Private Equity (PE) firms continue to be significant players in U.S. healthcare, acquiring assets across various sectors such as physician practices, home health, behavioral health, and urgent care. However, recent legal developments and enforcement trends over the last five years underscore the increasing regulatory scrutiny and legal risks associated with these investments.

Antitrust Enforcement Is Ramping Up

The Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) have intensified their focus on serial acquisitions and roll-up strategies. Recent enforcement actions suggest that smaller deals may still trigger antitrust reviews, especially when a PE firm accumulates significant market power through multiple transactions that fall below traditional Hart-Scott-Rodino (HSR) thresholds.

For example, in FTC v. U.S. Anesthesia Partners, Inc. (USAP), the FTC alleged that a PE firm orchestrated a decade-long “roll-up” strategy to consolidate anesthesiology practices in Texas, potentially driving up service prices. While the court dismissed the PE firm from the lawsuit, it denied the motion to dismiss for USAP, alleging that these acquisitions significantly reduced competition and amounted to illegal monopolistic conduct.

Last week, the FTC approved a final consent order with USAP. This final consent order imposes several restrictions including notification, compliance and reporting requirements. Viewed alongside other enforcement actions, it becomes clear that the current administration is taking a hard line with PE and is unlikely to extend the benefit of the doubt. This order serves as a timely reminder for PE firms to seek antitrust counsel when pursuing strategic acquisitions and roll-up transactions, particularly in the healthcare sector.

Takeaway for Deal Terms: Integrate Antitrust Review Early in the Deal Process

Even sub-HSR-threshold deals can attract FTC or state scrutiny, particularly in roll-up strategies. Engage counsel early to assess cumulative acquisition activity and avoid post-closing surprises.

State Oversight Is Expanding

States are enacting laws requiring pre-transaction notice or approval for healthcare mergers and acquisitions — even for non-reportable deals. For example, in New York, certain healthcare facilities, including hospitals and nursing homes, must obtain a Certificate of Need or prior approval from the New York State Department of Health (NYSDOH) before completing a merger or acquisition. Under Public Health Law § 2801-d, the NYSDOH reviews proposed transactions to evaluate their impact on the quality, accessibility, and cost of healthcare services in the community. This process can involve a detailed application, public notice, and opportunities for community input. Failure to obtain necessary approvals can result in enforcement actions or delays.

Beyond hospitals and nursing homes, other healthcare entities may be subject to pre-transaction notification or review under various state laws or contractual obligations. For example, transactions involving managed care organizations (MCOs) or provider networks could trigger review by the New York State Department of Financial Services or the Attorney General’s Office under antitrust and consumer protection laws.

While New Jersey does not have any such notification requirement, many other states, including Massachusetts, Vermont, Rhode Island, and Connecticut have similar legislation.

Takeaway for Deal Terms: Conduct Jurisdiction-Specific Regulatory Diligence

State laws vary significantly, especially around pre-transaction notice requirements, corporate practice of medicine (CPOM) rules, and facility licensing. Including counsel early on to conduct diligence to identify red flags and structural risks can help with compliance and reduce post-signing to closing periods.

CPOM Doctrine Still a Barrier

The CPOM doctrine remains a significant structural hurdle for PE firms investing in healthcare providers, particularly in states like New Jersey and New York, where enforcement of CPOM restrictions is active and nuanced. Both states generally prohibit non-physicians — including business entities such as PE firms — from owning or exercising control over medical practices. In New Jersey, the Board of Medical Examiners enforces this prohibition by restricting the ownership of professional medical corporations and limiting management agreements that may encroach upon clinical decision-making. Similarly, New York prohibits the ownership of medical practices by unlicensed individuals or entities under the Education Law and related regulations, and scrutinizes management service arrangements to ensure they do not amount to de facto control over professional judgment or fee-splitting.

To navigate these restrictions, PE firms commonly rely on management services organization (MSO) models, whereby a non-clinical entity provides administrative services under contract with a physician-owned PC. However, both New Jersey and New York regulators closely examine MSO arrangements for signs of indirect control, such as influence over staffing, compensation, or treatment protocols. If deemed to cross the line, these arrangements can trigger enforcement actions, regulatory penalties, or invalidate the structure entirely—jeopardizing the investment. Read more of our CPOM-centered posts here.

Takeaway for Deal Terms: Reassess MSO Structure and CPOM

Improperly structured MSO arrangements may expose both the portfolio company and the PE sponsor to CPOM violations or fee-splitting allegations. It is important to engage counsel early on to ensure MSO models are well-documented and preserve clinical autonomy.

Increased Focus on Billing and Compliance

PE-backed healthcare entities have faced whistleblower suits and False Claims Act (FCA) investigations tied to aggressive revenue strategies and alleged upcoding. Regulators are increasingly scrutinizing whether financial incentives tied to PE ownership result in overutilization of services or unnecessary procedures. While scrutiny of PE remains elevated, it is largely concentrated on the degree of control and influence exerted over portfolio companies — especially in cases tied to FCA liability.

In U.S. ex rel. Mandalapu v. Alliance Family of Companies LLC, the DOJ announced a $15.3 million settlement resolving claims that Alliance submitted false claims to federal healthcare programs for EEG tests that were incorrectly coded to increase reimbursement. The settlement also involved allegations against a PE firm that had invested in Alliance, highlighting the importance of robust billing and compliance practices.

Takeaway for Deal Terms: Understand the Sponsor’s “Line of Sight”

FCA enforcement trends suggest the DOJ may examine the sponsor’s involvement in operational decisions. Some ways to mitigate these risks include clarifying the sponsor’s role in governance versus operations and maintaining board-level oversight while avoiding involvement in day-to-day patient care decisions or billing practices that could trigger liability. Counsel can help provide a clear governance boundary to avoid allegations of direct control over clinical or billing practices.

Public and Legislative Criticism

Government officials have vocalized that PE ownership may prioritize profits over patient care. This has led to congressional hearings and public investigations into PE’s role in nursing homes, hospice care, and emergency room staffing.

For example, Prospect Medical Holdings, a PE-backed firm, faced bankruptcy proceedings after acquiring Eastern Connecticut Health Network and Waterbury Hospital. Accusations against Prospect included prioritizing profits over patient care and failing to invest in hospital infrastructure. These issues led to widespread criticism and scrutiny from local officials, emphasizing the reputational risks associated with PE ownership in healthcare.

Takeaway for Deal Terms: Monitor Portfolio Company Risk Post-Closing

It is important to establish post-acquisition compliance audits and consider board-level compliance reporting. Risks don’t end at closing, and ongoing oversight helps prevent problems from escalating into government investigations.

Conclusion

PE investment in healthcare continues to offer compelling returns, but the legal and regulatory environment is growing more complex. Proactive legal planning is essential to avoid pitfalls and protect long-term value. If you have questions about structuring a healthcare acquisition or navigating evolving legal risks, contact our Healthcare practice team.

On May 12, 2025, the U.S. District Court for the District of New Jersey entered a decision dismissing a lawsuit filed by a Massachusetts radiation oncologist and a Pennsylvania neurosurgeon, which claimed New Jersey’s licensure requirements to offer healthcare via telemedicine in New Jersey was unconstitutional. The case is MacDonald et al. v. Sabando.  

The plaintiff physicians operate national practices from Massachusetts and Pennsylvania and each treated a patient who subsequently resided in New Jersey. Those patients wished to continue their care with the out-of-state physicians but were unable to do so because neither physician was licensed in the State of New Jersey, a prerequisite to providing telehealth services in New Jersey.

Pursuant to N.J.S.A. 45:1-62(b), any healthcare provider who utilizes telemedicine or engages in telehealth must be licensed, certified, or registered to provide such services in New Jersey.

The plaintiffs’ complaint alleged four constitutional violations: (1) the Dormant Commerce Clause, (2) the Privileges and Immunities Clause, (3) the First Amendment Freedom of Speech, and (4) the Due Process Rights of Individuals.

With regard to the Dormant Commerce Clause, which prohibits in-state economic protectionism from out-of-state competition, the Court rejected the plaintiffs’ arguments, finding that the New Jersey licensure requirements applied equally to both in-state and out-of-state physicians. Thus, the Court would not apply a heightened scrutiny test to its review. Instead, the question was whether the burden on interstate commerce substantially outweighs the benefit. Since New Jersey has a strong interest in regulating the practice of medicine within the State, the Court found this interest to outweigh any burdens alleged by the plaintiffs.

The plaintiffs next argued the Privileges and Immunities Clause, which entitles all citizens of each state to all the privileges and immunities of citizens in the several states. Thus, the Court assessed whether the licensure requirements discriminated against non-residents of New Jersey, finding that the law does not treat in-state and out-of-state physicians any differently in terms of being permitted to provide telehealth services to patients in New Jersey. And, even if the law were to be found to discriminate, the Court stated that “the licensure requirement bears a substantial relationship to the state’s objective and does not impose too heavy a burden on the privileges of nonresidents.”

The plaintiffs’ next argument discussed the First Amendment’s right to freedom of speech and alleged the licensure requirements restricted the physicians’ speech in communicating with their patients. The Court rejected this argument, finding that the statute does not limit an out-of-state physician’s speech based on viewpoint or content. Rather, out-of-state physicians can become licensed in New Jersey and provide telehealth services. The Court further opined that the law takes no interest in what a physician might say, only whether they are licensed in New Jersey.

Finally, the plaintiffs alleged a violation of due process rights by claiming a fundamental right of parents to make decisions concerning the care, custody and control of their children. Thus, they alleged the law limited their ability to do so. The Court, while acknowledging the due process rights of parents, held that the licensure requirement does not implicate a fundamental right, and thus rational-basis review applied. The Court found that standard was met and concluded that the state has a legitimate interest – the health and safety of the public – and the legislature’s decision to require licensure serves that interest.

The Court’s decision to dismiss this lawsuit reinforces New Jersey’s authority to regulate the practice of medicine within its borders, including the means by which out-of-state physicians may offer telehealth services within the State of New Jersey.

On March 15, 2025, President Donald Trump signed a continuing resolution extending funding of the federal government through September 2025. Included in the continuing resolution were provisions that also extended Medicare telehealth flexibilities through September 2025.

Many providers in the healthcare industry have come to rely upon these virtual services for the delivery of care to patients. These flexibilities were originally set to expire on March 31, 2025, after having been put in place during the COVID pandemic. Up until only a few days ago, many feared they were going to be allowed to expire at the end of the month.

Of primary significance, the continuing resolution permits the following flexibilities, among others, to continue:

  • Enabling telehealth visits to occur from a wider range of locations, including a patient’s home, rather than the services being limited to rural areas and requiring certain originating sites.
  • Permitting additional qualified provider types and services to deliver virtual care, including physical and occupational therapy, emergency department visits, and nursing facility care.
  • Extending the Acute Hospital Care at Home Program, which allows Medicare-certified hospitals to furnish inpatient-level care in patients’ homes.
  • Continuing the waiver of the in-person visit requirement for behavioral health services.

While many had pushed for these flexibilities to be made permanent, or at least extended for a longer period of time, the continuing resolution will provide Congress and telehealth advocates with an additional six months to continue work on shaping the future of telehealth services.

On February 28, 2025, the Appellate Division of the Superior Court of New Jersey filed an opinion approved for publication in S.V. v. RWJ Barnabas Health. The court reversed the denial of a motion for summary judgment and ordered the dismissal of the psychiatric malpractice complaint. In an opinion written by Judge Sabatino, it held that the healthcare providers who had discharged a patient from a voluntary commitment did not have liability for a single car crash in which the passenger was injured when the recently discharged patient drove into oncoming traffic before losing control and crashing into a telephone pole. The court granted leave to appeal limited to the issue of whether the defendants had a legal duty to the non-patient passenger plaintiff who was the patient’s sister. Concluding that under the circumstances presented, the defendants “could not have reasonably foreseen that [the patient], shortly after her discharge, would cause a motor vehicle crash that would injure plaintiff.”

In dismissing the complaint because the defendants did not owe a duty of care to the third-party passenger, the court built upon a similar outcome in Vizzoni v. B.M.D. in which the Appellate Division affirmed summary judgment in favor of a psychiatrist whose co-defendant patient had killed a bicyclist while driving under the influence of psychotropic medications. The psychiatrist had not warned the patient that she should not drive while taking the medication. The court held that because the bicyclist was not the psychiatrist’s patient, he did not owe a duty of care to a third-party injured by the patient.

In Vizzoni, the court emphasized that foreseeability was “the foundational element in the determination of whether a duty exists” to provide a basis for imposing tort liability. It serves a dual purpose in determining both the existence of a duty of care and whether a breach of that duty is a proximate cause of the ultimate injury. In Hopkins v. Fox & Lazo Realtors, the New Jersey Supreme Court noted that this formulation arises out of the classic case of Palsgraf v. Long Island Railroad Company studied in law school. In various cases, the Supreme Court has repeatedly stated that the determination of the existence of a duty of care “is one of fairness and policy that implicates many factors” and “turns on whether the imposition of such a duty satisfies an abiding sense of basic fairness under all of the circumstances in light of considerations of public policy.” The factors to be identified, weighed, and balanced include the relationship of the parties, the nature of the risk, the opportunity and ability to exercise care, and the public interest in the proposed solution. 

In Vizzoni, the court noted the recognition in New Jersey judicial decisions that a mental health professional owes a duty to take reasonable steps to protect a readily identifiable victim put at risk by their patient. This duty of care arises from the context of a special relationship between physician and patient with the principal question being whether the defendant had a duty to act for the benefit of another but failed to do so. A special relationship can be the result of status, such as employer and employee, or it may emerge from some undertaking by the defendant to exercise care for the plaintiff, such as when a physician accepts a patient with an implicit promise to treat the patient with at least the skill and care customarily exercised by physicians in that field. In the absence of a special relationship a person has no duty to control the actions of another. The Appellate Division utilized Section 41 of the Restatement (Third) of Torts (2005) to support a distinction between where the practitioner is under an affirmative duty to act as opposed to when the practitioner’s conduct creates a foreseeable risk of harm. For example, when a practitioner prescribes either appropriate or inappropriate medication that impairs the patient, who in turn puts others at risk, the practitioner was under a duty to exercise reasonable care in making that decision to prescribe. The defendant psychiatrist in Vizzoni acted affirmatively by prescribing medication for his patient B.M.D. A risk to others may occur because of negligent treatment, such as prescribing inappropriate medication that impairs the patient, but it can also occur because of appropriate care of the patient, such as properly prescribing medication that impairs the patient. The Appellate Division stated: “Thus, the question is not whether the practitioner had a duty to act, but rather were the consequences of the act of prescribing medication foreseeable to the practitioner.” It then stated that “the issue in this case is properly framed as one of proximate cause, not the duty of care.” Based on its review of the record, the court found that the evidence did not show that the patient B.M.D. was impaired at the time of the crash. The plaintiff’s proofs that the patient was experiencing side effects of the medications such as dizziness, sleepiness, blurred vision and loss of coordination amounted to pure conjecture and speculation untethered to the observations of the police who had interviewed the driver at the scene of the accident and found no impairment.

While employing the Hopkins multi-factorial analysis for the determination of duty, in S.V. Judge Sabatino approached the question differently to reach the same conclusion as in Vizzoni. In contrast to focusing on proximate cause, he stated: “Breach or no breach, the injury must have been reasonably foreseeable to support liability.  In sum, there simply is no basis here to infer that this motor vehicle crash could reasonably have been foreseen by defendants when they discharged J.V. from their facility.” The patient was a middle-aged woman who began having psychiatric symptoms at the age of 18 with an eventual diagnosis of schizoaffective disorder and bipolar disorder. She received in-patient and out-patient treatment but had been without psychiatric episodes for about twenty years before the car crash incident. In August 2017, she threatened to kill herself which prompted a psychiatric evaluation. She agreed to a voluntary admission on the day of the evaluation.

While hospitalized, the patient received several anti-psychotic and other psychiatric medications. The medication doses and combinations were adjusted during her 14-day stay. She appeared to begin having delusions that other people were giving her cocaine and touching her belongings. Nonetheless, her condition seemed to improve during the hospitalization, and she asked to be discharged. She was attending group therapy, compliant with medication, and was eating and sleeping appropriately. She was referred to a psychiatric screening assessment with a note indicating some symptoms. However, the psychiatric screener and the psychiatrist who evaluated her both concluded that she did not meet the criteria for involuntary commitment. The statute requires proof the patient is dangerous to oneself or others in the “reasonably foreseeable” future.

The plaintiff’s expert criticized the decision to discharge as premature while her medications were being adjusted and that she was allegedly not sufficiently stabilized. There was no contention that the patient’s sister should have been warned that the patient was too unstable to drive a car or of any other dangers related to her condition. The plaintiff’s expert did not review the police report, the recorded statements obtained by the patient’s insurance investigator with contradictory versions of what happened in the crash, or the deposition of any of the fact witnesses. Significantly, in his deposition, the expert testified that he did not know what caused the patient to act in the way she did while driving. Proving that premature discharge is medical malpractice means not only proving that a doctor or hospital did not meet all standards of care in making the decision to discharge, but also that the premature discharge led to harm. Accordingly, Judge Sabatino concluded:

Given the absence of this critical element of foreseeability, we discern no grounds to impose a legal duty upon these defendants to protect third parties such as plaintiff who could have been passengers injured in a vehicle driven by J.V. after her discharge.  The sibling “relationship of the parties” did not make the crash foreseeable.  Nor did the “nature of the risk” or the “opportunity and ability to exercise care.”

He bolstered this conclusion by pointing out that the claim of a “premature discharge” of this voluntary mental health patient clashed with the terms of the civil commitment laws. The patient had requested that she be discharged after a 14-day hospitalization and, before being discharged, she was found to not be a danger to herself or others on an evaluation for involuntary commitment conducted in accordance with the statute. Invoking the fourth Hopkins factor of “the public interest” he stated that the premature discharge theory of liability actually ran counter to the civil commitment laws. By statute, a patient voluntarily admitted for psychiatric care “shall be discharged by the treatment team at the patient’s request” within 48 hours of the request unless the treatment team determined that there was a need for an involuntary commitment. Such an evaluation had been done but without finding an indication for the involuntary commitment because of danger to oneself or others “within the reasonably foreseeable future.” The theory of liability based on a supposed premature discharge was contrary to “these statutory requirements that are designed to honor a patient’s liberty and autonomy.” 

Use of foreseeability as a “crucial element” in deciding whether imposition of a duty on an alleged tortfeasor is appropriate and well engrained in New Jersey law. The Vizzoni court referred to both Section 41 and Section 7 of the Restatement (Third) of Torts. Section 7 presents an intriguing challenge.Comment j addresses the proper role for foreseeability in determining duty. It states:

Despite widespread use of foreseeability in no-duty determinations, this Restatement disapproves that practice and limits no-duty rulings to articulated policy or principle in order to facilitate more transparent explanations of the reasons for a no-duty ruling and to protect the traditional function of the jury as factfinder.

However, in Coleman v. Martinez, the Supreme Court noted that Vizzoni did not adopt Section 41 and commented that while the court typically gave “considerable weight” to views expressed in the Restatement, it concluded that “the particularized foreseeability test established in our jurisprudence readily covers whether a mental-health practitioner could be found to owe a duty of care for harm caused by a patient under a particular set of factual circumstances.” Similarly, in the more recent decision of Estate of Campbell v. Woodcliff Health & Rehabilitation Center, the Appellate Division stated that “no New Jersey published case … has looked to the Restatement to establish the existence and scope of a physician’s duty to a third party.” Thus, in the context of mental health malpractice claims, this will remain a fact-sensitive determination.

A recent article in the Journal of the American Medical Association (JAMA) triggers a question as to whether the standard of care to evaluate claims for medical malpractice should be changed. For decades, the New Jersey Model Civil Jury Charge has instructed jurors to measure the conduct of a defendant physician against the “knowledge and skill normally possessed and used by the average physician,” either as a general practitioner or specialist in that field, having regard to the state of scientific knowledge at the time that he/she or she attended the plaintiff. The jurors are further instructed that ordinarily based on common knowledge and without technical training, they cannot determine what conduct constitutes standard medical practice. The standard of practice by which a physician’s conduct is to be judged must be furnished by expert testimony and the jurors should not speculate or guess about the standards of care but rather should determine the applicable medical standard from the testimony of the expert witnesses they have heard during the trial.

The case law has viewed the applicable standards as those which are “generally recognized and accepted by the branch of the profession to which [the physician] belongs as the customary and proper methods of diagnosis or treatment of the physical or mental condition concerned in the inquiry.” The JAMA authors highlight the May 2024 action of the American Law Institute in approving the first-ever restatement of the law of medical malpractice. The JAMA article emphasizes that the new Restatement “shifts away from the traditional reliance on customary practice toward a more patient-centered concept of reasonable medical care.”

The official text of the Restatement (Third) of Torts: Medical Malpractice has not yet been published.  The article quotes Section 5 which provides: “The standard of reasonable medical care is the care, skill, and knowledge regarded as competent among similar medical providers in the same or similar circumstances.” (The authors’ quotations come from Tentative Draft No. 2 which is approved as representing the Institute’s position at this time.) Relevant circumstances for determining reasonable care include:

(1) the patient’s medical condition and medically relevant personal characteristics;

(2) the state of medical knowledge and the treatment options available at the time;

(3) resources available to the provider in the particular location or practice setting;

(4) whether the professional standards described in Subsection (a) differ among groups of providers; and

(5) any representations the provider made to the patient or public about the provider’s level of care, skill, knowledge, experience, or scope of practice.

The distinction between a standard based on customary practices and the standard of reasonable care is essentially the difference between what physicians do and what physicians should do. This has been a matter of debate in both the legal profession and among physicians for many years.  The leading case to which proponents of a patient-centered reasonable care standard point to is Helling v. Carey decided in 1974 by the Washington State Supreme Court.  

The plaintiff in Helling was a 32-year-old woman who was not screened for glaucoma and became blind. The standard of care accepted in the ophthalmology specialty did not call for routine screening of patients under the age of 40 since the risk in that age group was only one in 25,000. Despite the defendant having adhered to this customary practice, the court concluded that the physician was negligent.

Comment c to Section 5 notes that Helling “has been roundly criticized and is regarded as anomalous.” The new Restatement provision does not go as far as Helling and recognizes that customary practice has a role in determining reasonable and acceptable medical conduct. It quotes from a 2000 law review article by Professor Philip Peters who has written extensively on this topic:

Although it continues to be physician-based, the reasonable physician standard potentially differs from a custom-based standard of care in one crucial respect. It asks what a reasonable physician would have done, not what is usually done.

In a more recent article, Professor Philips stated that about forty percent of the states were using reasonable care language. Helling has not been cited in any reported New Jersey decision. However, in Klimko v. Rose, the New Jersey Supreme Court in a dictum had seemed to edge away from the enshrined professional custom for determining the standard of care. While the Court decided this case based on a common knowledge standard, in a footnote it commented:

[W]hen a risk is obvious and a precautionary measure available, an industry or professional standard or custom that does not call for such precaution is not conclusive if, regardless of the standard or custom, the exercise of reasonable care would call for a higher standard, i.e., for precautionary measures.

There does not appear, however, to have been any significant further movement in that direction. For example, in Marshall v. Klebanov, the Supreme Court adhered to the phraseology of “application of accepted medical practice” in describing a physician’s duty of care. But at the same time, the Affidavit of Merit Statute imposes an obligation on one seeking to bring a professional malpractice claim to provide an affidavit that “the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards or treatment practices.” The Patients First Act, focused specifically on medical malpractice, requires that an expert providing an affidavit or testimony “on the appropriate standard of practice or care” must have certain qualifications. Is there a meaningful distinction between “accepted” and “acceptable” or “appropriate” or is this just an exercise in the subtleties of semantics?

Section 6 of the new Restatement makes clear that a breach of the standard of care set out in Section 5 is to be established “through the testimony of a qualified expert” unless the res ipsa loquitur doctrine applied, or the breach was a matter of common knowledge. Another exception would be if the healthcare provider admitted a breach of the standard of care. Section 6 also indicates that proof that the healthcare provider complied with a practice guideline established by an authoritative body is sufficient to support, but not compel, a finding that the provider did not breach the standard of care under Section 5. The JAMA article describes the explicit inclusion of practice guidelines as a move toward evidence-based medicine. Significantly, the use of practice guidelines is noted in Comment f to Section 6 to be “asymmetric” in that practice guidelines can only be used to “support compliance with, but not to establish a violation” of the standard of care. This limitation should ameliorate concerns that practice guidelines will be imposed and result in so-called cookbook medicine.

The American Law Institute is a non-profit organization composed of judges, law professors, and practicing attorneys that seeks to clarify and modernize common law principles in its Restatements of the Law series and Model Codes.  In part it not only states what the law is but also what it should be. The American Law Institute is equivalent to the Institute of Medicine or the National Academy of the Sciences. Its publications are repeatedly cited by courts across the country.

In connection with its medical malpractice decisions, the New Jersey Supreme Court has periodically looked to the Restatement of Torts in its variation iterations. For example, in  Buckalew v. Grossbard, as part of its consideration of the applicability of the res ipsa loquitur doctrine to a medical malpractice case, the Court noted the comments on this topic in the Restatement. In Glassman v. Friedel, the Court pointed to the Restatement as reflecting the nearly universal adoption of comparative responsibility for the allocation of tort responsibility.

It remains to be seen what impact the new Restatement standard will have. To date, there are no reported opinions examining the new Restatement concerning medical malpractice.

The January 30, 2025 issue of the New England Journal of Medicine contains an article entitled “Providing Interstate Telehealth Abortion Services to Patients in Restrictive States.” In the second sentence, the authors write: “The complexities of telehealth regulation in the United States often result in areas of liability and concern for clinicians providing abortion services and for states attempting to protect patients and clinicians.”

Those concerns were undoubtedly intensified on January 31 when Dr. Margaret Daily Campbell was indicted by a Louisiana grand jury for violations of that state’s anti-abortion law. The charge against Dr. Campbell, a New York licensed physician, was that she caused an abortion to occur in Louisiana by providing a pregnant female minor with abortion-inducing drugs that had been obtained by the patient’s mother through the internet from Dr. Campbell’s practice. The Louisiana District Attorney has stated that the pregnant female wanted the pregnancy and had a “reveal party” planned but her mother coerced her into terminating the pregnancy. However, this is not the first time criminal charges have been brought against physicians prescribing through the internet.

The indictment of Dr. Campbell follows the lawsuit against her commenced on December 12, 2024 by the Texas Attorney General seeking injunctive relief and civil penalties of $250,000 based on Dr. Campbell having prescribed and provided the medications mifepristone and misoprostol to a 20-year old pregnant female without being licensed to practice medicine in Texas. The woman did not inform the biological father of her pregnancy but eventually was taken to the hospital because of severe bleeding. There, the biological father learned that the woman had been pregnant and on returning home discovered the boxes that contained the medications. He then provided information to law enforcement authorities.

The lawsuit is premised on Dr. Campbell’s unlicensed practice of medicine in Texas together with the provision in Texas law that an abortion may be performed in Texas only by a physician licensed to practice medicine in Texas. Moreover, under Texas law a person is prohibited from providing telemedicine services unless holding a full Texas license.

The NEJM authors refer to “shield laws” that have been enacted in over twenty states since the 2022 Supreme Court decision in Dobbs v. Jackson Women’s Health Organization. These laws include provisions protecting against interstate extradition, subpoenas, or summons to serve as a witness in court; prohibiting support of another state’s investigations or prosecutions; and limiting adverse professional consequences, such as loss of licensure, as well as medical malpractice protections and data-privacy requirements.

New York has a shield law. It includes reproductive health services “whether provided in person or by means of telehealth or telehealth services” and when these are provided by a person licensed in New York and physically present in New York they are “a legally protected health activity if the service or care is permitted under the laws of this state, regardless of the patient’s location.”

New Jersey also enacted two bills providing protection for abortion services that were discussed in a September 2022 posting on this blog. The statute blocking extradition does not explicitly refer to care provided over the internet to out-of-state patients.

In response to the Texas lawsuit, New York Governor Kathy Hochul stated her intent to maintain the safe harbor status of New York for abortion providers and patients and both the Governor and Attorney General Letitia James later responded negatively to the criminal filing in Louisiana.

The NEJM authors concluded: “Clinicians who rely on shield laws to provide telehealth abortion services to patients in abortion-restrictive states face uncertain legal protections.” The cases against Dr. Campbell will test the effectiveness of these laws in both a civil and criminal context.

While the Louisiana indictment appears to be the first criminal case concerning abortion care since the overturning of Roe v. Wade by Dobbs, it is not the first instance of a criminal prosecution of a physician located in one state for using the internet to prescribe medication for a patient located in a different state. In the 2007 decision of Hageseth v. Superior Court, a Colorado physician had prescribed a generic form of Prozac for a Stanford University student experiencing a depressive episode who had ordered the medication through an interactive website. The physician was charged with the unlicensed practice of medicine in California. He moved to dismiss the indictment asserting that a non-resident of the state who had never been in the state cannot commit an offense within the state. On appeal, the intermediate Court of Appeal affirmed the denial of the motion to dismiss and rejected the claimed lack of extra-territorial power in a criminal case where the out of state conduct had a detrimental effect in California that the defendant knew could occur. The California Supreme Court declined to review the case further. In February 2009, Hageseth pleaded no contest to the felony charge and received a jail sentence of nine months.

The major premise of the criminalization of abortion services through the internet is that the location of the patient at the time of treatment or diagnosis determines where a practitioner is engaged in the practice of medicine and that a state is empowered to define the terms and scope of the practice of that profession. In 1899, the Supreme Court recognized that the regulation of the practice of medicine was well within the police power of the state government. The police power to regulate is among the powers reserved to the states by the Tenth Amendment. The Interstate Medical License Compact facilitating a physician obtaining licensure in multiple states to be able to practice across state lines is built on the Tenth Amendment. As enacted in New Jersey, it adopts “the prevailing standard for licensure and affirms that the practice of medicine occurs where the patient is located at the time of the physician-patient encounter.” The Interstate Medical License Compact Commission issued a memorandum in December 2023 regarding the impact of Dobbs on medical practice across state borders that provides scant support for internet prescribing without a physical presence in proximity to the patient.

However, the circumstances of abortion-inducing medication are significantly different with a complexity that suggests rather than asking where the care was provided, the question should be where did the abortion occur? The following hypothetical illustrates the conundrum:

Imagine a provider located in New York communicates via telehealth with a patient physically located in Pennsylvania. Because of Pennsylvania rules, the provider cannot mail the pills into that state, so the provider mails them to a P.O. box in New Jersey, where the patient picks them up. The patient, who is traveling to see family, then travels to Delaware, where she takes the mifepristone. Then she goes to Maryland a day later where she takes the misoprostol. Then, when she finally arrives in Virginia, she expels the products of conception. There are six different states in this admittedly far-fetched hypothetical—when and in which one did the abortion take place?

The Louisiana criminal indictment in particular presents a multiplicity of issues that will need to be addressed including conflict of laws questions as well as comity and reciprocity among states under the Privileges and Immunities Clause in Article 4, Section 2, Clause 1 of the Constitution. This encompasses circumstances where extradition to a requesting state may be refused. The impact of federalism and interstate commerce are also involved. This will not be an easy task.

Born in Elsinborough Township in Salem County, New Jersey on October 13, 1825, John S. Rock was a person with amazing talents. After years of working as a physician, for health reasons he turned to the practice of law and in 1865 he became the first black lawyer admitted to practice before the Supreme Court of the United States. But his entire life is marked by accomplishments.

With New Jersey’s enactment of legislation for the abolition of slavery in 1804, Rock was a free-born African American. Unusual for the time, he remained in school until about the age of 18. He became a teacher and eventual head of a Quaker school in Salem County.

In Salem, Rock became active in the struggle for the abolition of slavery and the fair and equal treatment of his race. He was appointed secretary of the Colored Convention that met in Salem in 1849 and was one of the drafters of a petition to the New Jersey legislature to amend the recently adopted new constitution of 1844 to remove the word “white” that had been included in Article 2, Section 1 setting out the right of suffrage giving the right to vote to “[e]very white male citizen of the United States, of the age of 21 years.” He subsequently prepared comments addressing the “citizens” of New Jersey on behalf of a “disenfranchised portion of the legal taxpayers of New Jersey.” He reviewed the principles set forth in the Declaration of Independence and the experience of the founders contrasted with that of blacks who were obligated and expected to pay taxes, comply with the laws, and fight for the country as had been done during the American Revolution. He identified the sophistry of some who said that blacks should go back to Africa pointing out that if the national origin of forefathers was determinative, it would require that many whites go back to Europe. He declared that “[t]he country a man is born in, is his country.” These comments were disseminated nationally in The North Star newspaper published by Frederick Douglass.

Rock’s intellectual appetite led him to the study of medicine. Initially this was through borrowing books from two local physicians that he studied after completing his duties at the Quaker school. However, encountering the barriers of racial prejudice, he was unable to gain admission to a medical college and was unable to pursue a medical career in New Jersey. He relocated to Philadelphia and undertook the study of dental surgery. He opened a dental practice in 1850 and in 1851 won an award for the specimens of artificial teeth he created. He would later publish an article in the Boston Medical and Surgical Journal, the predecessor to the New England Journal of Medicine.

Philadelphia had one of the largest free black populations in antebellum America. There, Rock returned to his quest to become a physician. While maintaining his dental practice, he attended lectures at the American College of Medicine in Philadelphia and received his degree in 1852. In Philadelphia, he became acquainted with William Still, an important figure in anti-slavery activities and who is identified as the “Father of the Underground Railroad.” William Still kept detailed notes concerning fugitives passing through Philadelphia to help reunite families. He was able to reunite with his brother Peter who had remained enslaved for 40 years after their mother escaped with two daughters. Still’s family settled in Burlington County, New Jersey and included an older brother James Still, an herbalist known as the “Black Doctor of the Pines.”  Family reunions have been held in Lawnside, New Jersey for over 150 years.

In 1853, Rock and his wife relocated to Boston where he opened a dental and medical practice. Rock lived in the African American community located in the Beacon Hill area. He frequently treated fugitive slaves who came to Boston on their way to Canada using the Underground Railroad. He continued to write, lecture, and speak publicly in support of equal rights for the members of his race. A speech that Rock delivered in 1858 is recognized as the source of the “black is beautiful” expression that emerged in the 1960s.

Rock began to have health problems and in 1858 he wanted to travel to France for surgical treatment of a throat condition. That plan, however, was initially blocked by his being denied a passport. Then, United States Secretary of State Lewis Cass relied on the opinion of Chief Justice Roger Taney in the Dred Scott case in which he had ruled that because African Americans were not citizens, they could not be issued a passport which was evidence of citizenship. The Massachusetts legislature overcame this obstacle, however, by issuing Rock a state passport. While in France, Rock studied French and German. He achieved such a significant level of fluency that a correspondent for a German-language periodical reported this about a lecture that Rock gave in 1860 about Madame de Stael, a philosopher and political theorist in Parisian and Genevan circles in the time of Napoleon: “This thinking, educated German and French speaking negro proved himself as learned in German as he is in French literature.”

Rock’s French physician had advised him that his medical condition would not permit his continued practice of medicine. While cutting back on his medical practice, Rock began to study law and was admitted to the Massachusetts Bar in 1861. He became familiar with Charles Sumner, the United States Senator for Massachusetts whose antislavery views had prompted an attack in 1856 by a Congressman from South Carolina who beat Sumner with a cane while he sat at his desk on the Senate floor.

In 1863, Rock asked Sumner to support his admission to the bar of the Supreme Court. At this time, admission to the Supreme Court bar was within the discretion of the Chief Justice. Roger Taney was still Chief Justice and Sumner cautioned against making the attempt. But on October 12, 1864, Taney died, and President Lincoln appointed Salmon P. Chase as his successor. Chase had been part of the Team of Rivals that composed Lincoln’s cabinet. Chase had a long record as an antislavery advocate and served as Secretary of the Treasury until June 1864.

Rock renewed his request to be admitted to the Bar. On February 1, 1865, Rock went to the Supreme Court and the Chief Justice granted Senator Sumner’s motion for his admission. The swearing in of Rock overlapped with significant political and historical events. On January 31, 1865, the House of Representatives approved the adoption of the Thirteenth Amendment abolishing slavery in the United States after its earlier passage by the Senate. Though not needed for legal reasons, as a symbolic gesture of approval, President Lincoln signed the Joint Resolution submitting the proposed amendment to the state legislatures for ratification on February 1. It was ultimately ratified by the necessary number of states on December 6, 1865. The Thirteenth Amendment is the only constitutional amendment to be later ratified that was signed by a president.

Still sitting on the Court at the time of Rock’s swearing-in were four of the justices who had joined in Taney’s opinion in Dred Scott. Reporting in the New York Daily Tribune of February 7, 1865 noted that with the admission of Rock to the bar, “[t]he grave to bury the Dred Scott decision was in that one sentence dug; and it yawned there, wide open, under the very eyes of some of the Judges who had participated in the judicial crime against Democracy and humanity.”

The Dred Scott decision regarding the non-citizenship status of African Americans would not actually be overturned until enactment of the Fourteenth Amendment on July 9, 1868 with its birthright citizenship provisions. As part of his activist involvement in Boston, Rock had made a speech on March 5, 1858, condemning the Dred Scott decision that had been issued the preceding March of 1857. He did not experience the actual overturning of Dred Scott. Although admitted to the Supreme Court bar, Rock did not argue or handle any case before the Court before his death on December 3, 1866.

The memory and legacy of the contributions of Dr. John S. Rock are preserved by the Salem County Historical Society. It raised funds to restore the stone marker at his grave in Everett, Massachusetts and provides an annual scholarship in his honor to a student attending Salem County College. It will hold the twenty-first annual John S. Rock Memorial Lecture in October 2025.

In another in the seemingly endless series of decisions parsing the interpretation of the statutory requirements for an affidavit of merit in medical liability claims, on January 22, 2025 the New Jersey Supreme Court issued its unanimous opinion in Wiggins v. Hackensack Meridian Health. The court ruled that in a case against a physician who is board-certified in and practices two different specialties, a plaintiff can satisfy the statutory requirement with an affidavit of merit from a physician specializing in only one of those specialties.

The Wiggins case involved the death of a patient in September 2020. In December 2015, the patient received a prescription for the medication Tramadol for pain and then in January 2016 she received a prescription from a different physician for the medication Allopurinol. The patient had an allergic reaction from either one of the medications or a combination of the two that evolved into Stevens-Johnson Syndrome. This is a rare but serious and potentially life-threatening disorder of the skin and mucous membranes. A person develops a rash that spreads and blisters with the top layer of skin sloughing off.

The patient recovered from the attack of Stevens-Johnson Syndrome, but about four years later was admitted to Hackensack Meridian Health – JFK University Medical Center. Following the discharge, she saw defendant Dr. Goyal who prescribed Allopurinol which she took for four days. Then, on September 9, 2020, she was again admitted to the hospital with a diagnosis of Stevens-Johnson Syndrome. Despite treatment at a burn specialty hospital, she died on September 29 from a cardio-pulmonary arrest attributed to multiple organ failure, bacteremia, and Stevens-Johnson Syndrome.

In his answer to the complaint, in accordance with R.4:5-3, Dr. Goyal indicated that he was certified in the specialties of Internal Medicine and Gastroenterology and that his treatment of decedent “involved the medical specialties of Internal Medicine and Gastroenterology.” Plaintiff’s counsel provided an affidavit of merit (AOM) from a physician who was certified in the field of Internal Medicine but not Gastroenterology. At a case management conference held pursuant to the directives of Ferreira v. Rancocas Orthopedic Associates, defense counsel challenged the sufficiency of the AOM because of the double certification status of the defendant physician and the “like-for-like” requirement of the Patients First Act. Motions to dismiss were subsequently filed.

Arguing that Allopurinol was a medication prescribed by internal medicine physicians and was not limited to gastroenterology uses, Plaintiff opposed the motion to dismiss. Plaintiff contended that the AOM from an internal medicine physician was sufficient, especially in light of the comments of the Supreme Court in Buck v. Henry that “[a] physician may practice in more than one specialty, and the treatment involved may fall within that physician’s multiple specialty areas. In that case, an [AOM] from a physician specializing in either area will suffice.” The trial court denied the motion to dismiss. The Appellate Division granted leave to appeal and reversed. It stressed the statutory requirement that an expert have equivalent qualifications to the defendant physician and concluded that the comments in Buck were dicta and not binding. The Supreme Court granted a motion for leave to appeal for further review.

In his opinion for the court, Justice Fasciale reviewed the history of the affidavit of merit requirement from the initial statute enacted in 1985 for liability claims against any professional through the 2004 adoption of the Patients First Act, which enhanced the requirements for liability claims against physicians. He rejected the notion that the quoted comments from Buck were non-binding dicta. In Buck the Court had underscored the importance of the Ferreira conference in identifying and addressing problems with an AOM and weeding out unmeritorious cases, but Justice Fasciale emphasized that in that case the Court “did not resolve whether the plaintiff’s AOMs were sufficient.” But the Court had proceeded to provide guidance for sorting out when a physician practiced in more than one specialty and the treatment fell into more than one specialty area. Justice Fasciale stated: “‘[M]atters in the opinion of a higher court which are not decisive of the primary issue presented but which are germane to that issue … are not dicta, but binding decisions of the court’ [and] ‘the legal findings and determinations of a high court’s considered analysis must be accorded conclusive weight by lower courts.’”

Turning to the text of the statute, he pointed out that its plain language did not require an AOM to be from an individual with the same numerous specialties as the defending physician; “instead, it requires only the same ‘specialty or subspecialty’ in the singular” with emphasis added to the use of the disjunctive conjunction. Similarly, he noted that the statute’s requirement concerning equivalence as to the care or treatment in dispute was also “‘specialty or subspecialty,’ not specialties or subspecialties.” He distinguished the circumstances where even though practitioners of emergency medicine, family medicine, internal medicine might all treat similar or related conditions in the course of their practice, but the AOM was from a physician who was not equivalently qualified in any of these specialties but rather other areas.

The critical fact in Wiggins was the defendant’s acknowledgement that in addition to being certified in both internal medicine and the subspecialty of gastroenterology, his treatment of this patient involved both internal medicine and gastroenterology. There was nothing about the prescription of Allopurinol that was unique to the subspecialty of gastroenterology. Thus, it would be appropriate for a physician practicing in either of these fields to provide an AOM.

The decision in Wiggins adheres to the New Jersey Supreme Court’s long-standing practice of not exalting form over substance. The coalescence of both specialty credentials and treatment matching up with the defendant physician’s training and practice avoids a retrenchment to the time before enactment of the Patients First Act when the Court had tolerated a very low threshold to qualify as an expert. For example, in its 1953 decision in Carbone v. Warburton, the Supreme Court had stated “[t]he fact that [the proffered expert witness] is not a specialist may disparage his qualifications and thereby the weight to be given his opinion, but it does not render him incompetent to state an opinion.” Other cases recognized expert witness status as to persons who did not even hold a license in the field in question. In Sanzari v. Rosenfeld, a physician anesthesiologist was allowed to testify as to dental standards of care. In Rosenberg by Rosenberg v. Cahill, a medical doctor was permitted to testify as to the standard of care for a chiropractor. In Nicholas v. Mynster, the Court reasoned that allowing physician experts of different medical specialties, but who treated similar maladies, to offer testimony even though not equivalently credentialed to the defendant physician would “read out of the statute the kind-for-kind specialty requirement” the Legislature intended to impose.  Wiggins follows the same analysis.

Greenbaum healthcare attorneys Neil M. Sullivan and Jennifer A. Belardo analyze the CMS’s Medicaid and Children’s Health Insurance Program (CHIP) Managed Care final rule – and its impact on states, healthcare providers, and health plans navigating the Medicaid landscape – in this article recently published by the HFMA’s New Jersey Chapter in its Garden State Focus magazine.

On September 26, 2024, the Health Infrastructure Security and Accountability Act was introduced in the U.S. Senate. The bill would amend the Health Insurance Portability and Accountability Act (HIPAA) and direct the U.S. Department of Health and Human Services (HHS) to develop new “mandatory minimum cybersecurity standards for health care providers, health plans, clearinghouses and business associates.” It would further mandate annual cybersecurity audits and stress tests for healthcare entities, with particular waivers for small providers. To fund these new endeavors, the bill would remove fine caps for large corporations, fund the HHS’s oversight through user fees, and allocate $1.3 billion to hospitals for cybersecurity improvements.

HHS has indicated its backing of the bill, with Deputy Secretary Andrea Palm stating, “Clear accountability measures and mandatory cybersecurity requirements for all organizations that hold sensitive data are essential.” At this writing, the American Hospital Association (AHA) has declined to comment on the bill.

One of the bill’s sponsors, Senator Ron Wyden of Oregon, has commented that the bill is necessary because “megacorporations like UnitedHealth are flunking Cybersecurity 101, and American families are suffering as a result.” UnitedHealth’s subsidiary Change Healthcare was subject to one of the largest ransomware attacks in America’s history, leading to significant impacts on patients and healthcare providers. The fallout from this ransomware breach continues to be felt across the healthcare industry.

Given that the bill was introduced as Congress concluded its last day of business until the upcoming election, it is unlikely to progress any further during this legislative session. Moreover, depending upon the outcome of the upcoming election, the bill faces an uncertain future. Nevertheless, the healthcare industry is likely to continue to face pressure to improve its cybersecurity standards, whether voluntarily or through legal mandates.