We previously provided information on this blog regarding the Garden State Commercial Property Assessed Clean Energy (C-PACE) program, which is poised to become a popular option for hospitals and other healthcare sector entities looking to rehabilitate facilities or adopt clean energy initiatives while seeking to avoid the upfront capital expenditures typically required for such projects. The program was established by the New Jersey Economic Development Authority (EDA) as a mechanism to finance commercial renewable energy projects, energy efficiency initiatives, electric vehicle charging stations, microgrids, power purchase agreements, and water efficiency and other authorized improvement projects.

Greenbaum attorney Maura E. Blau has just published this new update providing details on the EDA’s updated program guidelines (issued on May 29, 2024) and draft supplemental guidelines, which once finalized would expand the C-PACE program to include not only retrofits, but also new construction projects, gut rehabilitation and refinancing. In addition, changes to the draft program guidelines include the addition of water conservation, flood resistant construction, and microgrids as C-PACE eligible improvement categories.

On June 28, 2024, the Supreme Court of the United States issued its decision in the cases Loper Bright Enterprises, et al. v. Raimondo, et al. and Relentless Inc. et al. v. Department of Commerce, et al., overruling its 1984 landmark decision in Chevron U.S.A. v. Natural Resources Defense Council. For the past forty years, what is commonly referred to as the “Chevron doctrine” or “Chevron deference” has required courts to defer to a regulatory agency’s interpretation of the statutes it administers if those interpretations were “permissible.”

Under Chevron, a court reviewing an agency’s interpretation of a statute was required to engage in a two-part analysis. First, the court had to determine whether Congress had directly spoken on the issue. If Congress had done so, courts would apply the statute as directed by its plain language.  However, if the statute was silent or ambiguous, courts were required to defer to the implementing agency’s interpretation of the statute if it was “based on a permissible construction of the statute” even if that interpretation was different than, or even contrary to, what the court would have ruled in the absence of agency guidance.

In analyzing the issue, the Supreme Court provided a history of the judiciary’s role in interpreting statutes beginning with the Federalist Papers, through the Court’s early decision in Marbury v. Madison, the rapid expansion of the administrative process which took place during the New Deal era, and ultimately the adoption of the Administrative Procedures Act (APA). That history demonstrates that while courts should provide “due respect” to the executive branch’s interpretation of federal statutes, no specific deference to that interpretation was required, or expected, prior to the Chevron decision.

While this history helped form the Supreme Court’s decision, its primary focus was on the incongruence between the APA and the holding in Chevron. Pursuant to the APA, a “reviewing court” is required to “decide all relevant questions of law” and “interpret . . . statutory provisions.”  The Court found that the APA requires courts to exercise independent judgment to determine the best interpretation of the statute, and that this obligation could not be reconciled with Chevron’s directive to defer to “permissible” agency interpretations. As the Court noted, “[i]n the business of statutory interpretation, if it is not the best, it is not permissible.”

Ultimately, the Court overruled Chevron, finding that it “was a judicial invention that required judges to disregard their statutory duties.” Under the new standard of review, “court’s must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the APA requires.” While the Court acknowledged that “[c]areful attention to the judgment of the executive branch, may help inform that inquiry,” that judgment is provided with no more significant weight than any other rule of statutory interpretation.

Nevertheless, the Court acknowledged that Congress may delegate authority to agencies in the statutes it adopts, and where it has done so, within constitutional limits, courts must respect that delegation, while ensuring that the agency acts within it. In such circumstances, courts must fix the boundaries of the authority delegated and determine whether the agency, acting within the scope of that delegation, engaged in “reasoned decision making.” However, in the absence of such a delegation, courts must exercise their own independent judgment when interpreting statutes.

The Loper Bright decision represents a seismic shift in how courts will review agency action.  Courts are no longer bound by the decisions of the implementing agency. Rather, courts are free, and indeed obligated, to determine for themselves what Congress intended when it adopted the statute. The decision will likely lead to an influx of litigation challenging agency action, as the arguments raised by the regulated public regarding the best interpretation of the statutes implemented by the agencies will be placed on equal footing with the interpretations asserted by the agencies.

A recently decided case, In the Matter of the License of Pemberton, M.D., is an example of the deference New Jersey courts give to decisions made by the New Jersey State Board of Medical Examiners. On June 10, 2024, the New Jersey Appellate Division upheld the Board’s decision to suspend a doctor’s license after he tested positive for illegal substances during a failed remediation plan, finding the Board’s decision to be well-reasoned and supported by substantial credible evidence as a whole. Given the doctor’s systemic use of illegal substances coupled with several positive blood and urine tests, the Appellate Division agreed that the Board did not have to wait for the doctor to cause harm to a patient before it suspended his license because the evidence clearly demonstrated that as the doctor was using illegal substances, his ability to practice medicine was likely to be impaired.

This case brings awareness to doctors, who should know that the Board has the power to suspend or revoke a doctor’s license if the doctor engages in drugs or uses alcohol within the previous 365 days in a manner likely to impair his/her ability to practice medicine with reasonable skill and safety.  N.J.S.A. 45:1-21(1). Doctors should also be aware that the Board’s authority is broad enough to revoke a medical license if the doctor poses a risk of harm to the next patient. Simply stated, the Board need not wait until the doctor causes harm before taking action. 

Additionally, this case highlights remedial action plans that hospitals can take to rehabilitate complaints related to a medical staff member’s conduct and poor quality of care if it stems from purported substance abuse.  The hospital can place the doctor on a remediation plan that could include a referral to the Professional Assistance Program of New Jersey (PAP).  The PAP works in tandem with the Board’s Impairment Review Committee (IRC) by providing services to doctors with chemical dependencies or other impairments. It is authorized by statute to enter into letter agreements with these doctors detailing their plan for recovery and each doctor’s obligations. Therefore, hospitals must also be aware that the PAP is obligated to report immediately the identity of any doctor that has not complied with the terms of this letter agreement, and to report to the IRC if that doctor has tested positive for the presence of a substance that was not appropriately prescribed for a legitimately documented reason, or if the doctor demonstrates a relapse. This is a separate avenue from the hospital’s corrective action, collegial intervention, or summary suspension.

Courts will only reverse the Board’s decision if it was arbitrary, capricious, or unreasonable or, if it was not supported by substantially credible evidence. The Appellate Division evaluated the Board’s decision using the following three criteria to determine whether the Board’s decision should be given substantial deference:

  1. whether the Board followed the law;
  2. whether the record contained substantial evidence to support the Board’s decision; and
  3. whether the Board’s decision was clear error because the conclusion could not have reasonably been made based on the relevant facts.

Ultimately, the Appellate Division found no merit in the doctor’s arguments that the State failed to demonstrate proof that he was impaired and determined that the Board’s thorough and well-reasoned decision was supported by the record. Read together, New Jersey courts will not disturb well-reasoned administrative decisions unless the decision is shown to be arbitrary and capricious.  Here, it was not.

On May 10, 2024, the Centers for Medicare & Medicaid Services (CMS) published the Medicaid and Children’s Health Insurance Program (CHIP) Managed Care final rule in the Federal Register.

The final rule aims to create new standards to “improve access to care, quality and health outcomes, and better address health equity issues” for Medicaid and CHIP managed care enrollees. The rule details that the volume of Medicaid beneficiaries enrolled in a managed care program in Medicaid has grown from 81% in 2016 to 85% in 2021, with 74.6% of Medicaid beneficiaries enrolled in comprehensive managed care organizations in 2021.

More specifically, the rule establishes new standards for appointment wait times, use of secret shopper surveys, and use of enrollee experience surveys. It requires states to submit a managed care plan analysis of payments made by plans to providers for specific services to monitor plans’ network adequacy more closely.

The final rule officially takes effect on July 9, 2024, however additional applicability dates range from sixty days to six years following the effective date.

The American Health Law Association (AHLA) recently published the Third Edition of its popular treatise “Corporate Practice of Medicine: A 50 State Survey.” The publication provides helpful guidance on each state’s corporate practice of medicine (CPOM) doctrine, including discussions of how each state interprets the law when dealing with unlicensed individuals and plenary versus limited licensed professionals, along with insights on other topics such as fee splitting. Greenbaum healthcare partner John W. Kaveney authored the chapter discussing New Jersey’s corporate practice of medicine doctrine. The publication is available for purchase as a print edition or in electronic format here.

On May 20, 2024, the American Medical Association and more than 100 other organizations issued a joint letter to Health and Human Services (HHS) Secretary Xavier Becerra concerning the February 21, 2024 reported cyber incident involving Change Healthcare. The letter requested clarity from the HHS Office of Civil Rights (OCR) “around reporting responsibilities and [to] assure affected providers that reporting and notification obligations will be handled by Change Healthcare.” Further, the letter asked OCR to “publicly state that its breach investigation and immediate efforts at remediation will be focused on Change Healthcare, and not the providers affected by Change Healthcare’s breach.”

The groups who authored the letter have concerns that the required HIPAA breach reporting and notification requirements following this incident could fall upon providers rather than being the sole obligation of Change Healthcare or its parent companies, Optum and UnitedHealth Group. Thus, these groups are seeking further clarification and guidance for the provider community.

As the OCR continues its ongoing investigation, it is anticipated that additional information and clarification will be provided by the government. We will keep you advised accordingly.

On May 10, 2024, the Centers for Medicare & Medicaid Services (CMS) published the Minimum Staffing Standards for Long-Term Care (LTC) Facilities and Medicaid Institutional Payment Transparency Reporting final rule, which aims to reduce potential risks to residents in LTC facilities by assuring appropriate nurse staffing levels. The final rule will become effective on June 21, 2024.

The final rule sets a nurse staffing standard of 3.48 hours per resident day (HPRD). The 3.48 HPRD requirement includes a minimum of 0.55 HPRD of direct registered nurse (RN) care and 2.45 HPRD of direct nurse aide care. The additional 0.48 HPRD required to comply with the standard can be fulfilled using any combination of nursing staff including RNs, licensed practical nurses (LPN), licensed vocational nurses (LVN) or nurse aids. The rule further requires LTC facilities to have an RN onsite 24 hours a day, seven days a week to provide skilled nursing care.

In addition to these minimum staffing standards, CMS also announced that it is finalizing additional requirements for the facility-wide assessments that LTCs are already required to conduct annually to determine what resources are necessary to care for their residents. These assessments must use evidence-based methods when care planning for each of the facility’s residents, including consideration of a resident’s behavioral health needs, and any significant changes in facility census or facility leadership. The assessment must include input from the LTC leadership, management, and direct care staff. LTC facilities must also seek out and consider input from residents, their representatives and family members. The use of these enhanced assessments may result in a need for staffing above the minimums set forth in the rule.

The implementation of the rule will be staggered over a three-year period for all non-rural LTC facilities.

  • Phase 1 will require facilities to meet the facility assessment requirements within 90 days.
  • Phase 2 will require facilities to meet the 3.48 HPRD total nurse staffing requirement and the 24/7 RN requirement within two years.
  • Finally, Phase 3 will require facilities to meet the 0.55 RN and 2.45 nurse aid HPRD requirements within three years.

CMS acknowledges that meeting these requirements will be more difficult for LTC facilities in rural areas, and accordingly it is providing such facilities with an additional one year to implement Phase 1 and two additional years to implement Phase 2.

When CMS initially proposed this rule, it was accompanied by an initiative to invest more than $75 million in a nursing home staffing campaign which would include incentives for workers to pursue careers in the field. However, such financial incentives were not included in the final rule.  Rather, CMS indicated it was still conducting research on the issue and anticipated financial incentives to begin in 2025.

The final rule will undoubtedly increase costs for LTC facilities. Indeed, comments to the proposed rule suggest that such staffing requirements may not be feasible, due not only to the cost involved, but also to the significant nursing shortages for all healthcare providers. Accordingly, LTC facilities should keep a close eye on any financial incentives that may be provided to alleviate this burden.

Hospitals and healthcare providers should continue to understand their professional and legal duties under the Emergency Medical Treatment and Labor Act (EMTALA) in anticipation of the comprehensive plan the Department of Health and Human Services (HHS) announced it would launch together with the Centers for Medicare & Medicaid Services (CMS) in a press release on January 22, 2024.

The purpose of the plan is to educate patients on their rights to emergency medical care in response to the growing number of inquiries CMS has received from both patients and providers. HHS announced that its comprehensive plan intends to:

  • Provide new information on CMS’s website to help patients gain a understanding of their rights under EMTALA, along with information regarding the process for submitting a complaint if denied emergency medical care;
  • Partner with hospitals and provider associations to disseminate training materials regarding a provider’s obligation under EMTALA; 
  • Convene with hospital and provider associations to discuss best practices and challenges in ensuring compliance with EMTALA; and
  • Establish a dedicated team of HHS experts to increase HHS’ capacity to support hospitals in complying with federal requirements under EMTALA.

Education and preparation will be critical. Educating providers through a Focused Professional Practice Evaluation (FPPE), or rehabilitating providers though an Ongoing Professional Practice Evaluation (OPPE), are two ways to prevent a violation before one occurs when navigating the uncertainties of state abortion laws. Internal investigations into whether medical staff has failed to offer necessary stabilizing care to a pregnant patient can be an effective way to monitor compliance with EMTALA by preventing harm to the putative patient.

Another way to prevent potential violations is to prepare for whether hospitals will withstand a CMS investigation if CMS learns of a potential violation from another hospital, or a patient or other individual. While CMS does not perform random audits and hospitals do not have an obligation to self-report a suspected EMTALA violation, hospitals do not want to be exposed by another hospital that is required to report a potential violation at their facility. To properly prepare, hospitals should review emergency room policies and procedures; census reports; transfer consent forms; medical staff rosters, schedules, and credentialing files; in conjunction with the medical staff bylaws, medical staff meeting minutes, quality improvement plans, and quality meeting minutes. These are the materials CMS will request in the event of a violation in connection with the medical records of a patient. Understanding the current state of the hospital’s affairs in advance of the comprehensive program will improve quality of care and patient safety through the early detection of existing deficiencies.

On May 9, 2024, the U.S. House Ways and Means Committee advanced legislation to extend pandemic-era telehealth flexibilities through 2026. The bill, referred to as the Preserving Telehealth, Hospital, and Ambulance Access Act, would extend the ability of Medicare beneficiaries to access care via telehealth through December 31, 2026, among other things.

During the pandemic, the federal government had taken steps to expand the ability of healthcare providers to offer medical care via telehealth to ensure patients could continue to access care. When the public health emergency expired, many of those telehealth flexibilities were set to expire as well. While some were made permanent, many were temporarily extended through 2024 while Congress and CMS continued to evaluate the future of telehealth services.

The recently advanced legislation would further extend a number of flexibilities, including the removal of geographic restrictions, expanding the list of providers that can offer virtual services, and the continued allowance of certain audio-only telehealth care. The bill would also extend the Medicare acute hospital at home program for an additional five years.

Following the Committee’s advancement of the bill, the legislation will now proceed to the floor of the House for further debate and consideration. While this development suggests that a move to make these telehealth flexibilities permanent may be off the table for the time being, the continued extensions further engrain these modes of delivering healthcare in the minds of Medicare beneficiaries and are likely to only bolster the desire of many to eventually make the expansion of telehealth permanent.

John Zen Jackson, Of Counsel to the firm’s Healthcare Department, has been appointed Vice-President of the Medical History Society of New Jersey (MHSNJ). Mr. Jackson has been an MHSNJ member since 2013.

Founded in 1980, the MHSNJ is a non-profit organization devoted to promoting and encouraging historical research, analysis, and publication concerning the history of medicine and allied fields. Members present scholarly papers at dinner programs and Zoom meetings. These include one of two named lectures delivered by a prominent medical historian. The Saffron Lecture series is named after Morris H. Saffron, M.D., PhD, a dermatologist and medical historian. The Kent Memorial Lecture series is named after physician, teacher, and humanist Donald F. Kent, M.D., PhD.

Mr. Jackson’s healthcare practice emphasizes litigated matters in judicial and administrative forums, including professional liability claims, licensure and credentialing issues with administrative agencies and health care entities, reimbursement and insurance fraud disputes. He is Certified by the Supreme Court of New Jersey as a Civil Trial Attorney and has extensive experience in trying jury cases to a verdict. He has published several articles and made presentations regarding healthcare providers of the 19th and early 20th centuries on behalf of the MHSNJ. In 2017, he delivered the 14th annual John S. Rock Memorial Lecture before the Salem County Historical Society.