Acknowledging the widespread impact of the COVID-19 pandemic, the US IRS and Treasury Department have issued notices granting much-sought flexibility for health and dependent care flexible spending accounts and health plans.  The relief includes permission for plan sponsors to amend their Section 125 cafeteria plans to allow employees to make prospective changes to their elections,

On Friday, April 3, 2020, the administration announced that the US federal government would compensate hospitals and other providers treating uninsured COVID-19 patients at Medicare rates. Health and Human Services Secretary Azar said:

“Under the President’s direction, we will use a portion of that funding [CARES Act] to cover providers’ costs of delivering COVID-19 care for the uninsured, sending the money to providers through the same mechanism used for testing.”

When making this announcement, the Secretary stressed that providers would be paid at Medicare rates and would be forbidden to balance bill any covered person. Although asked, Azar did not clarify whether government funds would be available for treating undocumented persons. Azar promised that regulations explaining how this would work would be released soon.

Continue Reading Update – US Federal Payments to Hospitals For Treating Uninsured COVID-19 Patients

Mayer Brown announced that the firm has filed a lawsuit on behalf of 3M Company in federal court in California against Utah-based Rx2Live, LLC for an alleged deceptive price-gouging scheme directed at Fresno, California-based healthcare provider Community Medical Centers, Inc. (CMC).

The lawsuit asserts that Rx2Live falsely claimed that it could source millions of 3M

The Antitrust Division of the US Department of Justice has determined in a business review letter that it will not challenge a plan for several medical supply companies to work together to expedite the distribution of supplies needed to combat the COVID-19 pandemic.

On March 24, 2020, the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) (collectively, the “Agencies”) issued a joint statement (the “Joint Statement”) of antitrust guidance for public and private efforts to address the COVID-19 pandemic.[1] In recognition of the urgent and rapidly evolving nature of the ongoing public health emergency, the Agencies expressed an intention to “respond expeditiously to all COVID-19-related requests, and to resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information.”[2] The Agencies further explained that “[w]hile these processes generally take several months after the agencies receive all necessary information, the agencies recognize that many individuals and businesses are trying to address a rapidly evolving crisis as quickly as possible.”

Continue Reading US Department of Justice Announces That It Will Not Challenge Collaborative Effort to Manufacture and Distribute COVID-19-Related Medical Supplies

The economic costs of treating COVID-19 patients are overwhelming the hospital system. The American Hospital Association reported to Congress in March that due to the expenses of treating COVID-19 patients, “hospitals are currently losing up to $1 million per day” with losses expected to grow over time. These economic strains exist independent of the substantial costs associated with treating the estimated 28 million uninsured individuals in the US.

Given the size of the uninsured population, many stakeholders advocated for the Trump administration to open a special enrollment window for ACA policies sold on the federal exchanges (covering thirty-eight 38 states). This would permit uninsured individuals to access ACA coverage and subsidies. The Trump administration did not elect this option (although individuals who recently lost employer-sponsored coverage may apply to purchase an ACA policy under existing law). Eleven of the 17 states that operate their own exchanges, and the District of Columbia, have opened special enrollment windows. These states are: New York, Vermont, Massachusetts, Rhode Island, Connecticut, Maryland, California, Washington, Nevada, Colorado and Minnesota.

Continue Reading US Federal Payments to Hospitals For Treating Uninsured COVID-19 Patients

Over the past month, in response to the COVID-19 pandemic, the US Food and Drug Administration (“FDA”) has invoked its statutory authority to issue a series of Emergency Use Authorizations (“EUAs”) that allow the distribution of certain products for use in the diagnosis, prevention, and treatment of COVID-19 that could not otherwise be distributed for those purposes. Manufacturers and distributors of such products should be aware of the (sporadically updated) EUAs and their limits.

In general, products that are intended to diagnose and treat disease may not be distributed in the United States absent FDA authorization. Although authorization to distribute drugs and medical devices may be obtained via various regulatory routes depending on the product in question, obtaining such authorization is usually a time-consuming endeavor, as the manufacturer must demonstrate the product’s safety and efficacy under the conditions stated in the product’s proposed labelling.

Continue Reading US FDA Emergency Use Authorizations In Response to the COVID-19 Pandemic

On Thursday, April 2, 2020, President Trump issued two memoranda directing use of the Defense Production Act (“DPA”) to (i) facilitate the supply of materials for production of ventilators and (ii) acquire N-95 respirators. Making the determination necessary to trigger the president’s powers under DPA section 101, 50 U.S.C. § 4511, the presidential memoranda determined

Mayer Brown employees and people across the UK showed their appreciation for the country’s nurses and doctors fighting the coronavirus pandemic by taking part in a huge round of applause.

At 8pm this evening (26/03/2020), people across the UK clapped from doors, windows, gardens and balconies to applause for NHS staff working on the frontline

Pursuant to his powers under the Public Readiness and Emergency Preparedness Act (PREP Act), 42 U.S.C. § 247d-6d, the United States Secretary of Health and Human Services has issued a declaration that significantly limits potential legal liability arising from the design, testing, manufacture, labeling, distribution, administration, and provision of medical products intended to diagnose and treat COVID-19.

The declaration means that, subject to certain limitations, persons covered by its terms “shall be immune from suit and liability under Federal and State law with respect to all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered” product. 42 U.S.C. § 247d-6d(a)(1).

The scope of the immunity granted is broad. It “applies to any claim for loss that has a causal relationship with the administration to or use by an individual of a covered” product, “including a causal relationship with the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such” a product. 42 U.S.C. § 247d-6d(a)(2)(B).

Continue Reading HHS Declaration Limiting Legal Liability Arising From Medical Products and Services Intended To Diagnose and Treat COVID-19

In response to the COVID-19 outbreak in the United States, all 50 states, Puerto Rico, and the District of Columbia have adopted certain measures intended to encourage “social distancing” in an effort to limit human contact and thus slow down the spread of the virus. Cities and states have adopted various measures to try to achieve this goal, including by closing schools and/or limiting or prohibiting large gatherings (such as by cancelling concerts, plays, museums, and eating in restaurants and bars). Some governments are also acting to protect people who get sick and cannot work or who are laid off. Several states have recently taken even more aggressive action.

In just the last week, some jurisdictions have issued orders advising their residents to stay in their homes (i.e., “shelter in place” orders). Other states have imposed strict limits on which businesses can remain open and/or have imposed requirements that “nonessential” workers stay home. As of now, these types of restrictions are in effect in, among other places, California, New York, Illinois, Ohio, Pennsylvania, New Jersey, and Connecticut. At present, these types of orders reach one in four Americans. As a result, businesses and workers have been confronted with the critical issue of whether they can operate and who, if anyone, can leave home to work on premises.

These actions are similar to many of those that have been taken by other jurisdictions, such as in China, Italy, and France. As governments have imposed these tight restrictions, they have also recognized the need to allow certain businesses to continue to operate as necessary to provide essential goods and services. These orders have been imposed quickly, responding to the immediate needs of each community, and thus neither the orders nor the exemptions to the orders allowing certain activities to continue are consistent across jurisdictions or always well-defined.

This Update provides guidance on the scope of essential services or businesses in five US jurisdictions that have adopted restrictive measures to fight the spread of the virus: CA, NY, IL, OH and PA. Alerts covering additional jurisdictions across the globe, and updates regarding these jurisdictions, will follow.

Continue Reading Who or What Is an “Essential” Business or Service That May Be Exempt from Shelter in Place or Stay at Home Orders?