Singularity Health Law Blog

SCOTUS AND OBAMACARE II: WINDS OF KATRINA

The Affordable Care Act as adopted contains 906 pages. It is a complex statute made necessarily so by industry and congressional efforts to block provisions that would have simplified it such as a move to a single payer option. To satisfy all of the various stakeholders including insurance and pharmaceutical companies and their minions, it became strategically necessary to make complex what would otherwise be simple by creating a system of state insurance exchanges and low income subsidies to increase enrollment.

The case of King v. Burwell pending in the Supreme Court of the United States is an effort to scuttle the Act by focusing on four words out of the 906 pages. Part of the changes to the tax code contained in the Act provides for a calculation of a tax credit that depends upon the number of months that the taxpayer has been enrolled in a health insurance plan purchased on an insurance exchange “established by the State.”

States, under the Act have the option to establish their own exchange or to rely on exchanges set up by the federal government. 34 states have opted to use the federal exchanges.  

The argument goes that if a state fails to set up its own exchange and relies on the federal default exchange those states have not utilized an exchange established by the State and therefore there can be no tax credits provided for those subsidized insureds living in the 34 federal option states. If successful, the plaintiffs in King will have engineered the loss of $29 Billion dollars in tax credits in those states impacting primarily poor and middle income people on subsidies.

 Interestingly, the proponents of the abrogation of the Act provide no specific alternatives for the federal government to deal with what appears likely to be the largest public service and human suffering disaster since Katrina.  In order for the Supreme Court to kill the Act on these grounds it would need to abandon any semblance of judicial restrain and proceed on strictly political grounds. The country be damned.

Federal exchanges adopted by a state in lieu of one created by the state is one established by the state in the context of the Act as a whole.

SCOTUS TO NC DENTAL BOARD: ANTITRUST IMMUNITY “LIKE PULLING TEETH.”

 

Eight out of ten members of the North Carolina Board of Dental Examiners are active dental practitioners. The Board issued cease and desist orders to commercial teeth whitening enterprises, asserting that they were unlawfully engaged in the practice of dentistry. The FTC brought an enforcement action against the Board for anticompetitive conduct in using the state regulatory power to manipulate and control the commercial market for teeth whitening services in North Carolina.

The Supreme Court, this week, affirmed the findings of an administrative law judge and the FTC that the Board’s conduct was not immune from antitrust liability under the “state action immunity” doctrine. Federal antitrust law, as a matter of comity, exempts state sovereign acts which have anticompetitive effects from antitrust liability where the actions are a matter of clearly articulated state policy.

Justice Kennedy, in a six to three opinion, stated that even if the Board, made of competitors, could be reasonably perceived as an arm of the State of North Carolina, when it undertakes to manipulate or control a commercial market under color and protection of state law, it must operate under a well articulated state policy and must be actively supervised by the state in its regulatory actions. 

The teeth whitening industry is not one that inherently required the active supervision of the Board. No active supervision was present. No immunity for its actions exists. Sic Semper Tyrranis.

DELAWARE PEDIATRICIAN CONVICTED OF WATER BOARDING CHILD.

In the “ I am not making this up” category, a Delaware Jury convicted Melvin Morse, M.D., a pediatrician and noted authority on childhood near death experiences of water boarding his 11 year old step daughter as a form of discipline and punishment. He was charged by authorities with endangerment and assault after the girl ran away from home and reported on Morse’s behavior. His lawyers argued that he was merely washing her hair in a manner that she didn’t like.

 

CAN THE FDA REGULATE YOUR STEM CELLS?

In July, 2012, Rosemary N, Collyer, a United States District Court Judge for the District of Columbia, ruled that autologous stem cells re-injected into a person’ body following a acculturation of the cells with the use of another drug product shipped in interstate commerce is a “drug” subject to regulation by the U.S, Food and Drug Administration. The purpose of the re-injection is to stimulate the regrowth of bone, cartilage and other human tissue to regenerate them in lieu of joint transplants and other orthopedic surgical procedures.

 

ATTORNEY GENERAL WANTS TO FIX DRUG SENTENCING

Attorney General Eric Holder announced today that he wants to change the mandatory sentencing guidelines adopted in the 1980s to restrict the discretion of trial judges in imposing lenient sentences on criminal offenders.  The United States has about 5 percent of the world’s population and about 25% of the world’s population that is behind bars, which is straining federal and state budgets and accomplishing very little other than warehousing for the non-violent offenders.

 

IRS SPOILS PHYSICIAN RECRUITMENT CONTRACTS

One of the hallmarks of physician recruitment contracts offered by hospitals and physician groups is the incentive of "foregiveness" of "loans" offered t phy;sicians who are financially underwritten as an inducement to relocate and entier profesioal practice ina particular location. Typically, there is a subidiy of the practice for a few years followdd by a three year or so period of continuing practice ofbligaiton in the community, during which the origional subsidy "loan" is written of over time and the physician is given Form 1099C (cancellation of dept) in the later years of the guarantee arrangement.

Last April, a United States District Court judge in the State of Washington, agreed with the Internal Revenue Service that those kinds of "loans" were in fact compensation and not loans at all. It held that the physician group was liable for failure to withhold from the payments to its physicians. The case was The Vancouver Clinic, Inc. v. The United States of America, 111 AFTR 2d paragraph 2031-632 (2013 DC Wash.).

The Hon. Rondal B. Leighton entered summary judgment in favor of the IRS,holding that because both the group and the physician at the inception had no expectatoin that the incentives would be repaid and that there would never be a repayment of the "loan", it was not in fact a loan.

These kind of incentive arrangments will in the future likely to be designed to have the look and feel of actual loans with effective promissory notes and periodic payments over the term of the loan agreements, including the early years. This is just aother level of complexity in the three dimensional chess game of the multiagency oversight regulation of health care systems.

ON LINE PRODUCTS HELP OFFENDERS PASS DRUG AND ALCOHOL TESTS.

Late last month in St. Charles, Missouri, a 34 year old man named Sydney Levin, on probation for illegal substance possession and felony stealing, was discovered using a prosthetic product known as the Whizzinator to pass synthetic medical grade urine in lieu of his own. He was charged with possessing a “forging instrument” and released on a $25,000. bond. The Whizzinator contains an artificial penis connected to a 4 oz. bag to contain the synthetic urine.  There are heating elements in the apparatus that elevate the temperature to human body levels.  The device comes in three colors, white, black and brown. The product is advertised at $149.95 plus shipping and handling. Rapid Clean Clean Pee is advertised at $15.95 a pack.

CALIFORNIA GAY CURE LAW GOES TO APPEALS COURT

Last year California Governor Jerry Brown signed into law California SB 1172, which makes it illegal to provide “conversion” or “reparative” therapy to homosexuals under the  age of 18 in the state. The issue is whether this an unremarkable and rational exercise of the police power of the state or an infringement of First Amendment rights.   Supporters of the bill assert that the “antigay” therapy is worthless pseudoscience and has the potential of harming young homosexuals who are struggling with identity and self worth issues.  They claim that homosexuality is not a disease or an assumed condition, but an intrinsic or genetic positioning on a natural scale of human sexuality.

 

SCOTUS REELS IN “STATE ACTION” ANTITRUST IMMUNITY DEFENSE

The United States Supreme Court, in a unanimous opinion written Justice Sotomayor, overturned an Eleventh Circuit Court of Appeals and Georgia District Court finding “state action” antitrust immunity in the case of FTC v. Phoebe Putney Health System, Inc. et al, No. 11-1160. Had they ruled otherwise there would have opened a huge whole in the FTC’s ability to regulate anticompetitive conduct by state sub-entities under a general grant of state authority. Georgia like many states has a hospital authorities law that permits counties and or municipalities to create quasi governmental entities with broad grants of powers to operate health care facilities.