King v. Burwell’s Implications for Employer-Sponsored Health Plans

Guest Commentary

Kim Wilcoxon, Thompson Hine LLP

Three years ago, the Supreme Court of the United States announced its decision in NFIB v. Sebelius and upheld the individual mandate under the Patient Protection and Affordable Care Act (ACA). Last week, the Supreme Court announced its decision in King v. Burwell and upheld the Internal Revenue Service’s (IRS) interpretation that tax credits were available under the ACA for taxpayers in all states, whether or not a state’s exchange was established by the state government or the federal.

There are many similarities in how these decisions affect employer-sponsored health plans. It’s déjà vu all over again, so this post revisits questions addressed in this blog three years ago in light of King v. Burwell. Continue reading

FDA Trans-Fat Order Sets the Table for More Food Product “Regulation by Litigation”

Partially hydrogenated oil  chemical structure

Partially hydrogenated oil
chemical structure

To no one’s surprise, the Food and Drug Administration (FDA) has confirmed its November 8, 2013 initial determination that the agency no longer considers the main source of trans fat in Americans’ diet, partially hydrogenated oils (PHOs), “generally recognized as safe” (GRAS). In its announcement, FDA emphasizes how the three-year window it has granted food companies to comply with the order would “allow for an orderly [transition] process.” Before anyone applauds FDA for being reasonable or magnanimous, however, consider what else the agency says, and doesn’t say, in its Declaratory Order (“Order”). FDA’s statements and omissions essentially set the table for an explosion of private lawsuits that could require PHO-containing products to be reformulated, or removed from the market, far earlier than June 2018.

What the Order Says. Under federal law, an FDA determination that a substance is no longer GRAS is not the equivalent of it being “unsafe.” It means that because some level of uncertainty has arisen from studies of the substance, food producers must seek approval for its use in specific products through a food additive petition. The Order, however, glosses over this inconvenient nuance, and instead consistently and repeatedly states that FDA has concluded PHOs are unsafe. The media has slavishly echoed FDA’s distorted conclusion to an American public that includes prospective judges and jurors for the lawsuits to come. Continue reading

Law Professor’s Attack on WLF’s “Legislative Grace Canon” Argument in “King v. Burwell” Brief Sails Wide of the Mark

Not a "canon"

Not a “canon”

University of Iowa College of Law Professor Andy Grewal blogged earlier this year about WLF’s amicus curiae brief in King v. Burwell at the Yale Journal on Regulation’s Notice & Comment Blog. While we’ll refrain from comment on his rather pedantic advice as to what material is best included in a brief, we did want to set the record straight about the crux of WLF’s argument, especially given the decision’s imminent release before the Supreme Court term ends later this month.

In a nutshell, WLF’s brief asks the U.S. Supreme Court to reverse an appeals court ruling that, if upheld, would allow IRS to appropriate billions of dollars a year in tax credits without authorization from Congress. IRS argued that it was entitled to Chevron deference for the agency’s interpretation of § 1321 of the Affordable Care Act (ACA), which authorizes subsidies for an exchange “established by the State.” Continue reading

California’s New Scrutiny of Patent Litigation Settlements Will Not Stand Under Federal Law

cali sealThe California Supreme Court earlier this month issued an opinion that subjects litigants who settle their patent disputes to scrutiny under state antitrust law. The court reasoned that such settlements may create unreasonable restraints on trade. While the decision in In re Cipro Cases I & II to reinstate antitrust claims was not overly surprising—after all, the U.S. Supreme Court had previously held in FTC v. Actavis, Inc. that some patent litigation settlements might violate federal antitrust law—the breadth of the California Supreme Court’s decision could have a particularly negative impact on the free-enterprise system. Indeed, the decision suggests that parties to a patent litigation settlement will have great difficulty ever avoiding California antitrust liability if the settlement entails transferring anything of value from the patent holder to the alleged infringer. Because Cipro’s new state-law antitrust standard is so much more exacting than the standard announced by the U.S. Supreme Court in Actavis, federal antitrust law may well trump California’s standard. Indeed, were Cipro to reach the U.S. Supreme Court, the Court likely would reverse on federal preemption grounds.

“Reverse-Payment” Patent Settlements

When parties to litigation enter into a settlement, one would normally expect that any cash payments would flow from the defendant to the plaintiff. The normal expectations have been reversed in the context of litigation involving prescription-drug patents, however, as a result of financial incentives created by the Hatch-Waxman Act, a federal statute designed to ensure that generic versions of prescription drugs enter the market more quickly. The Act includes a provision that permits generic companies, by declaring to the Food and Drug Administration a belief that the patent held by a brand-name drug company is invalid, to essentially force the patentee to immediately file a patent infringement suit. It also grants huge financial awards to generic companies that successfully challenge drug patents. Continue reading

End of the Road in the Long-running “FTC v. Phoebe Putney” Saga

amurinoFeatured Expert Column – Antitrust/Federal Trade Commission

Andrea Agathoklis Murino, Goodwin Proctor LLP

Many months ago, I wrote about the ongoing saga that was the Federal Trade Commission’s (“FTC”) attempt to unwind the acquisition of Palmyra Park Hospital (“Palmyra”) by Phoebe Putney Health System Inc. (“Phoebe”) in Albany, Georgia. There were visits to all three levels of the federal court system (yes, even the Supremes!), as well as unexpected detours through various Georgia regulatory bodies. With the FTC’s announcement late last month that it was settling its administrative litigation with a behavioral remedy, we now know how this story ends.

Where We’ve Been

This journey began back in early-2011 with the FTC’s attempt to block the deal outright on the grounds that the combined entity would have had market shares in excess of 85% in the provision of acute care services in a six-county region. The FTC initially secured a preliminary injunction at the district court level but Phoebe successfully argued that despite the concentration levels, its acquisition was legal under the state action doctrine. The state action doctrine provides that where (1) there is a clearly articulated state policy to displace competition and (2) there is active supervision by the state of the policy or activity, otherwise anticompetitive activity will be permitted. Here, Phoebe argued the acquisition was immune under both prongs of the test because it was owned by the Hospital Authority of Albany-Dougherty County, and operated under Georgia’s Hospital Authorities Law.

Continue reading

FDA’s Next Gift to the Litigation Industry: A Veritable Ban on Partially Hydrogenated Oils?

sharkIn a recent post, we lampooned the “high trans fat intake consumer” the Food and Drug Administration (FDA) invented to advance its de facto ban of partially hydrogenated oils (PHOs) as being a cross between Augustus Gloop and Homer Simpson. The ramifications of such a PHO ban for many processed food makers and their customers, however, are no laughing matter. Among other things, FDA’s final determination could expose the food industry to an avalanche of lawsuits and potentially billions of dollars in liability costs.

The Current Litigation Environment. Plaintiffs’ lawyers have been working feverishly for the past decade to turn lawsuits against “Big Food” into the next big payday. As chronicled on this blog since its inception in 2011, a small but persistent segment of the Litigation Industry has filed hundreds of class-action lawsuits alleging that everything from a perceived excess of empty space in a bag of chips to the printing of “evaporated cane juice” on a label violates state consumer protection laws.

By Litigation Industry standards, this lawsuit product line has not yet met profit expectations. But the lawsuits have successfully established, especially in California, that private litigants can enforce federal food laws and regulations. Continue reading

Federal Regulators’ Disregard for Sound Science Displayed in Four Agencies’ Actions

4th CircuitHow federal regulators use—and abuse—science in the regulatory process has a profound impact on regulated businesses and consumers who purchase their products and services.  In addition to the financial impact, every time that an agency forces science and the scientific process to serve its ideological or political agendas, rather than be guided by the neutral data, the public becomes less trusting of government pronouncements based on science. Below are some troubling recent examples of regulatory junk science. The first example demonstrates that protections against junk science do exist in the courtroom. The subsequent three examples reflect the lack of similar protections in the rulemaking and adjudication contexts.

Fourth and Sixth Circuits Slap-down EEOC. For the second time in less than a year, a federal appellate court has rebuked the Equal Employment Opportunity Commission (EEOC) for its use of junk science in accusing an employer of discrimination for conducting criminal background checks in its hiring process. EEOC’s litigation crusade against criminal background checks has faltered since its outset, with federal district court judges in Ohio and Maryland separately dismissing Title VII claims in 2013. Last April, just 20 days after hearing oral argument, the U.S. Court of Appeals for the Sixth Circuit affirmed the Ohio trial judge’s decision in EEOC v. Kaplan. The court found the EEOC’s statistical proof of disparate impact—compiled and presented by expert witness Kevin Murphy, an industrial psychologist—unreliable and “based on a homemade methodology” not generally accepted in the scientific community. A WLF Legal Opinion Letter and a WLF Legal Pulse post, both published last spring, offer more detail on the ruling. Continue reading