In response to the U.S. Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization and the resulting laws enacted in several states to prohibit abortions, New Jersey has passed new laws designed to protect individuals who visit New Jersey seeking reproductive healthcare services, in addition to the medical providers who provide them with care in New Jersey. These laws, however, do not change anything in New Jersey with respect to a woman’s right to abortion. Patients in New Jersey have, and continue to have, a right to in-clinic or medication abortions, without waiting periods, regardless of gestational age, and without parental notification if the patient is a minor.

Following the Court’s decision, and in anticipation of an increase in the number of out-of-state pregnant women traveling to New Jersey for abortion services, Governor Phil Murphy signed two bills on July 1, 2022 (A-3975/S-2633 and A-3974/S-2642) to shield these patients, along with New Jersey residents and medical providers, from lawsuits and other interventions from those states where abortion is now illegal. Part of the intent of these new laws is to ensure that the personal health information (PHI) of patients receiving comprehensive reproductive healthcare services in New Jersey, including abortion care, will be kept private, and to prevent PHI from being utilized by other states to investigate and prosecute individuals. New Jersey’s efforts are in furtherance, and consistent with, the continued efforts of the Office of Civil Rights (OCR) to administer and enforce the Privacy Rule of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) to prohibit healthcare entities from using or disclosing PHI absent an authorization from the patient.

What remains to be seen is how certain HIPAA exceptions, such as those for law enforcement purposes, will impact the protections of HIPAA. Governor Murphy’s nondisclosure bills attempt to address these concerns and will prohibit medical providers from disclosing certain information and/or communications about a patient’s reproductive healthcare services without the patient’s written consent in civil actions and other judicial proceedings. Likewise, public entities in New Jersey are forbidden from providing or using PHI in furtherance of any interstate investigation and/or proceeding that seeks to impose civil or criminal liability in connection with reproductive healthcare services on any person or entity.

Additionally, under the new laws, New Jersey licensing boards may not suspend, revoke, or decline to renew any license or registration of a medical provider based solely on the medical provider’s involvement in abortion-related services for a patient residing in a jurisdiction where abortion is illegal. Said differently, healthcare providers are protected from losing their professional licenses and/or registrations if they perform an abortion within New Jersey.

The bills also prohibit extradition of patients who travel to New Jersey for an abortion, along with patients who reside in New Jersey, in addition to the medical providers, for purported crimes relating to reproductive healthcare services that are unlawful in the outside state.

Further, New Jersey’s key law enforcement officials have taken a united position to share intelligence about threats to medical facilities and providers. They will also actively enforce the Freedom of Access to Clinic Entrances Act, a federal law prohibiting threats, force, obstruction, and property damage intended to interfere with reproductive healthcare services. Significantly, the New jersey Division of Consumer Affairs has vowed to protect the privacy of patients both within and outside of the state so that their private data will not be misused to target them.

As a result of these two new bills and the commitment of New Jersey’s law enforcement, New Jersey has established itself as a safe haven for women seeking reproductive healthcare services and the medical providers caring for them.

As we reported recently in a Client Alert, the Supreme Court of New Jersey’s recent decision in Rivera v. The Valley Hospital, Inc. aligned with prior case law in confirming that punitive damages in medical malpractice actions are only available in “exceptional cases.” Although the Rivera decision does not immunize medical defendants from claims for punitive damages, it reinforces the trial bench’s obligation to rigorously apply the standards for clear and convincing evidence of willful and wanton conduct, as our analysis of the ruling explains. We also proudly note that Greenbaum attorney John Zen Jackson acted as amicus counsel for the Medical Society of New Jersey and the American Medical Association, which submitted amici briefs in support of the defense in this matter.

On August 12, 2022, the U.S. District Court for the District of Minnesota entered an order in favor of Travelers Casualty and Surety Company of America, dismissing the complaint filed by SJ Computers, LLC, a Minnesota-based computer store. The case should serve as a cautionary tale to businesses across the country, underscoring the critical need to closely read the terms of any cyber insurance policies.

SJ Computers found itself the victim of a business email compromise attack when an attacker gained access to a purchase manager’s email account and sent the company’s CEO purchase orders, purportedly from one of SJ Computers’ existing vendors, Electronic Recyclers International Direct – with the bank account information edited. The CEO, without verifying the new bank information, sent two wire transfers to satisfy the invoices. After the payments had cleared, SJ Computers discovered the fraud and subsequently attempted to seek coverage under its cyber insurance policy by claiming that the attack was computer fraud rather than social engineering fraud because of the increased limits of coverage.

While acknowledging that lawyers had only identified three similar cases across the country, the judge identified a key distinction from those cases in this matter. The policy at issue here covers both computer fraud and social engineering fraud and makes clear that the two are mutually exclusive categories. The Travelers’ policy defines computer fraud, which provides coverage up to $1 million, “as intentional, unauthorized, and fraudulent entry or change of data or computer instructions directly into a computer system.” Moreover, the policy states that entries or changes made by employees or authorized persons on the basis of fraudulent instructions is not covered. Instead, such actions constitute social engineering fraud (which is what Travelers agreed to cover SJ Computers under) and is defined in the policy as “the intentional misleading of an employee or authorized person by a natural person impersonating [vendors, clients, employees or authorized persons] through the use of a communication.” Unfortunately for SJ Computers, this provision only provides coverage up to $100,000.

Based on the policy language, the court held that the claim was covered under the social engineering fraud provision, rather than the computer fraud provision. In a comment that underscores the important role individuals play in protecting a company, the judge stated:

“SJ Computers did not suffer a penny of financial loss when the bad actor hit ‘send’ on his email messages. And SJ Computers would never have suffered a penny of financial loss if the CEO had not opened those email messages, or if the CEO had asked the purchasing manager about them, or if ERI Direct had answered its phone when the CEO called, or if ERI Direct had promptly returned the voicemail message left by the CEO, or if the CEO had waited to hear from ERI Direct before paying the invoices.”

All businesses with cyber insurance should carefully review their policies and consult with legal counsel and their brokers to fully understand the scope and limitations of what they are purchasing. In today’s world of ever changing ways in which computers and other technology are being utilized to carry out attacks on businesses by bad actors, the circumstances surrounding the attacks and the language in these policies becomes even more critical to ensure that organizations are properly insured for losses. Moreover, as occurred here, efforts to keep employees ever vigilant in their efforts to identify and act on any suspicious information they encounter is paramount to keeping an organization safe.

On August 18, 2022, in the wake of the uncertainty visited upon the healthcare industry by the pandemic, New Jersey Governor Phil Murphy signed into law new legislation protecting employees during the transfer in ownership of healthcare entities. The new law prohibits employers from terminating employees absorbed through a consolidation, merger, reorganization, etc., during a four-month transition period absent cause – including without limitation, downsizing.  An “employee” is defined as any hourly, non-exempt, and non-managerial worker. A “healthcare entity” is defined broadly to include healthcare facilities, staffing registries, and home care service agencies.

Healthcare entities are further required to take the following action:

  • Post notifications to employees of their rights under the new law during the four-month transition period.
  • Honor the provisions of any unexpired collective bargaining agreement in force at the time of the transfer in ownership and for up to such time as it expires or six months after the transfer, whichever is later.
  • Retain all existing non-union employee wages and benefits for the duration of the transition period and for up to six months after the transfer in ownership.
  • Offer available employment positions to eligible employees that previously held those positions based upon seniority, or until no additional positions are available.
  • Conduct a written performance evaluation at the end of the four-month transition period of each employee retained and offer to keep that employee on board if his/her performance is deemed satisfactory.
  • Retain and present upon request to any employee (or representative) written records of each offer of employment/evaluation for not less then three years from the date of the offer/evaluation.

A healthcare entity that runs afoul of the provisions of the new law risks significant potential liability. Indeed, the legislation provides a private cause of action to employees aggrieved by any of its provisions along with remedies that include, without limitation, payment of lost wages and benefits (including liquidated damages), injunctive relief (e.g., reinstatement), and reasonable attorneys’ fees. For this reason, the new law’s requirements will no doubt have a long term and significant impact on the consideration and terms of any future transfers in ownership of healthcare entities in New Jersey post-pandemic.

The U.S. Department of Health and Human Services (HHS) recently announced a proposed rule to strengthen nondiscrimination in healthcare by advancing health equity and reducing disparity.  Entitled “Nondiscrimination in Health Programs and Activities,” the proposed rule revises Section 1557 of the Affordable Care Act (ACA) and also includes proposals to provisions in the nondiscrimination regulations from the Centers for Medicare & Medicaid Services (CMS).

The proposed rule underscores that healthcare should be a right and not dependent on looks, location, love, language, or the type of care needed. Accordingly, the proposed rule codifies protections against discrimination based on sex, including sexual orientation and gender identity, as set forth in Bostock v. Clayton, in which the U.S. Supreme Court held that it is unlawful to discriminate against an individual because of the individual’s sexual orientation or gender identity.  While restating protections provided in Section 1557 of the ACA, it also promotes congressional intent, and legal precedent, along with the Biden-Harris Administration’s priority of advancing gender identity and sexual orientation, reproductive healthcare services and racial equity and support for underserved communities through President Biden’s executive orders.

The ACA is one of the federal government’s most powerful tools for ensuring nondiscriminatory access to healthcare. It prohibits discrimination based on race, color, national origin, sex, age, and disabilities related to certain healthcare programs and activities. By strengthening the provisions of Section 1557, the proposed rule seeks to further protect the civil rights of those who access or seek access to healthcare programs or activities by eliminating avoidable differences in health outcomes for those who are underserved. The proposed rule also seeks to provide the care and support that those who are unheard need to survive.

To advance these protections, the proposed rule seeks to address gaps identified in prior regulations. This will include:

  • Reinstating the scope of Section 1557 to cover HHS’ health programs and activities;
  • Clarifying the application of Section 1557 nondiscrimination requirements to health insurance companies that receive federal financial assistance;
  • Aligning regulatory requirements with federal court opinions that prohibit discrimination based on sex, which includes sexual orientation and gender identity;
  • Clarifying that discrimination based on sex includes discrimination based on pregnancy or related conditions, such as “pregnancy termination”;
  • Requiring civil rights policies and procedures for entities receiving federal funding to ensure requirements preventing and combating discrimination are operationalized;
  • Requiring entities to provide staff training on language assistance services for persons with limited English proficiency (LEP), along with effective communication and reasonable modifications to policies and procedures for people with disabilities;
  • Requiring covered entities to provide a notice of nondiscrimination, along with a notice of the availability of language assistance services and auxiliary aids and services;
  • Explicitly prohibiting discrimination when using clinical algorithms to support decision-making in covered health programs and activities;
  • Clarifying that health programs and activities offered via telehealth, which must be accessible to LEP individuals and individuals with disabilities, are subject to nondiscrimination requirements;
  • Interpreting Medicare Part B as federal financial assistance; and
  • Refining and strengthening how conscience and religious freedom objections are raised.

Significantly, the proposed rule also reiterates protections from discrimination for people seeking reproductive health care services.  Thus, with this proposed rule, HHS is clearly attempting to push back against the increased attacks on women, transgender youth, and the healthcare providers treating them in an attempt to fill various identified gaps in the law to better ensure that people across the country can access healthcare without discrimination.

Healthcare providers should take note of the HHS’ proposed rule, as it will have numerous impacts on the everyday provision of care to the patients they serve and the means by which that care is delivered.

The New Jersey Economic Development Authority (EDA) is expected to soon release regulations implementing the New Jersey Commercial Property Assessed Clean Energy (C-PACE) program, which will apply to commercial and institutional entities including hospitals and medical facilities.

Adopted on August 24, 2021, the C-PACE law establishes a mechanism to finance, among other things, commercial renewable energy projects, energy efficiency initiatives, electric vehicle charging stations, microgrids, power purchase agreements, as well as water efficiency and other authorized improvements where “capital providers” pay the upfront costs of the project and are then repaid through a real property assessment levied by the participating municipality.  Under the program, the municipality assigns to the capital provider the real property assessment through an assignment agreement. A capital provider is defined as including “an accredited investor or qualified institutional buyer” as defined in the applicable federal regulations, as well as commercial lending institutions.

The C-PACE program is expected to be a popular option for healthcare sector and other commercial and institutional properties looking to rehabilitate facilities or adopt clean energy initiatives while seeking to avoid the upfront capital expenditures typically required for such projects. The program will become available once the regulations are adopted and the EDA publishes various required form documents. While the regulations were originally expected to be introduced earlier this summer, they remain pending but are anticipated shortly.

A bill to prohibit healthcare providers from reporting unpaid medical debt to a collection or credit reporting facility is working its way through the New Jersey Legislature.

Assembly Bill 3802 (and its companion S2428) define “medical creditor” as any healthcare provider that provides healthcare services and to whom the consumer owes money for healthcare services, or any person who purchases a debt arising from the receipt of healthcare services. Healthcare provider includes a physician, dentist and other licensed healthcare professionals, and a hospital and other licensed healthcare facilities.

The bill comes on the heels of an announcement from reporting agencies that they are curtailing the inclusion of medical debt in credit reports. The three nationwide credit reporting agencies – Equifax, Experian, and TransUnion – announced in March that effective July 1, 2022 they would no longer include paid medical collection debt, and unpaid medical collection debt would only appear after one year instead of six months. In the first half of 2023, they will no longer include medical collection debt under $500 on credit reports.

This legislation, if signed into law, would go a step further and prohibit the unpaid amounts from even being reported to the credit agencies. The companion bills have been referred to the Assembly Financial Institutions and Insurance Committee and the Senate Commerce Committee, respectively.

 

 

In an effort to reduce the number of medical malpractice claims without merit, the New Jersey Legislature enacted the Medical Care and Access and Responsibility and Patients First Act in 2004. Now more commonly referred to as the Patients First Act (PFA), this legislation included provisions specifically for “an action alleging medical malpractice” that amended the Affidavit of Merit Statute passed in 1995 concerning professional liability claims generally. The PFA established enhanced requirements for a person executing an affidavit of merit to preliminarily demonstrate the validity of the claim or for a person seeking to provide expert testimony on the standard of care issues that are central to any medical malpractice claim.

A component of the enhanced requirements was that the majority of the proposed expert’s professional time in the year before the occurrence giving to the claim was to have been in active clinical practice. This requirement is present in the statutes of many states, whether phrased as active practice for a recent period of time – one, three or five years – in relationship to the incident or at least not retired within some similar timeframe. The purpose of this tort reform legislation is to block participation of “professional witnesses” or “hired guns.”

This issue has arisen in New Jersey in several cases. In its opinion in Hurley v. Govindani filed by the Appellate Division on August 2, 2022 but not approved for publication, the court looked once more at the qualifications required of a proposed expert for plaintiff whether in the context of the preliminary affidavit of merit or the presentation of trial testimony. The specific focus was on the portions of N.J.S.A. 2A:53A-41(a)(2) stating that the witness “during the year immediately preceding the date of the occurrence that is the basis for the claim or action, shall have devoted a majority of [his/her] professional time” to designated activities including active clinical practice in the field or specialty of the defendant, or the instruction of students in an accredited medical school or other accredited program, or both. On a motion for leave to appeal from the denial of defendant’s motion to dismiss for lack of an appropriate affidavit of merit, the Appellate Division affirmed the trial court’s determination that the proposed expert met the statutory requirements. He had been an actively practicing obstetrician-gynecologist in New York for forty years before retiring from his medical practice two years before the plaintiff’s cause of action had accrued. Since retiring to Florida, this physician had volunteered at an OB/GYN clinic three times a month for a total of 15 hours.

The defendant did not dispute that the statutory requirements of a like specialty and board certification were satisfied but argued that 15 hours a month of volunteer work did not constitute “devot[ing] a majority of his professional time … to the active clinical practice” of the same health professional as the defendant. In rejecting this argument, the Appellate Division noted that the statute did not define or set forth parameters for what constitutes “the active clinical practice” of a medical specialty. The statute did not require that the proposed witness be paid for the medical services or specify a minimum number of hours. This physician continued to practice the same specialty as the defendant, although at a fraction of his prior work schedule, and maintained his board-certification credentials. The physician was qualified to provide the affidavit of merit with any contrast between his current activity and the defendant’s practice being matters to be “fully explored at trial.”

Prior case law concerning the PFA in both reported and unpublished decisions had examined other aspects of this “active clinical practice” requirement.

In the 2015 decision in Medina v. Pitta, the Appellate Division upheld dismissal of the complaint where the plaintiff furnished an affidavit of merit from an ophthalmologist who was “fully retired” as of January 1, 2007, before defendant allegedly failed to obtain testing in October 2010 that would have revealed the development of a retinal detachment with delayed treatment that left her with no vision in the right eye. The Appellate Division stated that the PFA requires “‘contemporaneity,’ meaning that the proposed expert must actively practice in the specialty at the time of the alleged deviation.” It noted that plaintiff had not requested a waiver pursuant to a provision of the PFA which had been construed in 2010 by the Supreme Court in Ryan v. Renny as not having any “‘strict time limit[]’ element common to all the sections of the PFA that define qualification requirements.” The Appellate Division adhered to the strict time limit approach in Castello v. Wohler and upheld the trial court’s barring of the proposed expert because he had been retired for several years and did not meet the statutory requirements. However, it tempered the disposition of dismissal with prejudice based on the proposed expert having submitted an affidavit of merit reciting that he had been in surgical practice for more than 35 years and provided an outdated curriculum vitae. At the deposition of the surgical expert, it was discovered that he had been retired for nearly five years before the plaintiff’s surgical procedure was performed. The Appellate Division concluded that while this expert would be barred, the misrepresentation with regard to his curriculum vitae together with the defense’s tactical delay in seeking to bar the expert provided equitable reasons to reverse and remand the matter for further proceedings in the trial court.

A variation of the issue was presented in Nicholas v. Hackensack University Medical Center. The defendants were specialists in pediatrics and pediatric intensive care who treated plaintiffs’ decedent in 2011 in the setting of a Pediatric Intensive Care Unit (PICU). Plaintiffs’ proffered expert was board-certified in pediatrics and pediatric intensive care. In his deposition, the expert testified that between 2006 and 2011 he devoted 25% of his time to direct in the PICU, 50% to administrative duties, and 25% to seeing patients and teaching residents in outpatient clinics. The trial court concluded that the expert did not satisfy the statute because only “a small percentage” of his professional time was devoted to pediatric critical care. The Appellate Division, however, determined that while the substantial amount of time spent with administrative duty would not necessarily disqualify the witness given that his clinical practice was devoted exclusively to pediatrics and pediatric intensive care, the expert did not satisfy the requirements of “a majority” of his professional time required by Section (a)(2) of the PFA. But it found that the trial court erred in not considering the other standard in Section (a)(1) of the PFA to testify against a specialist. This was where the physician was “credentialed by a hospital to treat patients for the medical condition, or to perform the procedure, that is the basis for the claim or action.”

Consistent with the New Jersey Supreme Court’s ruling in Nicholas v. Mynster, the requirements of “majority of professional time” for “active clinical practice” within a substantially contemporaneous timeframe are safeguards against a return “to the days before passage of the Patients First Act when, in medical-malpractice cases, physician experts of different medical specialties, but who treated similar maladies, could offer testimony even though not equivalently credentialed to defendant physicians.” The threshold to qualify as an expert was so low that a pathologist could testify against an emergency room physician based on discussions with other physicians or attending meetings, or that a physician who was not an obstetrician or a pediatrician could testify regarding a birth injury based on his general experience and anatomical knowledge.

Legislation revising the arbitration provisions of New Jersey’s Out-of-Network Consumer Protection, Transparency, Cost Containment, and Accountability Act was signed into law by Governor Phil Murphy on July 29, 2022.  New Jersey’s law was a predecessor to, and in some ways supplements, the federal “No Surprises Act.

As we noted in an earlier Client Alert, while the federal No Surprises Act has its own arbitration provisions, it defers to state laws to the extent they apply to payment amounts. New Jersey’s state law arbitration provisions are therefore still very relevant to arrangements within the reach of the state law.

S1177 extends the amount of time that the insurance carrier and healthcare provider have to negotiate a settlement in the event of an inadvertent use of out-of-network services from 30 to 60 days. It also extends the deadline for the carrier, provider, or covered person to initiate binding arbitration in the event of a failure to reach a settlement from within 30 days of the final offer to within 90 days of the final offer. The legislation provides that, in order for binding arbitration to be initiated, the difference between a carrier’s and provider’s final offers must be $1,000 or higher for a billed amount of $2,500 or more, or $500 or higher for a billed amount of less than $2,500.

The bill also changes the certification requirement for arbitrators from a certification from the American Arbitration Association to a certification from the Department of Banking and Insurance.

Finally, the bill requires an arbitrator to include detailed written findings with each decision. The detailed written findings are to be an analysis of the decision including information concerning any databases, previous awards, or other documentation or arguments that contributed to the arbitrator’s decision.

This last provision may be a nod to litigation filed against the federal arbitration provision as promulgated by CMS. A CMS rule that the dispute resolution entity must select the offer closest to “the qualifying payment amount,” typically the median rate the insurer would have paid for the service if provided by an in-network provider or facility, drew widespread criticism and litigation.

In Texas Medical Association et al. v. United States Department of Health and Human Services et al., the Court found that the rule deviated from the federal law, stating that: “…the Act plainly requires arbitrators to consider all the specified information in determining which offer to select.”  While the arbitration provisions of the New Jersey law would not be preempted by the federal rules, the new law clearly calls for greater accountability for the factors used by the arbitrator in making its decision.

The new law becomes effective on the 90th day following the July 29, 2022 date of enactment.

On July 11, 2022, at the direction of the U.S. Department of Health and Human Services (HHS), the Centers for Medicare & Medicaid Services (CMS) issued a memorandum to State Survey Agency Directors reminding them of their continuing federal obligations under the Emergency Medical Treatment and Labor Act (EMTALA) when treating pregnant patients.

The guidance was issued in the wake of the U.S. Supreme Court’s ruling in Dobbs v. Jackson Women’s Health Organization, following which many states have enacted legislation prohibiting or restricting abortion. In the memorandum, CMS clarifies for hospitals and healthcare providers that their professional and legal duties under EMTALA preempts any state law or mandate that is directly in conflict with EMTALA, even if doing so requires performing an abortion to medically stabilize the patient in a state where abortion is not allowed. In other words, the obligations under EMTALA trump the obligations under any state’s law when the two are in conflict with one another. Read together, hospitals and healthcare providers have a continuing professional and legal duty to provide all medically necessary stabilizing treatment to a pregnant woman presenting with an emergency medical condition (EMC) as defined under EMTALA, irrespective of whether that treatment violates the state’s abortion laws.

The determination of whether an EMC exists is made by the examining physician(s) or other qualified medical personnel at the hospital and is left to his/her clinical judgment. An EMC includes medical conditions with acute symptoms of sufficient severity that could place the patient’s health in serious jeopardy in the absence of immediate medical attention necessary to stabilize the patient. For a pregnant patient, this includes active labor, abdominal pain resulting from an ectopic pregnancy, complications of pregnancy loss, or emergent hypertensive disorders including preeclampsia. However, being pregnant is not in and of itself an EMC – the trigger is the pregnant patient’s need for medical evaluation/screening and stabilization.

Therefore, when a pregnant patient presents to an emergency room, and the examining provider’s clinical judgment determines that an EMC exists, EMTALA allows the hospital to perform an abortion, if it is within the hospital’s capabilities, and if it would be the appropriate stabilizing treatment that is medically necessary to reasonably assure that there will be no material deterioration of the EMC, or the patient, regardless of whether state law prohibits an abortion.

It is imperative that hospitals and healthcare providers recognize that their professional and legal duties under EMTALA are not usurped by state laws banning abortion, and that failure to comply with the federal law may result in civil monetary penalties by the Office of the Inspector General or exclusion from Medicare and State healthcare programs. CMS may also penalize a hospital by terminating its provider agreement. Additionally, failure to comply can result in civil suits filed by private citizens who are harmed by the hospital or healthcare provider’s failure to perform medically necessary stabilizing treatment to prevent the patient’s deterioration.

Thus, it is critical that hospitals and healthcare providers understand the protections afforded under EMTALA and consult legal counsel with any questions regarding their rights and obligations.