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New York Federal Court Holds Borrowers’ Action Against Lender Is Barred by Res Judicata Banner Image

New York Federal Court Holds Borrowers’ Action Against Lender Is Barred by Res Judicata

Month: October 2019

New York Federal Court Holds Borrowers’ Action Against Lender Is Barred by Res Judicata

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The United States District Court for the Eastern District of New York recently granted a lender’s motion to dismiss an action in which the borrowers alleged numerous violations of consumer laws, finding that the state court final judgment of foreclosure precluded any further claims relating to the borrowers’ loan.  See Bell v. Deutsche Bank, 2019 WL 4917901 (E.D.N.Y. Sept. 30, 2019).  In the case, plaintiffs defaulted on their mortgage and the lender brought a foreclosure action in state court in 2015.  The state court granted defendant’s motion for summary judgment and the property eventually was sold at a foreclosure sale.  In 2018, plaintiffs brought this complaint against the lender alleging, among other claims, negligent infliction of emotional distress and violations of the Real Estate Settlement Procedures Act (“RESPA”) and Dodd-Frank Act.  The lender filed a motion to dismiss arguing, among other things, that plaintiffs’ claims were barred because they should have been litigated in the state court foreclosure action.

The Court granted the motion to dismiss.  In addition to finding that plaintiffs failed to properly serve the lender, the Court agreed with the lender that the allegations should have been raised in the state court action and, therefore, are precluded under the doctrine of res judicata.  “Courts in this Circuit have found that a plaintiff’s federal-court claim is precluded by a state-court judgment in a foreclosure action when the plaintiff has alleged, in federal court, that the defendants acted improperly in connection with the making, validity or enforcement of the underlying mortgage.”  Further, the Court dismissed the negligent infliction of emotional distress claim because “Deutsche Bank, as a mortgage servicer, owes no duty of care to plaintiffs, the borrowers.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Washington Appellate Court Holds Title Insurance Company Not Liable Under Survey Exception

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The Court of Appeals of Washington recently found that a purchaser of property was not entitled to coverage from his title insurance company after he discovered that the prior owner of the property abandoned an easement, because an accurate survey would have shown the abandonment.  See Haley v. Hume, 448 P.3d 803 (Wash. Ct. App. 2019).  The property at issue in this action (“Lot B”) had an easement along a neighboring property (“Tract A”).  The easement was not necessary to access Lot B, but it was necessary to access two other properties beyond Lot B (“Lots C and D”).  Persons accessing those properties would need to use both the easement on Tract A and a portion of the Lot B driveway to access Lots C and D.  In 2001, the owner of Tract A and Lot D reconfigured his properties so that Lots C and D could be accessed by another driveway that solely crossed Tract A and did not affect Lot B’s driveway.  The owner then contacted the owner of Lot B (“Seller”), who agreed to abandon her easement on Tract A with the understanding that people accessing Lots C and D would no longer need to use her driveway.  In 2005, Seller sold Lot B to the plaintiff in this matter (“Purchaser”).  Purchaser obtained a title insurance policy at this time.  In 2012, Purchaser sought to expand his driveway into the easement on Tract A, but was informed by the neighbor that Seller had abandoned the easement.  Purchaser then brought an action against his neighbor seeking access to the easement and tendered a defense to the title insurance company.  The title insurance company denied the claim.  After Purchaser lost his lawsuit against the neighbor, he sued the title insurance company and Seller.  The title insurance company and Seller moved for summary judgment, and the trial court granted their motions.

On appeal, the Court affirmed.  First, the Court found that the limitations period had run on any claims against the Seller for breaching the warranties in Seller’s deed to Purchaser.  The Court held that there is a six-year limitations period for such claims and that Purchaser’s claim was untimely.  Second, the Court found that the title insurance company had no duty to defend Purchaser here.  The policy contained an exception stating that ““[t]his policy does not insure against loss or damage by reason of . . . other matters which would be disclosed by an accurate survey or inspection of the premises.”  The Court found that, if Purchaser obtained a survey in 2005, “the survey would have noted the evidence of [the neighbor’s] possession, noted that the easement was not observable at the time the survey was made, noted that there was evidence of use by someone other than [Seller], and noted that there was a stream in the middle of the easement area. All of these would have indicated that the condition of the easement area in 2005 was inconsistent with the use of the easement that [Purchaser] believed he was acquiring. As such, a survey would have disclosed the loss that [Purchaser] now asserts.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Recent Trends in Nursing Home Complaints, Final Regulatory Rule Regarding Identifiers, and a $1.6 Billion Dollar Judgment for ACOs

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For more information about this blog post, please contact Khaled J. Klele, Latoya Caprice Dawkins, or Ryan M. Magee.

Nursing Home Complaints:   The Office of Inspector General (OIG) previously found that a few states fell short in the timely investigation of the most serious nursing home complaints between 2011 and 2015. To complement this report, the OIG published an interactive map that displays details on nursing home complaint trends between 2011 and 2015.  The OIG then published a new interactive map to update the information for years 2016 through 2018. It includes information such as the number of complaints received and the number of the most serious complaints that a state investigated late.  As you can see from the map, the overall number of complaints for the entire country continues to rise.  To view the interactive map, click here. 

Common Ground healthcare Cooperative v. United States, No. 17-877C.  Federal Judge Margaret Sweeney, in the Court of Federal Claims, granted final judgment in this class action case ordering the United States government to reimburse the class of more than 100 Affordable Care Act plan issuers nearly $1.6 billion in unpaid cost-sharing reduction payments owed for the 2017 and the 2018 plan years.   This class action is one of dozens of cases filed against the United States for failing to reimburse issuers for reducing out-of-pocket costs for certain low-income enrollees.  In February, the judge said the government had to make the payments despite the fact that Congress did not appropriate any specific funding for them.  Click here to read the decision. 

84 FR 57621 – Final – The Department of Health & Human Services finalized its rule pertaining to the Administrative Simplification provisions of the Health Insurance Portability and Accountability Act of 1996. This final rule eliminates the regulatory requirement for health plans to obtain and use a health plan identifier (HPID) and eliminates the voluntary acquisition and use of the other entity identifier (OEID). The final rule also simplifies the process for deactivating the existing identifiers to minimize operational costs for covered entities.  The rule becomes effective December 27, 2019.  For the complete final rule, click here.  

Fourth Circuit Finds Debt Collector Did Not Violate the FDCPA by Seeking Post-Judgment Costs or Filing Continuing Lien

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The United States Court of Appeals for the Fourth Circuit recently affirmed a District Court’s decision that a debt collector seeking post-judgment enforcement costs as part of a writ of garnishment did not violate the Fair Debt Collection Practices Act (“FDCPA”), nor did the debt collector filing a “continuing lien.”  See Archie v. Nagle & Zaller, P.C., 2019 WL 5212213 (4th Cir. Oct. 16, 2019).  The plaintiff debtors brought this action against a debt collector/law firm based on debts relating to homeowners association liens.  According to plaintiffs, the defendant violated the FDCPA in two ways:  first, by seeking post-judgment enforcement costs as part of a writ of garnishment; and second, by filing liens that secured additional, post-recordation costs (i.e., a “continuing lien”).  Plaintiffs argued that both practices violated the FDCPA because they used “false, deceptive, or misleading representation[s] or means” and “unfair or unconscionable means” to collect the debts.  The District Court found that neither practice violated the FDCPA and granted defendant’s motion for summary judgment.

On appeal, the Fourth Circuit affirmed.  First, the Court found that including post-judgment enforcement costs in writs of garnishment did not violate the FDCPA.  In that case, the homeowners association and plaintiff entered into a consent judgment for the plaintiff’s unpaid monthly fees, and the judgment included $83 in costs.  When defendant sought to garnish plaintiff’s wages, it added additional costs of pursuing the judgment and the writ.  Although plaintiffs argued that these additional costs beyond the $83 violated the FDCPA, the Court disagreed, finding that defendant had simply followed what was allowed under Maryland collection law and had not made any false representations.  Second, the Court found that filing a lien that includes additional costs and fees “that may come due after the date this lien was drafted” also did not violate the FDCPA.  In that case, the defendant filed a lien against plaintiff’s property for unpaid homeowners fees, and the lien stated that it included the amount owed at the time plus “additional fines, late fees, interest, costs of collection and attorney’s fees actually incurred, if any, as permitted by the Association’s governing documents, that may come due after the date this lien was drafted” and that “[s]aid amount may increase or decrease.”  The Court again found that this provision did not violate the FDCPA.  Although Maryland law does not expressly permit or prohibit continuing lien clauses, the Court found that “construing the law to forbid them would lead to an impractical and costly result, with creditors obliged to file a new lien every time an additional cost accrued or a partial payment was made.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Two Recent Cases On Self Pay Issues and a Failed ERISA Filing

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Below are two recent New Jersey Federal District Court cases. In one matter, a group of Plaintiffs filed a class action against Quest regarding the difference in prices that Quest charges self-pay patients and patients with insurance.   In the second case, a New Jersey Federal District Court awarded attorneys’ fees and costs to a defendant regarding a complaint filed by an out of network provider.  Both of these cases may impact your practice. 

For more information about this blog post, please contact Khaled J. Klele, Latoya Caprice Dawkins, or Ryan M. Magee.

Leslie v. Quest Diagnostics, Inc., Civ. A. No. 17-1590.  In this matter, Plaintiffs filed a class action against Quest.  Plaintiffs were either uninsured or under-insured and Quest billed each for laboratory testing services based on "chargemaster" prices that Quest sets.  Plaintiffs alleged contract-based claims, arguing that Quest maintains two sets of rates: the chargemaster rates that it bills to uninsured or under-insured patients and negotiated rates that it charges to third party payers and wholesale clients.  According to Plaintiffs, the chargemaster rates are generally 500% to 1000% of the negotiated rates with third party payers, and therefore, neither represent actual market nor reasonable rates for the services provided.   

As to the contract claims, Plaintiffs alleged that because Quest never contracted with Plaintiffs to charge these rates, the relationship between Plaintiffs and Quest is governed by a contract implied-in-fact with a missing essential term: price.  Plaintiffs allege that because this implied contract lacks an agreement on price, Quest is limited under contract principles to charge only a "reasonable" price, that is, a price which is more similar to the negotiated rates paid by third-party payers.  

Plaintiffs' second theory asserted violations of state consumer fraud statutes from nine different states. Under this theory, Plaintiffs alleged that Quest engaged in an unconscionable and unfair commercial practice by billing Plaintiffs based on the chargemaster prices and then harassing Plaintiffs to collect the debt accrued for the billed laboratory services.

After dismissing their initial complaint, Plaintiffs filed an amended complaint.  Quest then proceeded to file a motion to dismiss the amended complaint.  As to the consumer fraud statutes, the Court granted Quest’s motion as to New Jersey and North Carolina based on the "learned professional" rule. The Court found that Quest, like hospitals and ambulance service providers, qualifies as a learned professional covered by other state regulations rendering a claim under the New Jersey or North Carolina consumer protection statutes precluded.  However, as to the other seven states, the Court found, at the motion to dismiss stage, that Plaintiffs alleged sufficient facts to support their theory of unfair trade practices based on excessive pricing because the prices billed by Quest were 500% to 1000% more than the prices paid by 99% of Quest's customers and the costs billed to them had no relationship to the actual cost incurred by Quest, and that these amounts are "substantially above the rates customarily received by other similarly situated lab companies for similar services." The Court held that “in sum, Plaintiffs allege that Quest's chargemaster prices are unreasonable, unfair, or excessive based on Quest's internal cost structure, the usual and customary rates charged, and payments received for these services by both Quest and other laboratory testing services.”

The Court similarly denied Quest’s motion to dismiss regarding the contract-based claims.  Plaintiffs alleged that it was only after Quest completed the requested services that price was mentioned by Quest.  The Court found that, at the motion to dismiss stage, Plaintiffs sufficiently alleged that Quest's chargemaster prices “are unreasonable based on Quest's internal cost structure, the usual and customary rates charged, and payments received for these services by both Quest and other laboratory testing services.”

Atlantic Plastic &Hand Surgery v. Anthem Blue Cross Life & Health Ins., Civ.A.No. 17-4600.  On February 12, 2014, Dr. Risin, the owner of Atlantic Plastic & Hand Surgery, an out-of-network provider, performed a surgical procedure on his patient, Clifford Robinson. Mr. Robinson is a member of a self-funded ERISA- plan (the “Plan”). On June 22, 2017, after the Plan partially denied the claim leaving an outstanding balance of $52,259.70, Atlantic, based on a power of attorney received from Mr. Robinson, brought an action against Ashland, LLC and Anthem Blue Cross Life and Health Insurance Company.

Atlantic alleged a wrongful denial of benefits claim pursuant to § 502(a)(1)(B) of ERISA, on the basis of Defendants’ failure to compensate it at the “usual and customary charge” for out-of-network services. On March 22, 2018, the Court  granted Defendants’ motion to dismiss, holding that Atlantic did not allege a Plan provision obligating Defendants to provide payment at the usual and customary rate.    After Atlantic filed an amended complaint, the Court dismissed the amended complaint as well for the same reason.  Thereafter, Ashland moved for attorneys’ fees and costs under ERISA’s prevailing party provision.  The Court granted the motion because Atlantic admitted that Defendants attached the Plan to their motion to dismiss and, at that time, Atlantic should have realized that the Plan did not provide for a “usual and customary charge” for out-of-network medical services. The Court, however, denied Ashland’s request for $34,725.29 in attorneys’ fees and costs, but provided Ashland leave to submit additional proofs to support its request for that amount. 

Connecticut Court Strikes Homeowners’ Special Defenses in Title Insurance Company’s Unjust Enrichment Action

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The Superior Court of Connecticut recently granted a title insurance company’s motion to strike certain defenses raised by homeowners in the title company’s unjust enrichment claim against them arising out of incorrectly wired funds.  See Fid. Nat’l Title Ins. Co. v. Vontell, 2019 WL 4513087 (Conn. Super. Ct. Aug. 29, 2019).  In the case, the homeowners purchased a property in 2000 and executed a mortgage that ultimately was assigned to Wells Fargo.  In 2006, they executed a mortgage to Fremont, with the proceeds from the Fremont loan intended to pay off the Wells Fargo mortgage.  The title insurance company issued a loan policy to Fremont insuring Fremont as the first mortgage on the property.  However, the loan proceeds were mistakenly used to pay off a mortgage on another property owned by the same homeowners.  Years later, Fremont made a claim with the title insurance company, and the title insurance company accepted the claim and paid $115,000 to Wells Fargo to ensure Fremont’s first priority lien.  The title insurance company then brought this action against the homeowners (for unjust enrichment) and the closing agent (for indemnification).  The homeowners filed an answer with special defenses, including laches, unclean hands, and that they were a third-party beneficiary of either the policy or the title insurance company’s settlement agreement with Wells Fargo.  The title insurance company filed a motion to strike these defenses.

The Court granted the title insurance company’s motion.  First, it found that laches did not apply.  Even if the title insurance company knew of the issue in 2007—as the homeowners alleged—it had no contractual duty to act until Fremont filed a claim.  “In short, the [homeowners] have not sufficiently alleged or explained how Fidelity had an equitable obligation to act sooner as they allege without Fidelity having an explicit legal obligation to act sooner under the title insurance policy.”  Second, the Court held that unclean hands could not apply because the homeowners “have utterly failed to articulate any facts to support a claim that Fidelity engaged in any dishonest behavior or any wilful misconduct in honoring its obligations under the title insurance policy, and in negotiating and resolving the mortgage priority dispute on the . . . property which was not of its making.”  Finally, the Court rejected the defense that the homeowners were the third-party beneficiaries of either the title insurance policy with Fremont or the settlement agreement with Wells Fargo, noting that the homeowners failed to show any intent by the contracting parties to confer this status on the homeowners.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

Recent State and Federal Legislation and Regulations

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New
Jersey State: Selected Adopted Legislation

  • S.4089 – Proposed – This bill permits long-term care facility personnel to assist residents with mail-in ballot; exempts long-term care facility employees from three ballot limit.  For the complete statute, click here.
  • S. 4111  – Proposed – This bill extends the length of time of postpartum comprehensive Medicaid coverage to a 180-day period for pregnant women who are eligible, beginning on the last day of pregnancy.  Currently, the comprehensive Medicaid coverage for this population is a 60-day period, beginning on the last day of the pregnancy.  For the complete statute, click here.
  • S. 4112  – Proposed – This bill makes it possible for general hospitals to choose the manner in which staff names are displayed on identification badges worn by student nurses, nurses, and other facility staff.  The motivation behind the proposal is to enable hospitals with an avenue to protect the personal information of their staff in the event that a patient files a complaint against a particular staff member or a student nurse, or seeks to identify the staff member or nurse on social media platforms. For the complete statute, click here.

New
Jersey State: Selected Proposed Regulations

  • 51 N.J.R. 1359 (a) – Adopted – The new rules set forth the manner in which the New Jersey Medicaid/NJ FamilyCare programs will provide covered health services to eligible persons through the Managed Care program, by means of managed care organizations (MCOs).  The new rule also affects Medicaid/NJ FamilyCare providers, including managed care entities and those providers who will continue to provide certain services on a fee-for-service basis to beneficiaries who are also enrolled in managed care.  For the complete adopted rule, click here.
  • 51 N.J.R. 1249(a) – Proposed – This rule amends the curriculum requirements for licensure and continuing education requirements for electrologists.  Comments are due by October 5, 2019.  For the complete proposed rule, click here.
  • 51 N.J.R. 1312 (a) – Proposed – This establishes standards to which hospices that elect to accept and dispose of surrendered prescription medications must adhere.  Comments are due by October 18, 2019.  For the complete proposed rule, click here.

Federal:
Selected Proposed and Enacted Legislation

  • S. 2543  – Proposed – This proposed bill intends to lower prescription drug prices in the Medicare and Medicaid programs, to improve transparency related to pharmaceutical prices and transactions, to lower patients' out-of-pocket costs, and to ensure accountability to taxpayers.  For the complete statute, click here.
  • H.R. 3 – Proposed –  This establishes a fair price negotiation program, protects the Medicare program from excessive price increases, and establishes an out-of-pocket maximum for Medicare part D enrollees, and along with other purposes.  For the complete statute, click here.
  • H.R. 2296 – Proposed –  This is another proposal to attempt to require manufacturers to report certain drug price increases. For the complete statute, click here.
  • H.R. 4223 – Proposed – This is another attempt to address balance billing.  In this bill, a facility cannot balance bill a patient for covered non-emergency services if the services are provided at an in-network facility and the participant or beneficiary did not have the ability or opportunity to select to receive such services from an in-network provider.  Otherwise, the bill is geared toward addressing balance billing in self-insured plans.  For the complete proposed statute, click here.

Federal:
Selected Adopted and Proposed Regulations

  • 84 FR 47794 – Final with Comment Period – This final rule with comment period implements statutory provisions that require Medicare, Medicaid, and Children's Health Insurance Program (CHIP) providers and suppliers to disclose certain current and previous affiliations with other providers and suppliers. It also provides, among other things, the agency with additional authority to deny or revoke a provider's or supplier's Medicare enrollment in certain specified circumstances.  Comments are due by November 4, 2019 and the rule becomes final on November 4, 2019.  For the complete final rule with comment period, click here.
  • 84 FR 50308-01 – Final Rule – This final rule provides $4 billion in state Medicaid disproportionate-share hospital (DSH) cuts for 2020 and includes further cuts totaling $8 billion through 2025.   DSH funds are reserved for safety-net hospitals, which serve a large share of low-income patients, Medicaid and uninsured patients to give them more financial flexibility.  These cuts were long in the making.  In 2013, CMS finalized a DSH Health Reform Methodology (DHRM), to implement annual allotment reductions that would have been in place only for FY 2014 and FY 2015. Prior to the implementation of allotment reductions, legislation was signed into law delaying the start of the reductions. Subsequent legislation further delayed the start of these reductions. Under current law, annual allotment reductions start in FY 2020 and run through FY 2025.  In this final rule, CMS is finalizing the DHRM as proposed, with limited exceptions. This regulation is effective on November 25, 2019. For the complete rule, click here.
  • 84 FR 51732 – Final Rule – This final rule reforms Medicare regulations that are identified as unnecessary, obsolete, or excessively burdensome on healthcare providers and suppliers. Additionally, this rule updates fire safety standards for Medicare and Medicaid participating End-Stage Renal Disease (ESRD) facilities by adopting the 2012 edition of the Life Safety Code and the 2012 edition of the healthcare Facilities Code. Finally, this final rule updates the requirements that hospitals and Critical Access Hospitals (CAHs) must meet to participate in the Medicare and Medicaid programs. For example, the final rule updates the requirements for hospitals and CAHs to have infection prevention and control and antibiotic stewardship programs  that are not only active and facility-wide, but which also demonstrate adherence to nationally recognized guidelines.  This rule is effective on November 29, 2019.  For the complete rule, click here.
  • 84 FR 51836 – Final Rule – This final rule empowers patients to be active participants in the discharge planning process and complements efforts around interoperability, i.e., the exchange of patient information between healthcare settings by revising the discharge planning requirements that Hospitals (including Short-Term Acute-Care Hospitals, Long-Term Care Hospitals, Rehabilitation Hospitals, Psychiatric Hospitals, Children's Hospitals, and Cancer Hospitals), Critical Access Hospitals, and Home Health Agencies must meet to participate in the Medicare and Medicaid programs. This final rule also implements discharge planning requirements which will give patients and their families access to information that will help them to make informed decisions about their post-acute care to avoid being re-hospitalized.   This rule is effective on November 29, 2019.  For the complete rule, click here.
  • 84 FR 46688 – Proposed – This proposed rule amends the list of bulk drug substances (active pharmaceutical ingredients) that can be used to compound drug products in accordance with certain compounding provisions of the Federal Food, Drug, and Cosmetic Act (FD&C Act). It adds five additional bulk drug substances on the list.  Comments are due by December 4, 2019.  For the complete proposed rule, click here.

If you
have any questions about the issues discussed in this blog post, please
contact Khaled J. Klele or Latoya
Caprice Dawkins.

The
list above does not include every proposed or adopted
legislation, litigation or guidance document that may impact the healthcare
industry.  Instead, it includes only a select few chosen by the authors,
and any information in this post is not intended to provide legal advice.
 If you are concerned that a proposed or adopted legislation, litigation
or guidance document may impact your practice, then you should seek legal
advice.  Nothing in this post should be relied upon
as legal advice in any particular matter. © 2019 Riker Danzig Scherer Hyland
& Perretti LLP.

Executive Orders Issued by the Trump Administration Regarding the Inappropriateness of Guidance Documents

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Two
Executive Orders: 84 FR 55235 and 84 FR 55239

Following
SCOTUS’ ruling in Azar v. Allina Health Services reported by us here,
in which the Court invalidated CMS’ Part C policy for failure to comply with
 notice and comment rulemaking before applying the policy, the executive
orders issued by the Trump Administration on October 9, 2019 “Promoting the
Rule of Law Through Improved Agency Guidance Documents” and “Promoting the Rule
of Law Through Transparency and Fairness in Civil Administrative Enforcement
and Adjudication” are both aimed at transparency in the regulatory process and
to curtail guidance documents from being improperly used by agencies in lieu of
following public notice-and-comment mandates of the Administrative Procedure
Act. 

"Promoting
the Rule of Law Through Improved Agency Guidance Documents,” found here
at 84 FR 55235, has sweeping implications for agencies that “sometimes used
this authority inappropriately in attempts to regulate the public without
following the rulemaking procedures of the APA.” This executive order puts in
place certain requirements that agencies must follow such as providing the
opportunity for public comment before finalizing significant guidance, amend
existing regulations as necessary, and implement processes and procedures for
issuing guidance documents that includes procedures for the public to petition
for withdrawal or modification of a particular guidance document, and establish
or maintain on its website a “single, searchable, indexed database that
contains or links to all guidance documents in effect from such agency or
component” with a disclaimer noting “that guidance documents lack the force and
effect of law, except as authorized by law or as incorporated into a
contract.”  

Specifically,
the order states an agency cannot treat failure to comply with a standard of
conduct announced solely in a guidance document as itself a violation of
applicable statutes or regulations. The guidance document cannot be used as a
prohibition of conduct but instead only to articulate the agency's
understanding of how a statute or regulation applies to particular
circumstances.   In sum, the executive order provides additional
protection for the public and providers by ensuring a  fair and
transparent regulatory process. 

The
“Promoting the Rule of Law Through Transparency and Fairness in Civil
Administrative Enforcement and Adjudication” executive order, found here
at 84 FR 55239, is intended to safeguard against guidance documents being used
to impose new standards of conduct except as expressly authorized by law or as
expressly incorporated into a contract and to avoid unexpected penalties. 

Star
Rating Update:  Last
month, CMS released premium and cost-sharing data for Medicare Advantage
and Part D prescription drug plans for the 2020 calendar year, found here.
Earlier this month, the Trump Administration issued the executive order,
“Protecting and Improving Medicare for Our Nation’s Seniors” that authorizes the
Department of Health & Human Services to expand Medicare Advantage, reduce
fee-for-service, and level the playing field between MA plans and Medicare,
found here. 
 Then weeks later, CMS released its star ratings for 2020 Medicare
Advantage and prescription drug plans, found here.
 Of all 210 MA-PD plans, fifty-two percent received four stars or above
for 2020. CMS found that 81 percent of MA-PD plan enrollees will be in a plan
rated four stars or more based on 2019 enrollment.  This is 12 percentage
points higher than it was in 2017.  We will continue to update you as
growing attention surrounds Medicare Advantage plans. 

If you
have any questions, please contact Khaled
J. Klele, Latoya Caprice Dawkins, or Ryan M. Magee.

Health Law Developments

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New Jersey State Regulatory Issues

51 N.J.R. 1493(a) – Proposed Regulation – This proposal establishes the County Option Hospital Fee Pilot Program. The purpose of the pilot program is to increase financial resources through the Medicaid/NJ FamilyCare program to support local hospitals in providing necessary services to low-income residents. The pilot program will be in effect for a period of five years from April 30, 2019 through April 30, 2024.   Each participating county can impose a local healthcare-related fee on hospitals within its borders.  Funds generated under the pilot program and transferred to the Department of Human Services will be combined with matching Federal Medicaid dollars and distributed to hospitals in participating counties through the existing Medicaid/NJ FamilyCare managed care organizations or directly to hospitals using fee-for-service payments, or a combination of the two mechanisms, at the Department's discretion. For the complete proposal, click here. 

51 N.J.R. 1546(a) – Public Notice – On August 9, 2019, the Department of Health (Department) received a petition for rulemaking from the New Jersey Hospital Association to make certain amendments to N.J.A.C. 8:43G Hospital Licensing Standards, Subchapter 14 Infection Control, N.J.A.C. 8:43G-14.9, Sepsis Protocols, requiring hospitals to implement certain protocols.  N.J.A.C. 8:43G-14.9 requires licensed hospitals in New Jersey to establish, implement, periodically update, and train clinical staff in evidence-based protocols for the early identification and treatment of patients with sepsis and septic shock (sepsis protocols). Notably, the Department does not require that hospitals base their sepsis protocols on guidelines and best practices for sepsis identification and treatment of certain entities that are generally recognized as authoritative among the regulated community.  N.J.A.C. 8:43G-14.9(f).  The petitioner requested that the Department amend N.J.A.C. 8:43G-14.9(f) to require hospitals to implement the protocol recommended by the Surviving Sepsis Campaign, known as Sepsis-1. For the complete public notice, click here.

New York Passes New Law Requiring Certain Large Insurance Plans to Cover IVF

In April, a new law was enacted in the 2020 New York state budget which updated its existing infertility statute to require certain large-group health plans (providing coverage to 100 employees or more) to cover up to three cycles of in vitro fertilization and associated medications and testing. The new mandate requires all insurance plans to cover cryogenic egg freezing for medically necessary purposes.  Medicaid plan beneficiaries, employees of small and medium-sized companies of less than 100 employee or companies that self-insure and those with individual insurance plans are not covered under the state mandate. Ten states have IVF insurance coverage laws.  For the complete statute, click here.

Heated Contract Network Negotiations Between the Largest Insurer and Hospital Network

Following contract network negotiations that included a reduction in reimbursement rates, the largest health insurance company nationwide, UnitedHealth Group Inc., which also happens to be affiliated with Optum, a large healthcare provider, has threatened to drop one of the top healthcare systems in Houston, Houston Methodist, from its network if an agreement cannot be reached.  Nearly 100,000 patients with UnitedHealthcare's Medicare Advantage and employer-sponsored plans effective Jan. 1, will lose in-network access to all eight Houston Methodist hospitals and dozens of its out-patient facilities while Methodists' employed physicians will be out of network starting April 1. The parties have until midnight Dec. 31 to reach a contract agreement. During the network negotiations dispute, Optum, announced it will begin sending new transplant patients to other in-network transplant providers effective Oct. 15 instead of sending patients to Houston Methodist. 

If you have any questions about the issues discussed in this blog post, please contact Khaled J. Klele or Latoya Caprice Dawkins.

The list above does not include every proposed or adopted legislation, litigation or guidance document that may impact the healthcare industry.  Instead, it includes only a select few chosen by the authors, and any information in this post is not intended to provide legal advice.  If you are concerned that a proposed or adopted legislation, litigation or guidance document may impact your practice, then you should seek legal advice.  Nothing in this post should be relied upon as legal advice in any particular matter. © 2019 Riker Danzig Scherer Hyland & Perretti LLP.

California Federal Court Holds Bank May Have Violated Contract by Charging Multiple Out-of-Network ATM Fees

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The United States District Court for the Southern District of California, interpreting New Jersey law, recently denied a bank’s motion for summary judgment seeking to dismiss a breach of contract claim brought by the bank’s depositors for multiple out-of-network ATM fees.  See Figueroa v. Capital One, N.A., 2019 WL 4962971 (S.D. Cal. Oct. 7, 2019).  In the case, the plaintiffs opened a bank account with the defendant bank in New Jersey and received documents disclosing the fees that the bank would charge for certain activities.  Over the next year, plaintiffs made three ATM withdrawals at out-of-network ATMs, and were charged multiple fees for each withdrawal; one fee when plaintiffs checked their balance and one fee when they subsequently withdrew money.  Plaintiffs then brought this class action alleging, among other things, that the bank had violated its contract with its customers by charging fees to which the customers did not consent.  After discovery, the bank filed a motion for summary judgment.

The Court denied the bank’s summary judgment motion.  First, the Court determined which of the many bank documents and disclosures were part of the contract.  It held that the only documents that could be part of the contract were those to which the parties mutually assented.   Relying on the bank’s records of what it printed as part of the “Welcome Kit” and the bank representative’s testimony regarding the same, the Court found that one of the documents relied on by plaintiffs was not part of the contract.  Nonetheless, the Court found that the contracts were ambiguous with regard to fees.  The Fee Schedule stated that there may be a “Foreign ATM Fee” for actions “initiated” at out-of-network ATMs.  The Court found that plaintiffs’ interpretation that this meant only one fee would be charged if plaintiffs performed multiple acts as part of a single visit to the ATM was reasonable.  “In sum, the court has read the contract documents as a whole in a fair and common sense manner and finds the plain and ordinary meaning of the term ‘initiate’ used in the Fee Schedule, read along with the ‘may also be charged…..’ phrase in the EFTAAD does not ‘indisputably’ state that a fee will be applied for each and every cash withdrawal and balance inquiry as Defendant would have the court believe.”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Anthony Lombardo at alombardo@riker.com.

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