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Regulatory Update, Including Federal Transparency Rules

Month: November 2019

Regulatory Update, Including Federal Transparency Rules

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

Federal Regulations

Pricing Transparency Rules:  As previously reported on November 22nd, we anticipated that the Department of Health would publish the transparency rules in the Federal Register on November 27th.  Today, the Department of Health published in the Federal Register the final Rule requiring hospitals to disclose pricing information and the proposed Transparency in Coverage Rule requiring insurers, among other things, to disclose cost-sharing information.    The final rule regarding hospital disclosures becomes effective January 1, 2021.   The proposed Transparency in Coverage Rule requiring health insurers to disclose cost-sharing information is open for public comment through January 14, 2020.

84 FR 64783 – Interim Final Rule – This interim final rule delays the inclusion of U.S. territories in the regulatory definitions of “States” and “United States” until April 1, 2022.  The territories include American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands. While a previous proposed rule sought to make this amendment effective by April 1, 2020, that date has been pushed back in response to delays in implementing Medicaid Management Information Systems (MMIS) in all of the included territories.  

New Jersey Regulations

51 N.J.R. 1691(b) – Final – This final rule authorizes orthotists, pedorthists, prosthetists, and their assistants to engage in telemedicine and telehealth.  The rule outlines the proper ways to establish a licensee-patient relationship and imposes standards of care consistent with standards applied to those same services when provided in-person.  The rule also imposes recordkeeping and data privacy standards for telemedicine providers.  This rule became effective November 18, 2019.

51 N.J.R. 1648(a) – Proposed – This proposed rule issued by the State Board of Dentistry provides amendments and new rules to enhance the safety of patients receiving dental services in New Jersey.  The updates emphasize training for licensed practitioners, provide guidance on appropriate sedation levels for procedures and require dentists to stay up-to-date on professional competencies through continuing education courses.  The proposed rules also impose more stringent criteria relating to the issuance and reinstatement of professional licenses and registrations necessary to practice dentistry. Comments are due by January 17, 2020. 

Anticipated Federal Hospital and Payor Transparency Rules

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

As we previously reported, on November 15, 2019, CMS issued a final rule and comment period that revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for Calendar Year 2020. In that final rule, CMS made clear that it intends to continue with its policy to require hospitals to publicly disclose "standard charges," including payer-specific negotiated rates.  CMS, however, did not actually publish the final rule in the registry and, instead, CMS stated it “received over 1,400 comments on our proposed requirements for hospitals to make public their standard charges. We intend to summarize and respond to public comments on the proposed policies in a forthcoming final rule.”   The fact sheet on the anticipated rule, however, explains hospitals will have until 2021 to comply with the new price disclosure requirements.  The anticipated rule requires hospitals to post publicly in a machine-readable file "standard charges," which is defined as gross charges, payer-specific negotiated charges, discounted cash prices, and de-identified minimum and maximum negotiated charges, for all items and services provided by the hospital.  Hospitals must also make public charges for at least 300 common "shoppable" services in a consumer-friendly and searchable format with annual updates.  

In the same view, HHS and the Departments of Labor and Treasury anticipate releasing a joint proposed rule entitled “Transparency in Coverage” that would require most group health plans, including self-insured plans, and health insurance issuers to disclose price and cost-sharing information to consumers.  According to the fact sheet, plans and issuers would provide consumers with real-time, personalized access to cost-sharing information through an online tool available to their members and in paper form upon request.

Providers and insurers have already indicated that they will challenge these rules.  

Seventh Circuit Holds That Letter Stating That Debt Collector “May File a 1099C Form” if It Discharges Debt May Have Violated FDCPA

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The United States Court of Appeals for the Seventh Circuit recently held that a dunning letter that stated that the debt collector “may file a 1099C form” if the debtor paid a discounted amount could constitute a violation of the Fair Debt Collection Practices Act (“FDCPA”) if the debt collector was discharging less than $600 in principal.  See Heredia v. Capital Mgmt. Servs., L.P., 2019 WL 5849901 (7th Cir. Nov. 8, 2019).  In the case, the debt collector sent a letter to the debtor that provided a number of settlement options in which the debt collector agreed to discharge a certain amount of the debt if the debtor made payments by certain dates.  In each option, the amount of discharged debt would have been less than $600.  The letter then stated that “[s]ettling a debt for less than the balance owed may have tax consequences and Discover may file a 1099C form.”  The debtor brought this action, claiming that the language regarding the 1099C was misleading in violation of the FDCPA.  The debt collector moved to dismiss the action, and the District Court granted the motion.

On appeal, the Court reversed.  The Court held that a debt collector only needs to file a 1099C if it discharges more than $600 if principal.  In this case, all of the settlement offers presented to the debtor in this letter would have resulted in a discharge of less than $600, so the debt collector would not be required to file a 1099C under any circumstances.  “In regard to the November 11 letter, therefore, [the debtor] could plausibly allege that it is, in fact, misleading to state that Discover may file a Form 1099C, when it never would.”  Accordingly, the Court reversed the District Court and reinstated the action.  In doing so, the Court also distinguished other cases in which courts found that letters that contained language that settlement may have tax consequences did not violate the FDCPA because “[s]ettlement may or may not have tax consequences depending on the financial situation of the debtor, and that information is only in the hands of the debtor herself, and not the debt collector.”  In this case, however, “the debt collector has within its own knowledge all of the information it needs in order to know whether such a form will or will not be required.”

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

Federal Regulatory Update

Posted on by rd_admin

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

Ambulatory Surgery Center Prospective Payment System

84 FR 61142 – Final Rule with Comment Period – This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for Calendar Year (CY) 2020.  On average for all covered procedures in ASCs, payment rates went up by 2.6%. CMS finalized the addition of eight codes to the ASC-payable list, including total knee arthroplasty (TKA), a mosaicplasty procedure, as well as six coronary intervention procedures, which were previously not payable in the ASC setting. Importantly, CMS plans to continue using the hospital market basket to update ASC payments for CY 2020 through CY 2023. This final rule also refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

Controversially, however, CMS will move forward with site-neutral payments for doctor's visits, even though a federal judge ruled against the policy earlier this year.  With this change, CMS will pay doctors the same amount for a basic visit whether it takes place in a hospital outpatient facility or a regular doctor’s office. CMS estimates that the change will cut copays for people on Medicare and slash federal spending by $800 million in 2020.  This part of the final rule will certainly engender litigation. 

In addition, the rule reduces drug payments by approximately $1.6 billion to safety-net hospitals under the 340B program by changing the formula it uses to calculate reimbursements.

This final rule becomes effective January 1, 2020.

Final Rule on the 2020 Physician Fee Schedule

84 FR 62568 – Final Rule – CMS issued this final rule for the 2020 Physician Fee Schedule, but it does more than merely update rates.  This rule updates the Evaluation and Management (E/M) documentation and coding framework for the first time in over two decades, and CMS anticipates this will save clinicians 2.3 million hours per year in burden reduction to address burnout from administrative tasks.  Consistent with the changes adopted by the AMA Current Procedural Terminology Editorial Panel for office/outpatient E/M visits, the CPT coding changes retain five levels of coding for established patients, reduce the number of levels to four for office/outpatient E/M visits for new patients, and revise the code definitions.  The CPT code changes also allow clinicians to choose the E/M visit level based on either medical decision making or time.  According to CMS, these updates will allow clinicians to spend less time on documenting visits and more time on treating patients.  These changes will go into effect starting 2021.

The final rule also defers the physician supervision requirement for physician assistants (PA) to allow them to practice more broadly in accordance with state law, and relaxes the medical record documentation policy so that physicians, PAs, and advanced practice registered nurses can review and verify (sign and date), rather than re-documenting, notes made in the medical record by other providers.  

In addition, the final rule implements provisions of the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act that established a new Medicare Part B benefit for opioid use disorder treatment services, including medication-assisted treatment, furnished by opioid treatment programs.

The rule also changes the Quality Payment Program, which provides clinicians with two paths of participation: through Advanced Alternative Payment Models and the Merit-based Incentive Payment System (MIPS).  This rule calls for the creation of a new framework—MIPS Value Pathways (MVPs)—that will be developed with stakeholder input and will apply beginning in the 2021 performance year.  Instead of requiring clinicians to report on measures and activities across the multiple performance categories (quality, cost, promoting interoperability, and improvement activities), the MVP framework will allow clinicians to report on the clinically related, specialty-specific measurement sets that are more relevant to their scope of practice. As a result, clinicians will be held accountable for fewer but more meaningful measures.

Moreover, this final rule expands those individuals and entities that can rely on OIG Advisory Opinions. 

CMS issued a fact sheet regarding the rule, which becomes effective January 1, 2020. 

Medicaid Fiscal Accountability Regulation

84 FR 63722 – Proposed – CMS issued this proposed rule to help ensure transparency in Medicaid supplemental payments and crack down on suspect financing arrangements.  Supplemental payments are additional payments states make to providers above base reimbursement levels for a particular service. These payments have increased from 9.4% of all other Medicaid payments in Fiscal Year 2010 to 17.5% in Fiscal Year 2017.  This rule requires states to report provider-level information on Medicaid supplemental payments instead of the current aggregate reporting.  The proposed rule also requires supplemental payment methodologies be sunset after three years, requiring states to seek CMS approval to continue a supplemental payment beyond that point.  In addition, the proposed rule establishes new definitions for Medicaid "base" and "supplemental payments," and clarifies other definitions associated with non-federal share financing arrangements and the upper payment limit categories to close potential loopholes.

For example, according to CMS, states have used numerous schemes that are not consistent with federal statute. Some examples include states that generate extra payments for private nursing facilities that enter into arrangements with local governments to bypass tax and donation rules, and the use of a loophole to tax managed care entities 25 times higher for Medicaid business than for similar commercial business. States can then use that tax revenue to generate additional payments, with no commensurate increase in state spending.  The proposal looks to address these questionable financing mechanisms by clarifying requirements related to intergovernmental transfers, healthcare-related taxes and donations, and Medicaid disproportionate share hospital payments.

CMS issued a fact sheet to explain the rule.  Comments are due on January 17, 2020. 

NJDEP Continues Environmental Justice Enforcement Efforts with Six New Lawsuits

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At an October 25th press conference, New Jersey Attorney General Gurbir Grewal and New Jersey Department of Environmental Protection (“NJDEP”) Commissioner Catherine McCabe announced the filing of six new lawsuits that, in their words, “target[] polluters in minority and lower-income communities across New Jersey.”  These six cases—relating to contaminated properties in Newark, Camden, Kearney, East Orange, and Trenton, the site of two cases—are the second salvo in NJDEP’s ongoing program to target its enforcement in lower-income areas.  Last December, NJDEP’s filing of eight similar lawsuits likewise was accompanied by a press conference publicizing the litigation.  Governor Murphy has been clear that he prioritizes environmental justice, that is, reducing environmental harms that disproportionately are borne by people in lower-income communities, so we should expect NJDEP to file more enforcement lawsuits like these in the coming years.

A survey of the fourteen cases NJDEP has filed since last December reveals common threads guiding the agency’s enforcement. 

  • Geography.  Nine out of the fourteen cases involve sites located in just three cities: Newark, Camden, and Trenton.  Owners or operators of contaminated sites in those three cities should be aware that they may be under increasing scrutiny from NJDEP.  However, NJDEP also has targeted properties located in municipalities that generally would not be considered urban.  In its first round of cases, NJDEP sought to compel remediation of sites located in Phillipsburg and Flemington.  Though not located in big cities, each of these sites is located in a densely developed “downtown” area in which nearby buildings potentially are subject to vapor intrusion. 
  • Sites Stuck in the Mud?  Almost uniformly, NJDEP has targeted egregious cases—sites where contamination has been known of for a decade or more without being remediated, or vacant properties in urban areas that allegedly have been used for illegal solid waste dumping.  Prior enforcement efforts through administrative orders and directives have proven unsuccessful in many of these cases.  NJDEP’s laudable goal to speed up remediation of languishing contaminated sites may be difficult to achieve in practice, however.  Remediation may have stalled not because of the defendants’ desire to avoid their legal obligations, but because of a lack of funds.  For example, in a case filed this October, NJDEP alleged that the former operator investigated contamination for ten years and submitted a remedial action work plan, but ultimately informed NJDEP that it could not afford the remediation.  In another case, the defendants already have defaulted.  Finding private funds to complete these cleanups or to reimburse NJDEP for public money already spent may be like getting blood from the proverbial stone.
  • Broad Net of Liability.   NJDEP also is casting a wide net, bringing claims against people and entities with any tenuous connection to the contamination.  Though perhaps this strategy is necessary given the noted prevalence of impecunious or judgment-proof defendants, it can backfire for NJDEP.  As we previously have described in our November 14th blog post, the court dismissed NJDEP’s Spill Act claim against an individual who owned a contaminated property for merely a month after the contamination already had occurred.  Despite NJDEP’s broad powers, the courts may side with defendants that push back against NJDEP overreach in these cases where warranted.

In conclusion, it should be noted that NJDEP is not advancing a novel legal theory of environmental justice in these cases.  These are straightforward environmental enforcement cases, in which NJDEP is using its well established authority to compel recalcitrant parties to remediate contaminated sites.  NJDEP is not breaking new ground on environmental justice, but rather is reallocating limited enforcement resources to address longstanding problems in underserved communities.  Parties who may be responsible for contaminated sites in lower-income communities should now be on notice that NJDEP is watching.

For more information, please contact the author Michael S. Kettler at mkettler@riker.com or any attorney in our Environmental Practice Group.

Ohio Federal Court Holds Title Insurance Company Did Not Have to Defend Insured for Claim Regarding Bridge Encroaching onto Neighbor’s Property

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The United States District Court for the Northern District of Ohio recently held that a title insurance company had no duty to defend its insured in a lawsuit brought by the insured’s neighbor relating to a bridge that spanned from one property to the other.  See Pandora Distribution, LLC v. Ottawa OH, LLC, 2019 WL 5729932 (N.D. Ohio Nov. 5, 2019).  In the case, a company owned two neighboring properties separated by railroad tracks and connected by two conveyor bridges.  The company sold one property to the insured and the neighboring property to another entity.  The insured’s neighbor then brought an action against the insured and the prior owner seeking to have the conveyor bridges removed.  The insured sought coverage from the title insurance company, but the title insurance company denied the claim.  The Court later found that the bridges were fixtures on the neighbor’s property and granted the insured summary judgment dismissing the neighbor’s claim against it. The Court also granted the title insurance company summary judgment, finding that the insured was not entitled to coverage under the title insurance policy.

The insured filed a motion for reconsideration, which the Court denied.  First, the Court found that the exceptions in the title insurance policy included an exception for “a License Agreement between Grand Trunk Western Railroad Company and Philips ECG, Inc., dated December 18, 1986, relating to the elevated conveyor bridge . . . [and] an encroachment by an existing overhead bridge conveyor onto the premises in question.”  The Court held that the plain language of this exception covered any claims arising from the bridges, including a claim that the bridges encroached onto the neighbor’s property.  Second, the Court found that the insured’s bad faith claim was meritless.  The claim was based on “an elaborate story which accuses at least four individuals of engaging in a scheme of constructive fraud beginning over ten months prior to [the insured’s] purchase,” and which was dependent on a finding that the neighbor did not own the bridges.  Because the Court found that the neighbor owned the bridges, the bad faith claim was also dismissed.

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

New Jersey Court Finds Prior Ownership of Property Alone Does Not Trigger Environmental Liability

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A person who previously owned contaminated real property is not liable for investigation and remediation costs solely as a result of its status as a prior owner of the property, according to a New Jersey trial court.  NJDEP v. Progress Petroleum of Phillipsburg, Inc.,  Docket No. WRN-L-370-18 (Law Div. April 23, 2019).  This decision is a blow to the New Jersey Department of Environmental Protection (“NJDEP”), as it has sought to impose liability on prior owners of contaminated property in several recent enforcement actions, but also serves as a beacon of hope for prior owners of contaminated real property that did not cause or contribute to the contamination.  Prior owners should not get too comfortable, however, as NJDEP is likely to continue to litigate this issue, either through appeals in Progress Petroleum or in other matters.

Progress Petroleum involves a property that had been contaminated by the historical operations of a gas station on the land.  A discharge of gasoline-related contaminants was discovered on the property in 1988.  The contaminants remained unaddressed when Inessa Shoimer and her then-husband purchased the land in August 1994 without conducting environmental due diligence of the property, including a Preliminary Assessment or Site Investigation.  A month later, the Shoimers sold the property to the couple’s own company, which retained it for two years, before selling it to an unrelated company.  The property subsequently changed ownership several more times.  In 2002, NJDEP ordered the current and prior owners, including Ms. Shoimer in her individual capacity, to pay for the cleanup of the site.  After the current and prior owners failed to comply with the order, NJDEP sued Ms. Shoimer and some of the other owners and claimed they were responsible for addressing the cost of the environmental cleanup.

The New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. (the “Spill Act”) imposes liability for hazardous substances on the “discharger” of such hazardous substances as well as on any person “in any way responsible” for the discharge of such hazardous substances.  A prior owner of contaminated real property that did not cause or contribute to the contamination is not a “discharger.” See White Oak Funding v. Winning, 341 N.J. Super. 294, 299-301 (App. Div.), certif. denied 170 N.J. 209 (2001)  However, as noted above, NJDEP has argued in several recent enforcement actions that a prior owner of contaminated property is liable as a person “in any way responsible” for a discharge.  NJDEP’s position is based on New Jersey Schools Development Authority v. Marcantuone, in which the Appellate Division found that the current owner of contaminated property is “in any way responsible” unless the owner qualifies for an “innocent purchaser” defense under the Spill Act. 428 N.J. Super. 546 (App. Div. 2012), certif. denied, 213 N.J. 535 (2013).  To qualify for the “innocent purchaser” defense against Spill Act liability, property owners must show that they conducted an inquiry into potential environmental problems prior to purchasing the land, but did not know or have any reason to know that contamination was present.  While the court in Marcantuone found that this Spill Act liability applies to current owners of contaminated property, NJDEP has argued that such liability extends to prior owners as well.

Ms. Shoimer filed a motion asking the court to dismiss the Spill Act claim brought against her, and argued that because she had sold the property prior to NJDEP’s 2002 cleanup order, she was a prior owner and therefore no longer “in any way responsible” for the contamination.  She asked the court to a use a plain-language interpretation of the Spill Act, and pointed to multiple sections of the law at N.J.S.A. 58:10-23.11g, in which the Spill Act used present-tense language when referring to liability based on ownership of contaminated property.  Ms. Shoimer reasoned that a lack of reference to past owners in the law meant that Spill Act liability did not apply to past owners.  To bolster her argument, Ms. Shoimer cited NJDEP v. Dimant for the principle that Spill Act liability requires some connection between the contamination and the responsible party, which she claimed was lacking in this case.

In contrast, NJDEP asked the court to use a broad interpretation of  the Spill Act language in N.J.S.A. 58:10-23.11g to find that prior owners were “in any way responsible” for contamination, and cited NJDEP v. Ventron for the principle that the Spill Act should be “liberally construed.”  NJDEP argued that under the holding of Marcantuone, Spill Act liability would apply to Ms. Shoimer unless she could demonstrate that she was an innocent purchaser.  However, Ms. Shoimer conducted no environmental due diligence prior to buying the land, and failed to qualify for the innocent purchaser defense.

The court ultimately agreed with Ms. Shoimer’s plain-language interpretation of N.J.S.A. 58:10-23.11g, and dismissed the claims against her.  The court determined that the Spill Act’s multiple present-tense references to imposition of liability on a person “who owns” contaminated property suggested ownership liability must be current, and thus, did not apply to a prior owner.  The court stated that inclusion of prior owners under the Spill Act’s definition of “in any way responsible” is a matter for legislators to address through statutory amendment if they so choose.

This trial court’s decision in Progress Petroleum provides an answer to the lingering question of whether Spill Act liability applies to past owners.  However, before prior owners of contaminated property assume that they are safe from Spill Act claims, they should remember that: (1) the decision may well be limited to its facts; (2) the trial court’s decision can be reversed in appellate court; and (3) NJDEP continues to pursue Spill Act claims against prior owners in other lawsuits.

For more information, please contact any attorney in our Environmental Practice Group.

New York Appellate Court Holds Borrower’s Participation in Class Action Settlement Barred Its Claims Against Lender in Foreclosure

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New York’s Second Department Appellate Division recently affirmed that a borrower who was part of a class action settlement with a lender relating to the lender’s marketing of its loans was barred from raising those same claims against the lender in opposition to the lender’s foreclosure action.  See Wachovia Mortg. FSB v. Macwhinnie, 175 A.D.3d 1587 (2d Dept. 2019).  In the case, the plaintiff lender brought a foreclosure action against the defendant borrower.  The borrower filed an answer and counterclaims, and the lender later filed an untimely reply to the counterclaims.  The defendant rejected the untimely reply and filed a motion for leave to enter a default judgment on his counterclaims, which included alleged violations of TILA and state law deceptive practices statutes arising from plaintiff’s “Pick-A-Payment” loan program.  Plaintiff cross-moved to compel defendant to accept its reply, to dismiss defendant’s counterclaims, and for summary judgment on its complaint.  The Court granted plaintiff’s motion, dismissed defendant’s answer and counterclaims, and directed the sale of the premises.

On appeal the Court affirmed.  The Court found that, as one of the exhibits to his motion for default judgment, defendant had submitted proof that he was a member of a 2011 federal class action settlement involving plaintiff’s marketing of its “Pick-A-Payment” loan program.  As part of the settlement, all class members released plaintiff from claims that plaintiff violated “‘TILA, state unfair competition laws, state unfair and deceptive trade practices statutes, and state consumer protection laws,’ as well as all claims that the plaintiff ‘breached the terms of the [loan] contracts; engaged in fraudulent misrepresentations or omissions; and breach the implied duty of good faith and fair dealing in connection with the . . . Pick-a-Payment mortgage loans.’”  Additionally, defendant’s exhibit included a check in the amount of $178.04 from the settlement administrator, indicating that defendant did not opt out of this settlement.  Accordingly, defendant had waived the claims in its counterclaims, and the Court affirmed the decision granting plaintiff summary judgment.

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

New Federal and State Regulations and CMS Alleged Overpayments

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

New Jersey State Regulation Expanding Graduates of International Medical Schools

51 N.J.R. 1597(a) – Proposed Regulation -- This proposal by the State Board of Medical Examiners (Board) is to update the eligibility requirements for graduates of international medical schools who seek licensure or authorization to engage in the practice of medicine as residents.  If approved, the proposed amendments would allow the Board to rely on recognized accrediting bodies for international medical schools that adhere to standards substantially similar to the bodies that currently accredit domestic medical schools. Currently, the Board relies on education licensing agencies such as the Liaison Committee on Medical Education (LCME) and the American Osteopathic Association (AOA). The proposed amendments would allow graduates of international schools to rely on accreditation from regionally recognized bodies that have standards comparable to those of LCME.  Comments are due by January 3, 2020.

Federal Regulations

84 FR 59746-01 - Proposed rule - The Office of Federal Contract Compliance Programs (OFCCP) issued a proposed rule to amend its regulations pertaining to its authority over TRICARE healthcare providers aimed at increasing access to care for uniformed service members and veterans.  The proposed rule suggests that OFCCP lacks authority over federal healthcare providers who participate in TRICARE and, therefore, OFCCP seeks to establish a national interest exemption from Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans' Readjustment Assistance Act of 1974 for healthcare providers with agreements to furnish medical services and supplies to individuals participating in TRICARE.   Comments are due by December 6, 2019.

84 FR 60478-01 – Final Rule -  This final rule brings up to date the home health prospective payment system (HH PPS) payment rates and wage index for calendar year (CY) 2020.  Besides boosting payments to Home Health Agencies, it also provides for a permanent home infusion therapy benefit to be implemented beginning in 2021 that includes professional services, patient education and training, and patient monitoring for the provision of home infusion therapy. The final rule also changes existing regulations to allow therapist assistants instead of only therapists to perform maintenance therapy.   In addition, the final rule implements the Patient-Driven Groupings Model (PDGM), a revised case-mix adjustment methodology, for home health services.  It puts into place a change in the unit of payment from 60-day episodes of care to 30-day periods of care, as required by section 51001 of the Bipartisan Budget Act of 2018 and finalizes a 30-day payment amount for CY 2020.  The final rule is effective January 1, 2020.

84 FR 60648-01 – Final rule - This final rule updates and makes revisions to the End-Stage Renal Disease (ESRD) Prospective Payment System (PPS) for CY 2020 and updates the payment rate for renal dialysis services furnished by an ESRD facility to individuals with acute kidney injury (AKI).  ESRD facilities will see a 1.7% increase in PPS payments in 2020 or a $4.06 increase from the current $235.27 base rate.  In addition, certain new and innovative equipment and supplies used to care for an ESRD patient will qualify for an add-on payment adjustment in the hopes that ESRD facilities will provide innovative therapies.  Importantly, it changes the methodology for calculating fee schedule payment amounts for new Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) items and services, and a methodology for making adjustments to the fee schedule amounts established using supplier or commercial prices if such prices decrease within 5 years of establishing the initial fee schedule amounts.  The final rule not only streamlines the requirements for ordering DMEPOS items, but also develops a new list of DMEPOS items potentially subject to a face-to-face encounter.  The final rule becomes effective January 1, 2020.

CMS Seeks $54.4 Million for Inpatient Claims

Last week, the OIG issued a report recommending that CMS direct Medicare contractors to recover $54.4 million in alleged overpayments after discovering several acute-care hospitals transferred patients to certain post-acute-care settings, such as skilled nursing facilities, but claimed the higher reimbursements associated with discharges to home.  The Medicare contractors are to identify any claims for transfers to post-acute care in which incorrect patient discharge status codes were allegedly used and recover any overpayments.   

New York Federal Court Holds Banks Were Not Liable for Ponzi Scheme Using Banks’ Accounts

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The United States District Court for the Western District of New York recently dismissed class action claims against two banks alleging that the banks were liable for a decade-long Ponzi scheme that utilized the banks’ account.  See Heinert v. Bank of Am., N.A., 2019 WL 5287950 (W.D.N.Y. Oct. 18, 2019).  In the case, the plaintiffs claim that the individual defendants defrauded them from about $102 million as part of a Ponzi scheme.  According to the complaint, the individual defendants used accounts at the two defendant banks, where a branch manager who worked at both banks purportedly assisted with the fraud by “coordinating the opening of new accounts, expediting the availability of funds, lying to creditors, and placing quarterly calls to American Express on [a defendant’s] behalf, [and] falsely confirming that his accounts held sufficient funds to cover his debts, when they did not.”  Based on the branch manager’s alleged role, plaintiffs brought this action alleging that the banks aided and abetted the individual defendants in committing fraud and that the banks breached their fiduciary duties to the plaintiffs.  The banks moved to dismiss the complaint as against them.

The Court granted the banks’ motion to dismiss.  First, the Court dismissed the claim that the banks aided and abetted the underlying fraud, finding that there was no allegation that the banks themselves had actual knowledge of the Ponzi scheme.  “It is well settled in the Second Circuit that a bank’s negligent failure to identify warning signs of fraudulent activity, such as atypical transactions – even where such signs converge to form a veritable ‘forest of red flags’ – is insufficient to impute actual knowledge of ongoing fraud.”  Likewise, the Court found that there were no allegations that the branch manager herself knew of the underlying scheme, but instead only knew that she was being asked to perform “atypical activities” for the individual defendants.  Second, the Court found that the banks were not liable for a breach of fiduciary duty to the plaintiffs, finding that “banks do not owe non-customers a duty to protect them from the intentional torts of their customers . . . With billions of banking transactions occurring in New York alone, this would be the equivalent of making New York banks liable to the world’s banking public.”

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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