Search Icon
Federal Regulatory Update and Recent Litigation Banner Image

Federal Regulatory Update and Recent Litigation

Month: November 2019

Federal Regulatory Update and Recent Litigation

Posted on by rd_admin

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

The Department of Health and Human Services (HHS) recently published 84 FR 59549, requiring annual inflation-related increases to the civil monetary penalties associated with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the Act).  The Act aims to improve the effectiveness of civil monetary penalties and to maintain a deterrent effect against violations of federal statutes or regulations.

  The regulation adjusts those civil monetary penalties to account for annual inflation, increasing civil monetary penalties using consumer price index and cost-of-living data for year 2019.  This final rule became effective on November 5, 2019.

The Centers for Medicare & Medicaid Services (CMS) also published 84 FR 59529, finalizing payment methodologies associated with Basic Health Plans (BHP) under the Affordable Care Act for years 2019 and 2020.  Currently, states pay a portion of BHP costs each year.  However, the proposed change in BHP methodology will shift an additional portion of BHP costs from the federal government to the states, with a potential increase in beneficiary contributions and potential decreases in provider payment rates (including rates to standard health plans in the BHP).  This final rule becomes effective January 6, 2020.

Recent Litigation

Missouri Hospital Assoc. v. Azar, No. 18-1778 (8th Cir. 2019):  In this matter, the Eighth Circuit held that an HHS rule requiring Medicaid reimbursements for Disproportionate Share Hospitals (DSH) (i.e., hospitals that serve a number of low-income patients) to be reduced based on payments they receive from Medicare and private insurers is valid.  At the district court below, the Missouri Hospital Association (MHA) challenged the rule’s definition of “costs incurred” and the discretion it delegated to the Secretary of HHS to include payments by Medicare and private insurance in the DSH payment calculation.  The Eighth Circuit reversed the district court’s grant of summary judgment for MHA. 

The Eighth Circuit’s reversal follows a U.S. Court of Appeals for the District of Columbia Circuit decision we previously covered in August of this year, Children’s Hospital Association of Texas, et al. v. Azar.  In that decision, the D.C. Circuit held that Congress “did not intend to exclude Medicare and private insurance payments” from the methodology used to reduce payments for hospitals serving low-income patient populations. 

NJDEP Changes Policy for Applicability of the ISRA De Minimis Quantity Exemption

Posted on by rd_admin

Certain business transactions involving property in New Jersey now risk facing expanded environmental obligations if the parties do not follow an administrative policy that has been quietly revised by the New Jersey Department of Environmental Protection (“NJDEP”).  The environmental obligations at issue arise under the New Jersey Industrial Site Recovery Act (“ISRA”), which requires owners and/or operators of “industrial establishments” in New Jersey that cease operations or undergo a transfer of ownership or operational control to conduct an environmental review of and, if necessary, remediation of the industrial establishment prior to closing the transaction.  However, ISRA allows those responsible for “industrial establishments” to avoid complying with the substantive requirements of ISRA as long as the establishment qualifies for a De Minimis Quantity Exemption (“DQE”).  A DQE is available if an industrial establishment only has small (i.e., de minimis) amounts of hazardous materials present on site, and must be approved by the NJDEP based on an application submitted in connection with the transaction. 

Until August 2019, the owner or operator of an industrial establishment that qualified for a DQE was able to apply for a DQE even after consummation of the transaction that triggered ISRA.  Indeed, that practice was affirmed in 2017 by the Appellate Division, which found that the former owner of an ISRA subject property could seek a DQE twenty years after the sale of the property to a new owner.  R&K Associates, LLC v. NJDEP, 2017 WL 1316169 (April 10, 2017) (holding “[i]f liability under ISRA can extend to a former ‘owner’ then the avenue for an exemption equitably and logically should extend reciprocally to qualified former owners, as well.”)  With the publication of a new DQE application form, NJDEP now states that if the sale or transfer of ownership or operations has already occurred, the industrial establishment is not eligible for a DQE.  As a result, owners and operators that were eligible for the exemption will now have to substantively comply with ISRA unless they apply for and receive a DQE prior to the completion of the transaction. 

NJDEP’s new policy may be subject to challenge because it is not based on a statutory or regulatory amendment and the change in policy clearly conflicts with the holding of the Appellate Division in R&K Associates.  In any event, owners and operators of industrial establishments should take heed that failure to comply with the policy may expand their obligations under ISRA by requiring substantive compliance even when a DQE would have been available.  

For more information, please contact the author Alexa Richman-La Londe at alalonde@riker.com or any attorney in our Environmental Practice Group.

Update on Prescription Drug Legislation

Posted on by rd_admin

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

Last week, the House approved two bills intended to improve prescription drug pricing transparency for patients.  H.R. 2115, the Public Disclosure of Drug Discounts Act, requires CMS to publish certain payment information regarding pharmacy benefit managers (PBMs) and prescription drugs.  The House also approved H.R. 1781,  Payment Commission Data Act of 2019, which together with H.R. 2115, proposes amending Titles XVIII and XIX of the Social Security Act to provide greater transparency of discounts provided by drug manufacturers.  Both bills should now progress to the Senate for consideration. 

Primary Care First Model:   CMS recently opened the application period for the Primary Care First advanced alternative payment model.  The start date was delayed to January 1, 2021. To meet that start date, you must apply by January 22, 2020. 

CMS Delays Pricing Requirement:  We previously reported in July 2019 that the Trump Administration would require hospitals to publish their negotiated rates with insurers.   CMS recently announced that it was delaying the rule to address the more than 1400 comments it received in connection with the Proposal, but the Trump Administration continues to push the rule and will likely expand it to include insurers, which will more than likely lead to legal action. 

New Jersey Appellate Division Affirms Dismissal of Predatory Lending Counterclaim in Foreclosure Action

Posted on by rd_admin

The New Jersey Appellate Division recently affirmed a trial court’s decision that granted a foreclosing lender summary judgment and struck the borrower’s answer and counterclaim in which the borrower made predatory lending allegations.  See Deutsche Bank Nat’l Tr. Co. as Tr. of IndyMac INDX Mortg. Tr. 2007-AR19, Mortg. Pass-Through Certificates, Series 2007-AR19 v. Merz, 2019 WL 4940213 (N.J. Super. Ct. App. Div. Oct. 8, 2019).  In the case, the lender issued a loan to the borrower in 2007 that was secured by a mortgage on the borrower’s home.  The borrower defaulted in 2010 and the lender brought this action in 2015.  The borrower counterclaimed under the Consumer Fraud Act (the “CFA”) and alleged that the lender or its predecessor in interest engaged in predatory lending practices, including convincing the borrower to enter into an adjustable rate loan he could not afford and inflating the appraised value of the property.  The trial court granted the lender’s motion for summary judgment and struck the borrower’s answer and counterclaim.

On appeal, the Court affirmed.  First, the Court found that although the CFA is subject to a six-year statute of limitations, the claim “is preserved under the doctrine of equitable recoupment, which allows a defendant to assert an otherwise stale CFA claim and avoid the statute of limitations, "where, . . . the defendant uses the claim ‘as a shield by way of counterclaim’ instead of ‘as a sword.’"  Thus, the borrower’s counterclaim was timely even though it was not raised until eight years after the subject transaction.  Second, the Court found that the borrower had not set forth sufficient evidence to defeat the summary judgment motion.  Among other things, the Court noted that the borrower was able to make monthly payments for three years before defaulting and did not raise any predatory lending allegations until this action.  Moreover, the Court found that the borrower did not proffer anything more than conclusory allegations and “evidence in the media” of predatory practices, and that the borrower clearly benefited from the loan because “the record shows the proceeds from the subject loan were used to pay off [the borrower’s] prior liens and credit card debts as well as provide [the borrower] with $18,000 in cash at closing.”  Accordingly, the Court found that the trial court had properly dismissed the borrower’s counterclaim.

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

Get Our Latest Insights

Subscribe