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NJDEP Proposes Significant Changes to Inland Flood Hazard Area Regulations Banner Image

NJDEP Proposes Significant Changes to Inland Flood Hazard Area Regulations

Month: October 2022

NJDEP Proposes Significant Changes to Inland Flood Hazard Area Regulations

Posted on by Christie Bowness

The New Jersey Department of Environmental Protection (“NJDEP”) has announced that it will propose an Inland Flood Protection Rule to revise its flood hazard and stormwater management rules in an effort to mitigate the impacts of increased flooding and stormwater runoff caused by climate change.  With the proposal, NJDEP plans to replace older precipitation estimates with more recent data that considers current and projected future increases in rainfall and stormwater runoff caused by more frequent and severe storm events.  For now, these rule changes affect only fluvial flood areas (i.e., areas surrounding non-tidal rivers and streams).  However, NJDEP is planning a more comprehensive package of revisions to the State’s land use rules as part of its New Jersey Protecting Against Climate Threats (“NJPACT”) initiative, which is anticipated to propose additional new rules in response to coastal flooding risks.

Once contemplated as an emergency rule with immediate effect, NJDEP now intends to follow the normal rulemaking process and publish the proposal in the New Jersey Register on December 5, 2022, with a virtual public hearing scheduled for January 11, 2023 and a 60-day comment period that will run through February 3, 2023.  Under the typical rulemaking process, the proposed rule will not be adopted and become effective until after the Department responds to these public comments.  The proposal follows a series of public engagement sessions with stakeholders, including developers, municipalities and environmental groups, wherein members of the regulated community voiced their concerns with adoption of the Inland Flood Protection Rule as an emergency rule.

The rule proposal, a pre-publication copy of which is provided here (Inland Flood Protection Rule Proposal), contains the following key components:

  • The fluvial (non-tidal) Design Flood Elevation (which dictates the elevation required for habitable first floors) will be raised by two feet (2 ft.) in comparison to the NJDEP’s current flood maps and by three feet (3 ft.) in comparison to current FEMA maps.
  • Applicants will be required to use future projected precipitation data (year 2100 projections) when calculating flood elevations.
  • Stormwater Best Management Practices (“BMPs”) designs will need to be based on the revised and future projected precipitation data.
  • Certain existing methods for calculating stormwater amounts/impacts (i.e., Rational and Modified Rational methods) will no longer be allowed.
  • NJDEP flood hazard permits will need to conform to NJ Uniform Construction Code standards and meet or exceed minimum FEMA National Flood Insurance Program requirements.

These rule changes will impose significant new development restrictions, conditions and constraints for many projects.  By raising the Design Flood Elevation, large areas of New Jersey that are not currently regulated soon will fall within the flood hazard area and will need an NJDEP permit for development and other regulated activity.  This elevation increase may impact the financial feasibility of projects by imposing new permitting costs and development restrictions, and it also may create new difficulties with access, since current roadways and other access points may be below the soon-to-be-required elevation.  In addition, the changed BMPs for stormwater management design likely will result in larger required stormwater retention areas and other management systems that can reduce the developable area of a site.  Furthermore, existing NJDEP-issued flood hazard area verifications (which confirm the existing flood hazard area limits and design flood elevations), if calculated based on older data, may no longer be valid.

In consideration of the significant impacts of this proposed rule and the fact that many projects, including those currently not subject to regulation, already are or are soon to be underway, NJDEP is proposing that the new requirements apply only to new or reconstructed development.  Also, any permit application deemed administratively complete before the rule is adopted will not be subject to the proposed changes.

Although NJDEP has made this “grandfathering” accommodation, it is likely that the regulated community will make comments to the rule proposal to request a delay to the adoption and provide further relief under the grandfathering and hardship provisions so that those affected by the rule have more time to consider the impact of and plan for these rule changes.

Riker Danzig’s environmental attorneys will continue to monitor and report on these new developments as well as NJDEP’s larger NJPACT initiative.  For more information or to discuss how the proposed Inland Flood Protection Rule may affect your project or property, please contact Jaan Haus at jhaus@riker.com or any attorney in our Environmental Practice Group.

New Federal Court Ruling On EKRA and Commission-Based Compensation With Sales Agents

Posted on by Jessica Civetta

Case law defining the application and scope of the Eliminating Kickbacks in Recovery Act (“EKRA),” 18 U.S.C. §220, has continued to grow since its passage in 2018. Over the past several months, the United States District Court for the Northern District of California, San Jose Division, issued rulings in relation to EKRA in the matter of United States v. Schena (Case No. 5:20-cr-00425-EJD-1).

The Schena matter entails a laundry list of alleged wrongful actions by Arrayit Corporation, a California-based biomedical company that advertised microarray-based testing claims, and subsequent inability to substantiate such claims. Among the allegations were that Arrayit had orchestrated a kickback scheme by paying kickbacks and bribes to its recruiters based on the number of patient referrals they secured for Arrayit. Arrayit moved to dismiss the EKRA claims, relying on S&G Labs Haw., LLC v. Graves, 2021 WL 4847430 (D. Haw. Oct. 18, 2021) to argue that EKRA did not apply as there was no direct interactions between its marketers and the individual patients.

In S&G Labs, the U.S. District Court for the District of Hawaii held that a commission-based lab employee did not violate EKRA because the lab employees did not refer individual patients, but instead, solicited physicians to refer patients to the lab. However, the Schena court rejected the S&G Labs analysis, finding that “EKRA’s safe harbors did not extend to all employer-employee remunerations.” Specifically, highlighting the vague definitions of “remuneration” and “individual” under both EKRA and the Anti-Kickback Statute, the Schena court held that EKRA lacked any directness requirement regarding interactions with individuals, thereby bringing Arrayit’s indirect interactions between its recruiters and patients under EKRA’s purview.

The Schena court’s rejection of Arrayit’s S&G Labs-based defense emphasizes the potential liability risks under ERKA for recovery homes, clinical treatment facilities, and clinical laboratories that pay their marketers based on productivity.

CMS Enhancing Oversight of Poor Performing Nursing Homes

Posted on by Christie Bowness

The Centers for Medicare & Medicaid Service ("CMS") recently announced that it will begin toughening program requirements and oversight for nursing homes participating in its Special Focus Facility ("SFF") Program, a CMS initiative to rehabilitate poorly performing nursing homes. Under the SFF program, participating nursing homes are inspected biannually regarding their adherence to Medicare health and safety requirements. Based on these inspections, CMS issues recommendations for progressive enforcement (e.g., civil money penalties, denial of Medicare payment, etc.) until the nursing home either (1) graduates from the program; or (2) is terminated from the Medicare and/or Medicaid program(s).

CMS’s proposed overhaul of the SFF program consists of four main tenets:

  1. Toughening Program Requirements: CMS is strengthening the criteria for successful completion of the SFF Program by adding a threshold that prevents a facility from exiting based on the total number of deficiencies cited. Facilities will need to demonstrate systemic improvements in quality to graduate from the program.
  2. Termination of Non-Improving Facilities: CMS will consider all facilities cited with Immediate Jeopardy deficiencies on any two surveys while in the SFF Program for discretionary termination from the Medicare and/or Medicaid programs.
  3. Enhancing Enforcement Actions: CMS is imposing more severe, escalating enforcement remedies for SFF Program facilities that have continued noncompliance and little or no demonstrated effort to improve performance.
  4. Incentivizing Sustainable Improvements: CMS is extending the monitoring period and maintaining readiness to impose progressively severe enforcement actions against nursing homes whose performance declines after graduation from the SFF Program.

CMS further recommended that facilities make good faith efforts to improve quality and make measurable changes, such as by engaging CMS Quality Improvement Organizations and hiring external consultants to support performance improvement, as such efforts will be considered when evaluating potential enforcement actions for noncompliance.

The changes to the SFF program are effective immediately, with the CMS Center for Clinical Standards and Quality/Quality, Safety & Oversight Group advising facilities to advise staff within 30 days.

NJDEP Adopts Interim Soil Remediation Standards for PFAS

Posted on by Jessica Civetta

The New Jersey Department of Environmental Protection (“NJDEP”) published interim soil and soil leachate remediation standards for PFNA, PFOA, PFOS, and GenX on October 17th. These interim remediation standards are effective immediately upon publication. PFNA, PFOA, PFOS, and GenX belong to a group of man-made chemicals called per- and polyfluoroalkyl substances (“PFAS”) that do not readily break down in the environment. For more than a decade, scientists have been studying the health effects associated with PFAS, and these emerging contaminants are subject to increasing regulation in jurisdictions across the country.

Riker Danzig will hold a webinar on November 17th to discuss these PFAS standards further and other new developments in site remediation practice in New Jersey.

New Jersey Pioneering PFAS Remediation Standards

New Jersey was the first state to adopt Maximum Contaminant Levels for PFAS that require statewide testing of drinking water systems for PFOA and PFNA. New Jersey also has promulgated Ground Water Quality Standards requiring investigation and remediation of PFOA, PFOS and PFNA in groundwater.  With the adoption of the interim soil remediation standards this week, New Jersey becomes one of a handful of states to develop PFAS remediation standards for soil. The U.S. Environmental Protection Agency has not yet promulgated soil standards for PFAS.

NJDEP adopted interim remediation standards for PFNA, PFOA, PFOS and GenX for the Ingestion-Dermal Exposure Pathway. The Department also adopted standards for the Migration to Ground Water Exposure Pathway (both Soil and Soil Leachate) for each of these contaminants, except GenX, which does not have a standard for that pathway. Since generic Soil Remediation Standards for Migration to Ground Water could not be calculated, the Soil Remediation Standards for Migration to Ground Water are to be calculated on an Area of Concern (“AOC”) and site-specific basis utilizing the Synthetic Precipitation Leaching Procedure (“SPLP”). SPLP is already utilized in New Jersey to develop a site-specific impact to groundwater and soil remediation standards for contaminants other than PFAS.  In the absence of interim standards for GenX for the Migration to Groundwater Pathway, the Department recommended that remediating parties delineate GenX to the laboratory reporting limit at this time.

The specific standards are listed below:

Potential Impacts of the Soil Standards

Even before the interim soil standards were adopted, Licensed Site Remediation Professionals (“LSRPs”) already had been required to perform an evaluation of whether PFAS have been used at a site. Where the evaluation documents the potential for the use or discharge of PFAS at the site, further investigation may be necessary.

Riker Danzig’s environmental attorneys will continue to monitor and report on these new developments.  For more information, please contact any attorney in the Firm’s Environmental Practice Group.

Behavioral Health Integration, 340B Litigation, and Medicare Advantage Plans

Posted on by Christie Bowness

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

HHS Releases Roadmap for Behavioral Health Integration

In September 2022, the United States Department of Health and Human Services (“HHS”) released its “Roadmap for Behavioral Health Integration,” detailing policy solutions to help integrate mental health and substance use care into large healthcare systems. The Roadmap builds on the Biden Administration’s Strategy to Address Our National Mental Health Crisis and furthers HHS’s strategic goal of enhancing integrated care within healthcare systems, a goal which HHS has described as “critical” to transforming care for individuals with mental and substance use disorders ("M/SUD").

Five key takeaways from the September 2022 Roadmap are that:

  1. HHS is committed to providing integrated, equitable, evidence-based, culturally appropriate, and person-centered behavioral healthcare to the populations it serves;
  2. HHS has evaluated barriers to transforming behavioral healthcare and has identified policy solutions to overcome these barriers;
  3. HHS will develop a diverse workforce prepared to practice in integrated settings and invest in infrastructure for integrated care;
  4. HHS will leverage health financing arrangements, including efforts to fully realize the potential of parity; and
  5. HHS will invest in behavioral health promotions, upstream prevention and recovery.

The Roadmap reflects an overall agency strategy, detailing current and forthcoming HHS-funded programs that are aimed at achieving the agency’s goals for enhancement of M/SUD services. Such programs and proposals include Substance Abuse and Mental Health Services Administration ("SAMHSA") Minority Fellowship Program ("MFP") grants, CMS proposals to establish billing codes to account for monthly M/SUD care integration, and the Centers for Disease Control’s ("CDC") What Works in Schools Program, among others.

Federal Judge Accelerates Restoration 340B Drug Payments by HHS

The District Court for the District of Columbia recently ruled that the U.S. Department of Health and Human Services ("HHS") must immediately resume coverage of 340B hospitals' drug costs. The 340B program generally allows eligible hospitals to buy outpatient drugs at discounted rates. In 2018, HHS instituted rulemaking to lower the program's reimbursement rate to 22.5 percent. However, in June 2022, the Supreme Court of the United States ruled in favor of 340B hospitals, finding that HHS could not vary the program's reimbursement. In July 2022, HHS stated that it would restore its coverage of 340B drugs and biologics in CY 2023. The District Court for the District of Columbia’s ruling accelerates HHS’s restoration of the 340B program reimbursement rates, requiring that HHS immediately reverse its prior rate cuts.

CMS Tightens Scrutiny of Celebrity Endorsements of Medicare Advantage Plans

The U.S. Centers for Medicare & Medicaid Service ("CMS") has begun implementing tighter scrutiny of celebrity endorsements of Medicare Advantage ("MA") plans. Between 2019 and 2020, CMS noted a 165% uptick in consumer marketing complaints regarding Medicare Advantage advertisements featuring celebrities, many of which focused on confusion as to the difference between MA plans and original Medicare coverage. In response to such complaints, CMS has put into place stiffer rules for marketers that sell MA policies on behalf of insurers. Under CMS’s tightened scrutiny, marketers will be required to disclose more to their customers and the insurers will be responsible for what their marketers say. This policy stance shift builds off of established regulations regarding marketing of Medicare and MA plans and products, which may be found at 42 CFR § 422.2264, 423.2264, 422.2268, and 423.2268.

Wisconsin Court of Appeals Finds for Title Insurer Despite Late Policy Issuance

Posted on by Christie Bowness

The Court of Appeals of Wisconsin, District Three recently upheld a summary judgment finding for title insurer WFG National Title Insurance Company (“WFG”) in a title insurance coverage dispute based on clear exceptions for a driveway easement even though the title policy was issued late.  See Columb v. Cox, No. 2020AP1593, 2022 Wisc. App. LEXIS 478 (Ct. App. June 7, 2022).

The dispute arose among neighbors, the Columbs and the Coxes, who owned parcels in Marinette County north of County Highway X. Willard DeGroff (“DeGroff”) formerly owned both properties, and in the mid-1990s, deeded the northern portion of his property to the Columbs, the southern portion of his property to the Peter L. and Deborah Ann Putirskis (the “Putirskises”), who later sold their property to the Coxes, and the two properties in between to other owners.  The deed for the Columbs' property established an easement ("the Original Easement") starting at County Highway X and running through the Putirskises' property and onto the Columbs' property, thereby providing the Columbs with access to the highway.  The deed to the Putirskises' property, reserves the Original Easement for the use of several parcels, including the parcel owned by the Columbs. In 2016, the Putirskises recorded a modification of the Original Easement ("the Modification"), purporting to reroute the easement's location to the east, away from the house and other buildings on the property, but the Columbs did not sign the Modification and apparently never agreed to move the easement from its original location.  In 2017, the Putirskises sold their property to the Coxes, including an addendum to their deed stating that the property is subject to the ingress/egress easement in the deed to the Columbs as modified in the Modification.

In 2019, the Columbs sued the Coxes for wrongful interference with the easement, alleging that the Coxes blocked the Original Easement, seeking damages and an order enjoining the Coxes from interfering with their easement rights.   The Coxes requested an injunction prohibiting the Columbs from further trespass and a judicial determination of the parameters of any easement in which the Columbs retained easement rights.

The Coxes tendered their defense to their title insurer, WFG, which denied the claim.  Specifically, the Policy excepted coverage for disputes relating to the “rights and/or claims of others in and to,” and the “terms and provisions as to the use and maintenance of,” “that ingress/egress easement as set forth in [DeGroff Deeds 1-4] and as modified in [the Modification].”

The Coxes then filed a third-party complaint against WFG for breach of contract.  WFG moved for summary judgment, arguing that there was no coverage under the Policy.  The Coxes argued that WFG could not rely on the driveway exception, as WFG issued the Policy late.  Specifically, WFG had issued its title commitment (the “Commitment”) to the Coxes in 2017, but through some error, did not issue the Policy until April 2020, months after the Coxes filed suit against WFG.  The court rejected the lateness argument and granted WFG's motion based on the fact that the exceptions were clearly set forth in the Commitment

The Coxes appealed.  The Court first rejected the Coxes’ arguments that WFG forfeited its defenses to the Policy for failing to timely issue the Policy, as no legal authority to support their argument was offered by the Coxes or found by the Court, nor was there any authority or factual support to their argument that WFG could not rely on the exceptions because it engaged in misconduct by wrongfully backdating the Policy.  As to the Coxes’ remaining arguments, the Court began by noting that the Commitment merged into the Policy when the Policy was issued, per the terms of the Commitment and general legal principles.  Because the Commitment contained the same exceptions to coverage that the Policy contained, the Court rejected the Coxes’ contention that they did not have notice of the exceptions.  The Court further rejected the Coxes’ argument that because certain other exceptions were not in the Policy, the exception did not apply because the exceptions in the Policy did not exactly mirror the language of the exceptions in the Commitment.  The Court noted that this argument would only apply if the Policy was adding an exception not set forth in the Commitment, which was not the case here.  It found that the Coxes were provided information from which they could reasonably ascertain that the Policy would not provide coverage for those matters excepted under the Policy, and that WFG had no additional obligation to explain the legal effect of the Policy exceptions.

The Coxes also argued that the exceptions only refer to the Modified Easement, and that coverage is not excepted for any losses or disputes relating to the Original Easement.  The Court held that a “title insurance policy is an indemnity contract, not a warranty that title is as described,” and thus held that the exceptions’ reference to "that ingress/egress easement as set forth in [DeGroff Deeds 1-4] and as modified in [the Modification]" is not a representation that the Original Easement was (or was not) validly modified or that coverage would be excepted only for an easement in some specific modified location, but rather, that WFG notified the Coxes of which title defect or encumbrance was being excepted and provided the Coxes with the information needed to determine the title defect the exception referenced.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.

Access Denied: Court Prevents Use of Access Statute to Identify Off-Site Discharger

Posted on by Christie Bowness

Remediating parties often need to enter onto another’s property to investigate and remediate contamination that has migrated from the site of a discharge. Recognizing this reality, the Legislature enacted N.J.S.A. 58:10B-16 (the “Access Statute”) authorizing a remediating party to seek a court order for access when the property owner does not voluntarily permit access. The Appellate Division’s September 23rd decision in Solvay Specialty Polymers USA LLC v. Paulsboro Refining Company LLC interpreting the Access Statute may portend a more difficult future for parties seeking access under the statute.  Specifically, the court refused to allow a remediating party to access an off-site property for the purpose of showing that contamination from that property was contributing to an allegedly commingled plume of groundwater contamination.

The Appellate Division reversed a lower court ruling that had granted Solvay access to the Paulsboro Refining Co. LLC (“PRC”) refinery property to conduct environmental sampling to delineate groundwater contamination from per-and polyfluoroalkyl substances (PFAS).  In overturning the trial court’s decision, the Appellate Division narrowly construed the Access Statute, holding the trial court erred when it concluded that access to the PRC property was “reasonable and necessary” for Solvay’s PFAS investigation. Notably, PRC’s property is located in another municipality and approximately two miles away from the Solvay facility. Although Solvay is subject to an NJDEP directive relating to PFAS contamination from its facility, the court noted that the directive did not identify any party other than Solvay as a possible source of PFAS contamination. Thus, according to the court, the directive did not deputize Solvay with the Department’s authority to investigate whether other parties were off-site sources of contamination.

The Access Statute authorizes a remediating party to seek a court order for access if, after making a good faith effort, it is unable to reach an agreement with the owner to obtain access to the off-site property. The court will issue an order for access if it determines that either (1) a reasonable possibility exists that contamination has migrated to the off-site property, or (2) access to the property is reasonable and necessary to remediate the contamination. An applicable NJDEP oversight document for the investigation or remediation activities creates a presumption in favor of access. While the ability to obtain access via a court order has long been a vital tool for remediating parties, there is a dearth of case law interpreting the Access Statute. Thus, the opinion in Solvay is instructive for determining when access to an off-site property will be  considered “reasonable and necessary” under the Access Statute.

The Appellate Division narrowly construed the Access Statute in denying Solvay’s access request. Because Solvay denied that any PFAS contamination had migrated from its facility to PRC’s refinery, the court only analyzed whether access to the property was warranted under the second prong of the Access Statute—whether it was “reasonable and necessary” for Solvay to access the PRC facility to investigate or remediate the contamination for which Solvay was responsible.

The court held that it was not reasonable and necessary for Solvay to show that PFAS contamination from the PRC facility was commingled with contamination that NJDEP’s directive had attributed to Solvay.  Solvay could comply with the NJDEP directive without “invading” PRC’s refinery to conduct “intrusive environmental sampling.”  The court rejected Solvay’s contention that, under the NJDEP regulation governing investigation of off-site sources of contamination (N.J.A.C. 7:26E-3.9), Solvay had a duty to identify other particular sources of off-site contamination. Rather, the Appellate Division found that Solvay had satisfied its obligations under NJDEP’s regulations and the directive when it documented the possibility of PFAS contamination from a source other than the Solvay facility, without necessarily proving the identity of the off-site source. Relying on an NJDEP technical guidance document, the court held that where sufficient evidence of off-site contamination in a commingled plume exists, but the source of the contamination has not been identified, it is the Department, and not the remediating party or a court adjudicating a claim under the Access Statute, that determines whether further investigation is warranted.

The relative distance of PRC’s refinery from the Solvay facility also seems to have been a contributing factor in the Appellate Division’s holding that it was not “reasonable and necessary” for Solvay to conduct sampling on the PRC property. Although most access requests under the Access Statute usually pertain to adjacent or nearby properties, it would be a mistake to construe Solvay as categorically precluding access to distant properties. With the increasing need to investigate PFAS, which quickly migrate through the environment and resist natural degradation, remediating parties will have a legitimate need to investigate more distant sites.

The court was mindful that parties remediating a commingled plume of groundwater contamination from multiple sources need a way to gather information about other sites and parties that may have contributed to the contamination, even if the Access Statute is not the proper vehicle. Thus, the court noted that, during the pendency of this appeal, Solvay had filed a contribution action under the Spill Act against PRC concerning the alleged migration of PFAS from its refinery to areas that Solvay was remediating. The Appellate Division emphasized that its decision did not preclude Solvay from conducting further discovery with respect to the migration in that action, but refused to give its imprimatur to using the Access Statute as a pre-discovery tool to gather information in support of a contribution action.

Parties seeking access to conduct environmental investigation or remediation, and parties from whom such access is sought, should take note of the Solvay decision—a rare instance when an appellate court construed the Access Statute—when negotiating or perhaps litigating over site access.  Going forward, courts likely will look skeptically on access requests that seem motivated by a desire to obtain data to use against a potential litigation adversary, rather than to complete a remediation project.

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

Pennsylvania Federal Court Dismisses Statutory Claims, Allows Breach of Contract Claims in Wire Fraud Case

Posted on by Christie Bowness

In a wire fraud claim raised by a bank’s customer, the United States District Court for the Western District of Pennsylvania recently granted in part and denied in part a motion to dismiss filed by the customer’s bank, P.N.C. Bank (“PNC”), regarding claims brought by plaintiff Richard Tracy (“Tracy”) for breach of contract, promissory estoppel, violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) and violation of Pennsylvania's Uniform Commercial Code (“UCC”).  See Tracy v. P.N.C. Bank, N.A., No. 2:20-cv-1960-NR, 2022 U.S. Dist. LEXIS 111095 (W.D. Pa. June 23, 2022).  While the Court dismissed the statutory claims, it held that PNC’s post-notice conduct of erroneously informing its customer that the majority of the funds had been recovered and ignoring the customer’s subsequent requests could set forth a breach of contract claim.

In December 2019, Tracy sought to purchase a home from a third party, but the title agent suffered a data breach, resulting in Tracy receiving fraudulent instructions for the transaction.  Tracy instructed PNC, with whom he was a customer, to initiate a wire transfer in the amount of $143,585.59 for the purchase of the property, unknowingly instructing the wire to a fraudster's account.  Tracy learned of the fraud the next day, and requested that PNC return any recoverable funds and freeze the account.  About ten days after the wire transfer, PNC credited Tracy's account with $141,763.20, and after Tracy's inquiry, PNC confirmed this was the amount that it retrieved. Believing this money had been returned to him, Tracy closed on the purchase of the property on January 3, 2020.  However, PNC later posted a "pending withdrawal" of $70,236 in Tracy's account.  Tracy attempted to communicate with PNC about the pending withdrawal, but PNC ignored him and eventually withdrew $70,200 from his account.  Tracy brought suit.

The Court dismissed Tracy’s UCC and UTPCPL claims.  Regarding Tracy’s UCC claim, the Court noted that Tracy brought claims under sections 4A:203 and 4A:204 of the UCC.  However, the Court further noted that these sections of the UCC protected against wire transfers that are not authorized.  Since Tracy had, in fact, authorized the wire transfer, the Court dismissed the count with prejudice.

The Court then found that to state a claim under the UTPCPL, Tracy was required to allege that he "purchase[d] ... goods or services" and "thereby" suffered a loss by PNC’s deceptive conduct. The Court held that the closest that Tracy could come to pleading the purchase of a service is if he had alleged that he paid PNC a fee for the wire transfer as part of his account or wire-transfer agreements, but that even if he had paid for the service, his claim still fell short, as he did not allege that PNC engaged in deceptive conduct in initiating the wire transfer, but rather post-transfer when it was seeking to retrieve the money, and thus the alleged deception and injury arose from a separate, unpaid service – PNC’s attempted retrieval of the money. The Court held that since Tracy had not plausibly plead to have paid for the post-transfer service or conduct at issue, the Court dismissed the count with prejudice.

However, the Court allowed Tracy’s breach of contract claim to survive on the theory that PNC breached its duty of good faith and fair dealing, as Tracy’s allegation that PNC assured him that almost all of the wire transfer had been retrieved and returned to him, and then ignored him when their information turned out to be incorrect, stated a plausible good faith and fair dealing claim.  The Court also allowed Tracy’s promissory estoppel claim to survive, holding that PNC’s arguments that a contract controlled the parties’ relationship, that Tracy had not sufficiently alleged what PNC told him, and that a deed of trust purchased by Tracy foreclosed the claim were unavailing.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.

Litigation Regarding Overseas Telemedicine and Medicare Recoupment Determinations

Posted on by Jessica Civetta

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

Overseas Telemedicine Denied

Providers should remain vigilant regarding their provision of telehealth services to Medicare beneficiaries as such services remain subject to numerous stringent rules and regulations. The United States Circuit Court for the District of Columbia clearly demonstrated the need for such vigilance in the matter of RICU, LLC v. United Stated Department for Health & Human Services, et al.

In RICU, RemoteICU, a telehealth service company comprised of US-trained, licensed, and board certified physicians who are located outside of the US, contracted with several hospitals to provide telehealth services to patients located within the US during the COVID-19 pandemic. However, claims made by the hospitals for the telehealth services were denied, as CMS’s final rule provides that, although the patient’s location is considered the site of treatment (the originating site), “for payment purposes, the site of service for the telehealth service is the location of the physician or practitioner at the distant site.” Hence, Medicare refused payment as CMS guidance (66 FR 55330) on underlying Medicare telehealth regulations (42 CFR 410.78) specifically redefined payment rules to base reimbursement for telehealth services on the physician’s location, thereby triggering Medicare’s prohibition on payment for services provided by physicians located outside the United States (42 U.S.C 1395y(a)(4); 42 C.F.R 411.9(a)).

Ultimately, the DC Circuit did not rule on the substance of the Medicare guidance, as it upheld dismissal based on RemoteICU’s failure to exhaust administrative remedies with the Department of Health and Human Services prior to filing its lawsuit. The full text of the RICU, LLC v. United Stated Department for Health & Human Services, et al. decision can be found here.

Statute Expanding Telehealth Medicare Coverage of Telehealth Services Passes the House of Representatives

Legislation to expand and extend Medicare coverage of telehealth services beyond the end of the federal COVID-19 Public Health Emergency period was recently approved by the United States House of Representatives. Under the Advancing Telehealth Beyond COVID-19 Act of 2022, certain telehealth flexibilities would be extended until December 31, 2024, should the COVID-19 emergency period end before that date. Specifically, the current House-approved version of the bill would allow:

  1. beneficiaries to continue to receive telehealth services at any site, regardless of type or location (e.g., the beneficiary's home);
  2. occupational therapists, physical therapists, speech-language pathologists, and audiologists to continue to furnish telehealth service;
  3. federally qualified health centers and rural health clinics to continue to serve as the distant site (i.e., the location of the healthcare practitioner);
  4. evaluation and management and behavioral health services to continue to be provided via audio-only technology; and
  5. hospice physicians and nurse practitioners to continue to complete certain requirements relating to patient re-certifications via telehealth.

The bill would also delay implementation of certain in-person evaluation requirements for mental health telehealth services until at least January 1, 2025. The full text of the House-approved version of the Advancing Telehealth Beyond COVID-19 Act of 2022 can be found here.

Appeals Court Says Testing Laboratory Can Sue HHS Over Botched Overpayment Decision

A significant decision regarding judicial review of provider recoupment of funds overpaid to Medicare came out of the Court of Appeals for the Fifth Circuit earlier this year. In D&G Holdings v. Becerra, the Fifth Circuit reopened and remanded a matter involving recoupment of funds by a diagnostic testing laboratory in relation to a botched overpayment decision by Novitas, a Medicare Administrative Contractor (“MAC”).

In the underlying matter, Novitas determined that the lab had been overpaid by more than $8M by Medicare and began recouping funds. After challenging the determination with HHS’s administrative review process, Medicare ultimately owed the lab over $4.6M. However, the lab was only paid $1.8M, which lead to the present action to collect the remaining balance owed by the government.

The District Court had dismissed the case accepting HHS’s argument that the lab could not bring their repayment claim directly to federal court without first attempting to resolve it through HHS’s administrative process. However, the Fifth Circuit reversed the District Court’s decision after applying Shalala v. Illinois Council on Long Term Care Inc. where the Supreme Court determined that there are certain circumstances where questions that were not strictly presented to the administrative agency are reviewable by the federal courts under the Medicare Act (42 U.S.C. 405(g)). The Fifth Circuit determined that “effectuations” of final agency decisions fall under the jurisdiction of the Federal Courts and that repayment to the lab was an effectuation of the final agency decision that Novitas had erred in its initial recoupment.

Providers submitting claims to federal benefit programs, such as Medicare, should take notice of this decision as it highlights several key aspects of challenging federal recoupments. In D&G Holdings, the lab received the recoupment notice from Novitas in 2014, and it took three years to navigate through HHS’s administrative appeals system to receive a favorable determination in 2017. More than seven years after the initial notice of recoupment, the lab still had not received payment from Medicare. Moreover, D&G Holdings highlights the limited availability of judicial review for such administrative actions, generally requiring exhaustion of all administrative remedies prior to filing. The full text of the D&G Holdings, LLC f/d/b/a Doctor’s Lab v. Becerra decision can be found here.

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