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DOJ Policy Invalidates Special Environmental Projects in Settlements but Private Parties May Have Other Options Banner Image

DOJ Policy Invalidates Special Environmental Projects in Settlements but Private Parties May Have Other Options

Month: May 2020

DOJ Policy Invalidates Special Environmental Projects in Settlements but Private Parties May Have Other Options

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Recently, the Justice Department eliminated the use of supplemental environmental projects (“SEPs”) in United States Environmental Protection Agency (“USEPA”) settlements.  SEPs, environmentally beneficial projects implemented by a regulated entity, are not required by law but have been used for years to allow an entity to lower its penalty for a violation of environmental law.  Although the use of SEPs has been questioned in the past, the Justice Department now has determined that SEPs in settlements violate the Miscellaneous Receipts Act (“MRA”), 31 U.S.C. §3302, and can no longer be used.  As a result, instead of implementing these beneficial projects, many violators simply will pay higher fines into the United States Treasury, with no guarantee that the penalty money will be used for environmental protection.  However, by structuring the project to directly remedy the harm, which will be considered by the Justice Department as injunctive relief and not an SEP, there may be an avenue for violators to continue to include such projects in USEPA settlements.

The MRA requires that any federal official receiving funds on behalf of the federal government must deposit those funds directly into the Treasury.  The Justice Department has determined that the use of SEPs in settlements diverts money designated for the Treasury to a third party in violation of the MRA.  Also, according to the Justice Department, by trading monetary payments for projects not previously approved by Congress, SEPs allegedly allow government officials to make decisions regarding budgetary allocations, which they are not permitted to do. 

SEPs not only provide environmentally beneficial projects for communities but they also generate “goodwill” for violators, making them favored by both the regulated community and environmentalists.  SEPs include projects that reduce pollution impacts, preserve land, protect public health and promote renewable energy.  For years, the Justice Department and the USEPA have claimed that SEPs do not trade penalties for projects because penalties are not assessed and owed until the settlement is final.  Since the SEP is established before the settlement is finalized, no trade occurs and no money is diverted from the Treasury.  But the Justice Department now has changed its position pointing to the fact that an SEP can reduce penalties by, in some cases, 80%.   

In the past, the USEPA attempted to avoid conflict with the MRA by changing its policy to formulate SEPs so that they directly remedy the harm caused by the violation, which would be considered injunctive relief and not a separate third party project.  This older USEPA policy, however, continued to consider the relationship between the SEP and a reduction in penalties and, thus, does not adequately resolve the conflict with the MRA. 

Nevertheless, the Justice Department has acknowledged that a properly designed project, one that directly remedies the harm at issue and does not simply benefit third parties, may provide an avenue for allowing the use of environmentally beneficial projects in USEPA settlements as injunctive relief and not as an SEP.  Therefore, the regulated community should not abandon the use of environmentally beneficial projects when settling with USEPA, but rather, should work with their attorneys and consultants to develop projects that may properly be characterized as injunctive relief.  To avoid violating the MRA, however, such projects should not be tied to any reduction in monetary payments or penalties.

In response to the Justice Department’s decision, environmental activists may begin to push Congress to authorize the use of SEPs by statute.  If Congress were to authorize USEPA to use projects when settling with a violator, this would circumvent the alleged issues in the MRA because Congress is permitted to direct money designated for the Treasury.

For now, USEPA is not permitted to include SEPs in settlements.  Therefore, any party in the final stages of negotiations of a settlement that includes an SEP will have to renegotiate the settlement.  It may be beneficial to determine whether the negotiated SEP can be modified so that it is remedying the harm caused by the violation; otherwise the SEP will be eliminated and the settling party will likely face a higher penalty.  

For more information, please contact the author Laurie J. Sands at lsands@riker.com or any attorney in our Environmental Practice Group.

A Non-COVID-19 Update . . . Yes . . . You Read That Correctly

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Although everyone’s attention has been focused on COVID-19, other aspects of healthcare continue to move forward.  This update focuses on non-COVID-19 issues like five recent federal proposed payment rules, the recent Medicare Advantage Rate Announcement, and critical federal litigation.

For more information about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

FEDERAL REGULATORY UPDATE

Final Rule on Federally-Facilitated Exchanges and State-Based Exchanges

85 FR 29164 – Final – The Centers for Medicare & Medicaid Services ("CMS") issued a final rule setting forth standards for issuers, exchanges, and excepted benefit health reimbursement arrangements.  For 2021, the final rule maintains user fee rates at 3% for plans on the federally facilitated exchange and 2.5% for plans on the state-based exchange on the federal platform.  For states that run their own exchanges, CMS is giving them more flexibility to customize how quality information is displayed for consumers.  A more controversial aspect of the final rule updates maximum annual limitations on cost-sharing, which is likely to increase out-of-pocket spending for consumers who already have annual out-of-pocket spending close to the annual limit.  The final rule becomes effective July 13, 2020.

CMS Proposed Payment Rules

85 FR 20949 – Proposed – CMS proposed a rule to update the hospice wage index, payment rates, and cap amount for fiscal year (FY) 2021.  Specifically, CMS proposed increasing hospice payment rates by 2.6 percent in 2021, which would yield an additional $580 million for the Medicare Hospice Benefit.  CMS also wants to adopt the most recent Office of Management and Budget statistical area delineations to calculate wage indexes for hospices, with a 5 percent cap on wage index decreases.   Comments are due by June 9, 2020.

85 FR 20914– Proposed – This proposed rule would update the payment rates used under the prospective payment system (PPS) for skilled nursing facilities (SNFs) for fiscal year (FY) 2021. Specifically, CMS proposed increasing the SNF payment rates by 2.3 percent, which would yield an additional $784 million in payments.  CMS also wants to adopt the most recent Office of Management and Budget statistical area delineations to calculate wage indexes, with a 5 percent cap on wage index decreases.  The proposed rule includes changes to the International Classification of Diseases, Version 10 (ICD-10) codes to classify SNF patients into payment groups.  CMS is also proposing to align the SNF Value-Based Purchasing Program to apply the 30-day Phase One Review and Correction deadline to the baseline period quality measure quarterly report, and to establish performance periods and standards for upcoming program years.  Comments are due by June 9, 2020.

85 FR 20625– Proposed – CMS proposed a rule to update the prospective payment rates, the outlier threshold, and the wage index for Medicare inpatient hospital services provided by Inpatient Psychiatric Facilities (IPF), which include psychiatric hospitals and excluded psychiatric units of an Inpatient Prospective Payment System hospital or critical access hospital. Specifically, CMS proposes a 2.4 percent (or roughly $100 million) increase in IPF payments.  CMS also proposes that wage index decreases be capped at 5 percent, and that the most recent Office of Management and Budget (OMB) statistical area delineations be adopted.  Comments are due by June 9, 2020.

85 FR 22065 – Proposed – CMS proposed a rule to update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for federal fiscal year (FY) 2021.  As with the proposed rules for hospices, SNFs, and IPFs, CMS wants to adopt the most recent Office of Management and Budget statistical area delineations.  CMS also proposes a 5 perfect cap on any wage index decreases, applied in a budget neutral manner.  The proposed rule amends the IRF coverage requirements to remove the post-admission physician evaluation requirement, codify existing documentation instructions and guidance, and allow non-physician practitioners to perform certain requirements that are currently required to be performed by a rehabilitation physician.  Comments are due by June 15, 2020.

CMS-1735-P – Proposed – This rule, which will not be published until May 29, proposes updates to Medicare payment policies for hospitals paid under the Inpatient Prospective Payment System (IPPS) and the Long‑Term Care Hospital (LTCH) Prospective Payment System (PPS) for fiscal year (FY) 2021.  Despite fierce opposition from hospitals, CMS is continuing with its price transparency rule finalized in 2019. CMS proposes to collect a summary of certain data, including hospitals’ median payer‑specific negotiated inpatient services charges for Medicare Advantage organizations and third-party payers.  Overall payments for inpatient services would increase by roughly 1.6 percent, or $2.07 billion.   The rule also includes proposals to support access to new antimicrobials (antibiotics to treat drug‑resistant infections) for Medicare beneficiaries, including the alternative new technology add-on payment (NTAP) pathway.  CMS is also proposing a separate new hospital payment category for Chimeric Antigen Receptor (CAR) T-cell therapy.   CMS issued a fact sheet regarding the proposed rule.  Comments are due by July 10, 2020.

OIG Proposes an Increase in Civil Monetary Penalties

85 FR 22979 – Proposed – The Office of Inspector General (OIG) issued a proposed rule that would amend the civil money penalty (“CMP”) rules. First, this proposed rule would modify 42 CFR Parts 1003 and 1005 to add the Department of Health and Human Services’ (“HHS”) new authority related to fraud and other misconduct involving grants, contracts, and other agreements into the existing regulatory framework for the imposition and appeals of CMPs. Second, Section 4004 of the Cures Act added Sec. 3022 to the Public Health Service Act, which, among other provisions, provides OIG the authority to investigate claims of information blocking and authorizes the Secretary of HHS to impose CMPs against individuals who the OIG has determined committed information blocking.  Finally, the proposed regulation would codify the increased civil money penalties, which were increased under the Bipartisan Budget Act of 2018. Comments are due by June 23, 2020.

CMS Publishes CY 2021 Rate Announcement for Medicare Advantage and Part D Plans

CMS has released its Calendar Year (CY) 2021 Rate Announcement, which finalizes updates and changes to the methodologies used to pay Medicare Advantage organizations, PACE organizations, and Part D sponsors discussed in Parts I and II of the CY 2021 Advance Notice.  The Rate Announcement addresses comments received on Parts I and II of the CY 2021 Advance Notice published on January 6 and February 5, 2020, respectively. As part of this Announcement, CMS released the CY 2021 Rate Book and calculation data, which provides detail on the county-level Part C benchmarks, and a fact sheet summarizing the Rate Announcement.

FEDERAL LITIGATION

The Fifth Circuit Rules that DHS Calculations Include Payments from Medicare and Private Payers

As a follow-up to our previous update, the U.S. Court of Appeals for the Fifth Circuit recently ruled that Disproportionate Share Hospital (DHS) payment calculations do include Medicare and private insurer payments, concluding the rule was consistent with the Medicaid Act. DSH payments are supplemental payments made to hospitals that serve a disproportionate share of indigent patients. The payments are limited to the cost incurred for taking care of these patients. In 2017, CMS issued a rule that incurred costs should include net payments from third parties like Medicare and private health plans, which would reduce the DHS payments. The Court overturned  a lower court decision that sided with a challenge of the rule led by eight Mississippi hospitals.  The case is Baptist Memorial Hospital et al v. Alex M. Azar, II et al. Case No. 18-60592.

United States Supreme Court Rules that Congress Bilked ACA Insurers

The Supreme Court recently ruled that the federal government acted unlawfully when it reneged on a commitment to shield Affordable Care Act (ACA) insurers from heavy financial losses. The ruling reversed a Federal Circuit decision that left in place Congress' denial of $12 billion in "risk corridor" funding, which the ACA dangled as an incentive for insurers during the law's first three years of operation. The risk corridor program was funded partly with contributions from highly profitable ACA insurers, but there was still a $12 billion shortfall. Litigation has centered on the ACA's directive that the U.S. Department of Health and Human Services "shall pay" money to certain money-losing insurers — a directive that insurers have called unequivocal and inescapable. The Supreme Court agreed and rejected the federal government's argument that the language essentially had an asterisk allowing risk corridor dollars to be spent only if specifically appropriated by Congress. The case is Maine Community Health Options v. U.S., Case No. 18-1023.

If you have any questions about the issues discussed in this Update, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

Texas Federal Court Holds Individual Could Not Bring RESPA Claim for Loan Issued to Her LLC

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The United States District Court for the Western District of Texas recently dismissed an individual plaintiff’s RESPA claims because the borrower under the loan was actually her LLC.  See Cocchia v. LendingHome Funding Corp., 2020 WL 1879223 (W.D. Tex. Apr. 15, 2020).  Plaintiff purchased the subject property “with an LLC, . . . for the initial purpose of using the property as a rental.”  In January 2020, after a default under the loan documents, plaintiff brought this action seeking to enjoin the foreclosure sale of the property scheduled for that month.  In the complaint, she alleged that she had submitted a qualified written request (“QWR”) to the servicer and the servicer had not responded, and that she had submitted a loss mitigation application but had not received a denial letter.  After the state court stayed the foreclosure, the servicer removed the action and filed a motion to dismiss.

The Court granted the motion to dismiss.  Under 12 C.F.R. § 1041(g), if a borrower files a timely loss mitigation application, a servicer cannot hold a foreclosure sale until it responds.  Likewise, a servicer is required to respond to a QWR under 12 C.F.R. § 1035.  Nonetheless, the Court found that, by plaintiff’s own admission, her LLC purchased the property for a business purpose and is the borrower on the loan documents, regardless of her claim that it is now her homestead.  Because RESPA does not apply to “credit transactions involving extensions of credit . . . primarily for business, commercial, or agricultural purposes,” plaintiff could not bring a RESPA claim.

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

California Appellate Court Holds Limitations Period for Quiet Title Action Did Not Begin When Homeowners Received Notice of Trustee’s Sale

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The California Court of Appeals recently found that a quiet title action brought by homeowners challenging a deed of trust five years after receiving a notice of trustee’s sale was not untimely because their possession was not disturbed, as they immediately submitted the issue to the title insurer.  See Huang v. Wells Fargo Bank, N.A., 2020 WL 2059951 (Cal. Ct. App. Apr. 29, 2020).  Plaintiffs purchased the property at issue in 2009.  Later that year, they received a notice of trustee’s sale from the holder of a deed of trust from the prior owner.  Plaintiffs sent the notice to their title company, who told them it would investigate.  The sale was adjourned, and plaintiffs assumed the issue was resolved.  Five years later, plaintiffs received another notice of trustee’s sale.  At this point, they brought a quiet title action against the lender.  The lender filed a motion for summary judgment, and the trial court granted the motion dismissing the complaint, finding that plaintiffs’ action was time-barred under California’s three-year statute of limitations.

On appeal, the Court reversed.  The Court held that “more than a threat to one’s title is required to commence the running of the limitations period against an owner in possession,” and that the period should not run until possession is “disturbed.”  Here, the Court found that the 2009 notice of trustee’s sale did not disturb plaintiffs’ possession because they immediately informed their title insurer and took action to resolve the issue.  “The matter was in the hands of their title insurer, and the Huangs should not be expected to independently sue to protect their title. . . . any challenge to their dominion was eliminated once the Huangs, pursuant to the advisement on the notice, took action to prevent the sale and the sale was indefinitely postponed.”  Thus, the limitations period did not begin to run in 2009 and the action was timely.  Finally, the Court recognized that the doctrine of laches may apply here, but that this doctrine was not at issue in this motion.

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

New Jersey Department of Health Issues Guidance on the Resumption of Elective Surgeries

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If you have any questions about the issues discussed in this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

As a follow-up to yesterday’s blog post, the New Jersey Department of Health (“NJDOH”) issued its guidance on the resumption of elective surgeries in hospitals and licensed ambulatory surgery centers.  As we mentioned yesterday, the Division of Consumer Affairs (“DCA”) issued guidance addressing the resumption of (1) medically necessary or therapeutic services and (2) elective procedures in the office setting.   Both guidance documents are similar in many respects, but the NJDOH’s guidance for performing elective procedures in licensed ambulatory surgery centers (“ASCs”) adds several requirements.

First, an ASC has to confirm with the hospital that it has a transfer agreement with the hospital that meets the downward trajectory calculations set forth in Section B of NJDOH’s guidance.   Also, before each surgery day, the ASC must confirm and document that the hospital has the appropriate number of intensive care unit (ICU) and non-ICU beds to support its potential need for emergent transfers, personal protective equipment, ventilators, medications, and trained staff to treat all patients.

Second, the NJDOH’s guidance, similar to the DCA’s guidance, requires ASCs to prioritize procedures, but the prioritization criteria are somewhat different.  Compare NJDOH’s guidance in Section C(1) to the DCA’s guidance in Section 1(d).

Third, the NJDOH guidance states that ASCs cannot perform procedures on confirmed COVID-19 patients regardless of whether the patient is asymptomatic.  The DCA’s guidance recommends that providers postpone any elective surgery for confirmed COVID-19 asymptomatic patients if, in the provider’s professional judgment, a postponement will unlikely result in an adverse outcome.

Fourth, although both guidance documents require testing, the NJDOH guidance specifically states each patient must be tested (specimen collected and results received) within a 96-hour maximum before a scheduled procedure with a preoperative COVID-19 RT-PCR test and ensure COVID-19 negative status.  In connection with the testing, the NJDOH guidance requires patients to self-quarantine, among other things, after the testing and up until the day of surgery.

Please visit Riker Danzig’s COVID-19 Resource Center to stay up to date on all related legal issues.

Illinois Appellate Court Holds One-Year Limitations Period Applies to TILA Rescission Claim

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The Appellate Court of Illinois recently found that borrowers bringing a claim under the Truth in Lending Act (“TILA”) for a lender’s refusal to rescind a mortgage must bring the action within one year of the lender’s violation.  See U.S. Bank Nat’l Ass'n v. Miller, 2020 IL App (1st) 191029 (Ill. App. 2020).  The defendant borrowers refinanced their mortgage in 2007.  In 2009, the plaintiff lender initiated a foreclosure action and, in 2011, defendants filed a counterclaim that plaintiff violated TILA by changing the loan terms at closing and failing to provide required disclosures.  Defendants also claimed that they rescinded the loan in 2010 but that plaintiff did not respond within the required 20 days.  Through the counterclaim, defendants sought both rescission of the loan and mortgage under 15 U.S.C. § 1635(b), as well as costs and attorneys’ fees under 15 U.S.C. § 1640.  Plaintiff argued that the TILA counterclaim was untimely and the trial court agreed, dismissing the counterclaim.

On appeal, the Court affirmed.  First, the Court found that the claim under section 1640 is untimely.  Section 1640(e) states that any action brought under it must be commenced within one year from the violation.  In this case, defendants waited one year and four months from after plaintiff failed to respond to the rescission request to bring the counterclaim.  Second, the Court found that the one-year statute of limitations found in section 1640 should apply to section 1635.  The Court noted that section 1635 does not provide a limitations period and that some federal circuit courts have applied state limitations periods to rescission claims.  It further noted that some district courts, including the Northern District of Illinois, have borrowed section 1640’s one-year period and applied it to section 1635.  Thus, although the Court stated that “[t]his split in federal authority begs our supreme court to take up the question of the appropriate statute of limitations for claims arising under section 1635 of TILA,” it agreed with the District Court cases that a one-year period should apply.  “[W]ithin 20 days of sending a notice of rescission, the borrower knows whether the bank will respect that notice. It is difficult to conceive of a justification for a lengthy statute of limitations, where the accrual of a claim is so straightforward.”

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

New Jersey’s Division of Consumer Affairs Issues Order on the Resumption of Elective Surgeries

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If you have any questions about the issues discussed in this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

On Friday, May 15, 2020, Governor Phil Murphy executed Executive Order No. 145, which allows for the resumption of elective surgeries, both medical and dental, starting Tuesday, May 26 at 5:00 a.m. The Order required the New Jersey Department of Health (“NJDOH”) and the Division of Consumer Affairs (“DCA”) to issue policies by Monday, May 18, to address where, when and how these surgeries can resume.

Late last night, the DCA issued its Order, which appears to apply to practitioners providing two different types of services in the office:  (1) in-person adult and pediatric medically necessary or therapeutic services and (2) elective procedures.   The DCA identifies different, but in many cases overlapping, protocols a practitioner must have in place before providing either type of service.   For example, for either service, practitioners must, among other things, screen patients and staff and wear the proper PPE.  The Order also states that providers cannot perform elective surgeries on any confirmed COVID-19 patients who are symptomatic until after certain time frames.  In addition, providers should postpone any elective surgery for confirmed COVID-19 asymptomatic patients if, in the provider’s professional judgment, a postponement will unlikely result in an adverse outcome.   As a result, providers will have to test their patients before performing elective surgery.

We are still awaiting the NJDOH’s guidance, and we will modify this blog post as soon as it is released.

Please visit Riker Danzig’s COVID-19 Resource Center to stay up to date on all related legal issues.

New Jersey Court Vacates Final Judgment in Tax Sale Foreclosure

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The New Jersey Chancery Division in Bergen County recently vacated a final judgment of foreclosure based on the defendant’s principal’s health issues and its attorney’s alleged negligence.  See BV001 REO Blocker, LLC v. HB (USA) Properties, LLC, Docket No. BER-F-2097-19.  Plaintiff filed a tax foreclosure complaint relating to the defendant entity’s property in January 2019 and served defendant in February.  The principal of defendant, who lived in the home, hired an attorney to represent defendant in the action.  During this period, the principal was dealing with his own health issues, “such as tonsillar cancer, and new medical issues involving his eyesight, back pain, and a stage 4 diagnosis of prostate cancer in May 2019,” as well as his children’s “severe mental health issues.”  The principal also allegedly informed the attorney that he had family members who could pay the tax lien.  Nonetheless, defendant did not file an answer, plaintiff moved for final judgment, and the Court entered final judgment on July 31, 2019.  Upon being served with the final judgment motion papers, defendant’s counsel informed the principal that he had until August 19 to pay off the taxes.  Defendant attempted to do so on August 14, but was informed by the tax collector that it was too late.  On November 17, 2019, defendant moved to vacate default judgment under Rule 4:50-1(f).

The Court granted the motion.  First, the Court held that N.J.S.A. 54:5-87—which plaintiff cites and which holds that a party has three months to seek to vacate a tax sale judgment, absent fraud or lack of jurisdiction—does not control here.  Instead, it held that Rule 4:50-1 “has supremacy over the foreclosure statutes that Plaintiff cites as controlling” in “appropriate cases,” and that this case was “appropriate” due to “the myriad of issues Defendant faced.”  Second, the Court held that the final judgment should be vacated under Rule 4:50-1 based on the attorney’s apparent negligence and the other underlying factors.  The Court found that “Defendant had the necessary funds and was ready to pay off the tax lien,” but failed to do so because “Defendant’s attorney purportedly gave Defendant misinformation.”  Stated otherwise, the Court found that “Defendant took every action that it thought was necessary to satisfy its debt, while also dealing with a host of serious personal and familial health issues.”  It also found that defendant’s delay in bringing this motion was minimal and that plaintiff would not be prejudiced.  Finally, the Court noted that the tax lien was $180,000 and the property was worth $1.15 million and, in addition to the fact that plaintiff would obtain a substantial windfall, defendant’s principal would be evicted from his home if the foreclosure were not vacated.

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

A Refocus on Nursing Homes, Other COVID-19 Updates, and New Jersey Adopts Telemedicine Rules

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If you have any questions about this blog post, please contact Khaled J. Klele, Ryan M. Magee, or Labinot Alexander Berlajolli.

Skilled Nursing Homes

The Centers for Medicare & Medicaid Services ("CMS") recently announced a new independent Commission that will conduct a comprehensive assessment of the nursing home response to COVID-19.  The Commission is expected to develop recommendations on three key tasks: (1) putting nursing home residents first by ensuring they are protected from COVID-19 and improving the responsiveness of care delivery to maximize the quality of life for residents; (2) strengthening efforts to enable rapid and effective identification and mitigation of COVID-19 transmission and other infectious diseases in nursing homes; and (3) enhancing strategies to improve compliance with infection control policies in response to COVID-19.

In addition, CMS announced that it intends to require nursing homes to notify their residents and representatives within 12 hours of confirmed COVID-19 cases in the nursing home or notification if three or more residents or staff with new onset of respiratory symptoms occur within 72 hours.   The notice must also include information on mitigation actions implemented to prevent transmission, and describe if and how normal operations will be altered.

CMS Recommendations for Re-Opening Facilities

CMS has issued new guidelines for re-opening facilities to provide essential non-COVID-19 care to patients without symptoms of COVID-19 in regions with low and stable incidence of the virus.  These recommendations are intended to provide guidance for communities that have entered or anticipate immediately entering Phase 1 of the Guidelines for Opening Up America Again.   CMS still advises that healthcare facilities and providers in areas seeing a higher number of COVID-19 cases should continue to follow their recommendations issued in March 2019.

Interim Final Rule

85 FR 27550 – Interim Final Rule – Our last update focused on CMS’ second set of sweeping regulatory changes.   Since then, CMS published an interim final rule on May 8, 2020 formalizing those changes.  The interim rule was effective May 8, 2020.  Comments must be submitted by July 7, 2020.

Interoperability Final Rule Delayed

The Office of the National Coordinator for Health IT (“ONC”), CMS and the OIG announced that, in light of COVID-19, they will delay their respective portions of the Interoperability and Patient Access Final Rule (“Final Rule”). ONC stated that it will exercise its discretion in delaying enforcement of all new requirements under the Final Rule until 3 months after the initial compliance dates and timeframes.  The enforcement discretion dates and timeframes are listed here.  CMS released a statement that it is extending the implementation timeline for the admission, discharge, and transfer notification Conditions of Participation (“CoPs”) by an additional six months, such that CoPs will now be effective 12 months after the Final Rule is published in the Federal Register.  Finally, enforcement of the Patient Access API for Qualified Health Plan issuers will not be enforced until July 1, 2021.

Independent Freestanding Emergency Departments

In an effort to increase hospital capacity, CMS recently issued guidance allowing independent freestanding emergency departments (“EDs”) to provide care to Medicare and Medicaid patients and bill for those services during the COVID-19 pandemic.   EDs may participate in Medicare and Medicaid in three ways: (1) as a hospital‑affiliated ED under the 1135 emergency waivers; (2) as Medicaid-certified clinics under the state’s clinic benefit; and (3) as a Medicare-certified hospital by temporarily enrolling in Medicare as a hospital through the attestation process detailed in the CMS guidance.

Federal Regulations

85 FR 22024 – Final Rule – Following the Office of Civil Rights (“OCR”) announcement to allow alternative technologies to provide more flexibilities in providing telehealth, the Department of Health and Human Services (HHS) issued this final rule formalizing that flexibility.  As previously noted, providers may use video chats, including Apple FaceTime, Facebook Messenger video chat, Google Hangouts video, Zoom, or Skype.  However, Facebook Live, Twitch, TikTok, and similar video communication applications should not be used because they are public facing.  The rule is effective, retroactively, to March 17, 2020 and will remain in effect until the Secretary of HHS declares that the public health emergency no longer exists, or upon the expiration date of the declared public health emergency, including any extensions.

85 FR 22978 – Proposed – CMS recently extended the comment period to June 23, 2020 for the proposed rule titled ‘‘Medicare Program: Comprehensive Care for Joint Replacement (CJR) Model Three-Year Extension and Changes to Episode Definition and Pricing.”  The proposed rule, first published on February 24, 2020, sought to revise certain aspects of the CJR model.  Due to COVID-19, and in order to receive the benefit of an active commentary, the comment period has been extended.

New Jersey Statutes

S2357 – Approved – This bill requires hospitals to report COVID-19 demographic data to the Department of Health (DOH) including the age, ethnicity, gender, and race, of persons who have tested positive, who have died from, who have sought treatment for, who have been admitted for treatment, and who were turned away from testing for COVID-19. The bill provides that DOH is to publish the demographic data on its internet website, with daily updates providing the latest demographic data.  The data collected thus far has been uploaded to the DOH’s website. To review this data, which is updated daily, click here.

New Jersey Regulations

52 N.J.R. 890(b) – Final – The State Board of Medical Examiners (“BME”) adopted the telemedicine and telehealth rules it proposed last year.   Importantly, the BME rejected several commentators’ request that the BME delete the requirement that a physician be licensed in New Jersey if the physician is located in New Jersey while treating patients via telemedicine who are located outside of New Jersey at the time of treatment.

52 N.J.R. 894(a) – Final – The BME adopted these final rules that were proposed last year implementing telemedicine and telehealth rules for midwives.

52 N.J.R. 896(b) – Final – The Board of Nursing adopted rules, proposed last year, regarding the standards by which an advanced practice nurse may transmit, or have an authorized agent transmit, an electronic prescription to a pharmacy.

52 N.J.R. 866(a) – Proposed --  In 2019, New Jersey entered the Nurse Licensure Compact. The Compact is an agreement between states in which nurses licensed in one member state ("home state") may work in another member state ("remote state") without obtaining a license in the remote state. To effectuate the Compact, the Board of Nursing proposes amendments and new rules to establish the procedures for applying for licenses with multistate privileges. Comments are due by June 19, 2020.

52 N.J.R. 867(a) – Proposed – The Board of Nursing proposes to amend N.J.A.C. 13:37-5.3 and 7.2 to effectuate the requirements of P.L. 2017, c. 28. to complete continuing education or initial education in pharmacologic therapy, addiction prevention and management, and issues concerning opioid drugs. An applicant for certification as an advanced practice nurse must complete this education as part of his or her six hours in pharmacology.  Comments are due by June 19, 2020.

Please visit Riker Danzig’s COVID-19 Resource Center to stay up to date on all related legal issues.

D.C. Federal Court Holds Insured Not Entitled to Defense in Forged Deed Lawsuit After Insured Conveyed Property

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The United States District Court for the District of Columbia recently held that an insured was not entitled to a defense in a lawsuit alleging a forged deed after it conveyed the property, and when the underlying complaint alleges that the insured was involved in wrongful conduct.  See Sec. Title Guarantee Corp. of Baltimore v. 915 Decatur St NW, LLC, 2019 WL 6728449 (D.D.C. Dec. 11, 2019), as amended (Mar. 23, 2020).  In the case, the insured defendant purportedly purchased a property in 2016.  That same day, the insured sold the property to another entity.  The plaintiff title insurance company issued a title insurance policy to the insured.  In 2017, the prior owner of the property brought a lawsuit against the insured and the subsequent purchaser, alleging that her signature on the deed to the insured was forged.  The insured submitted a claim to the title insurer, and the insurer denied the claim.  The insurer then brought this action seeking a declaratory judgment that the insured was not entitled to coverage under the policy, and the parties cross-moved for summary judgment.

The Court granted the title insurer’s motion in part and denied the insured’s motion.  Under the policy, the insured had coverage “only so long as” it retained an interest in the property, held an obligation secured by a purchase money mortgage, or would be liable due to warranties in the transfer of title.  The Court found that most of the claims made by the prior owner, including claims of fraud or negligence, were not covered because they related to the insured’s actions before it purchased the property.  Therefore, they were not “losses or damages that were effectively incurred during the coverage period when [the insured] owned the property” and not covered by the policy.  The Court further found that there were no warranties in the insured’s deed to the other entity that would allow coverage to continue for these claims.  The Court found that only two of the prior owner’s claims fell within the coverage period:  “trespass for mesne profits,” which was about the money the insured received for the sale of the property, and conversion.  Nonetheless, the Court held that these two claims, among others, are excluded under the policy’s Exclusion 3(a), which bars claims “created, suffered, assumed or agreed to” by the insured.  Using the “eight corners” rule, the Court held that coverage was determined by comparing the allegations of the complaint with the policy language.  Because the prior owner’s claims all centered on the allegation that the insured was actively involved in the allegedly fraudulent transfer of the Property, Exclusion 3(a) barred coverage.  Finally, the Court denied the title insurer’s argument that it had no duty to indemnify the insured, finding that the motion was premature.  The Court found that, although there is not coverage right now based on the claims in the complaint, the development of facts in the underlying litigation might ultimately result in a covered loss.  “While the facts as alleged in the Complaint are such that [the insurer] has no duty to defend the suit, it is less clear that it will, under no circumstances, have no duty to indemnify any losses.”

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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