department of Financial Services (NYDFS) of a change in their drug prices greater than 10%. NYDFS will make this information public within five days of notification so that consumers have time to prepare for the price increase. This will apply to any drug that is purchased or reimbursed in the state of New York. The new law aims to make drug costs and their causes more transparent, as well as help consumers and potentially plan issuers, prepare for and/or adjust to higher costs.

The IRS has updated the ACA’s penalty stating what an Applicable Large Employer (ALE) would be liable for under its Employer Shared Responsibility rules (“Employer Mandate”). The updated 2025 penalties are $2,900 per full-time employee for not offering minimum essential coverage (MEC) to at least 95% of the ALE’s full-time employees and dependent children (down from $2,970 in 2024) and $4,350 per full-time employee that receives subsidized Exchange coverage due to lack of affordability (down from $4,460 in 2024). Notably, for the first time since its inception, both ACA penalty amounts decreased from

A group of employees participating in the Johnson & Johnson (“J&J”) employee and retiree medical plans have filed a class action lawsuit against J&J and its plan fiduciaries alleging ERISA fiduciary breach violations related to the management and administration of prescription drug benefits offered through these plans. The complaint alleges that the plans drastically overpaid for drugs through the plans’ pharmacy benefit manager (PBM). Among other allegations, it is alleged that the company paid $10,000 for a 90-day supply of a generic multiple sclerosis drug that would have cost just $28 if the person went into a pharmacy and paid out of pocket. The complaint argues that these breaches cost J&J’s plans and employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher deductibles, higher coinsurance, higher copays and lower wages. While there have been a growing number of ERISA lawsuits challenging the costs and fees paid by health plans, this case is unique in that it is the first to directly take aim at plan fiduciaries for PBM contracting allegedly resulting in increased costs to plan participants and beneficiaries.

* posted on our site on 02.19.24

The Departments of Labor, Health and Human Services and Treasury (“Agencies”) issued new FAQ guidance (“Guidance”) regarding the Transparency in Coverage regulation (“TiC Rules”). As background, under the TiC Rules, non-grandfathered group health plans and issuers must make certain cost-sharing and pricing information available to participants and beneficiaries by, among other methods, a self-service cost estimator tool. These requirements first applied to 500 specified medical items and services in 2023, and then expanded to all covered medical items and services for plan years beginning on or after January 1, 2024. The new Guidance discusses compliance with cost sharing disclosure requirements where a plan is providing cost estimates based on claims data but there is extremely low utilization of the item or service at issue, and thus, the estimates may not be accurate. In such cases, the new Guidance clarifies that the Agencies are likely to exercise discretion on a “case-by-case basis” as to whether they will bring an enforcement action where a plan fails to provide the required information for these types of items and services. However, the Guidance notes that this exercise of discretion is limited to cost sharing information otherwise required to be disclosed (via the self service tool, in hard copy or by phone) where: (i) the cost estimate would need to be based on past claims data, and (ii) there have been fewer than 20 claims in the past three years. In cases involving the self-service cost estimator tool, the tool should indicate that the item or service is covered, but that a cost estimate is not available due to insufficient data and should encourage the individual to contact the plan for more information on applicable cost sharing requirements.

* posted on our site on 02.19.24