Justia U.S. 3rd Circuit Court of Appeals Opinion Summaries

Articles Posted in Health Law
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In a class action suit, the plaintiffs, a group of patients, alleged that the Trustees of the University of Pennsylvania (Penn), who operate the Hospital of the University of Pennsylvania Health System (Penn Medicine), were in violation of Pennsylvania privacy law. The plaintiffs claimed that Penn Medicine shared sensitive health information and online activity of its patients with Facebook through its patient portal. Penn removed the case to federal court, asserting that it was "acting under" the federal government, referencing the federal-officer removal statute. However, the District Court rejected this argument and returned the case to state court.This case was primarily focused on whether Penn was "acting under" the federal government in its operation of Penn Medicine's patient portal. The United States Court of Appeals for the Third Circuit affirmed the District Court's decision to remand the case back to state court. The Court of Appeals determined that Penn was not "acting under" the federal government, as it did not demonstrate that it was performing a delegated governmental task. The court declared that Penn was merely complying with federal laws and regulations, which does not qualify as "acting under" the federal government. The court noted that just because a private party has a contractual relationship with the federal government does not mean that it is "acting under" the federal authority. In conclusion, the court determined that the relationship between Penn and the federal government did not meet the requirements for Penn to be considered as "acting under" the federal government, thus the case was correctly returned to state court. View "Mohr v. Trustees of the University of Pennsylvania" on Justia Law

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The Family Smoking Prevention and Tobacco Control Act requires any tobacco product not on the market before February 15, 2007, to receive FDA approval, 21 U.S.C. 387j(a)(1)–(2). Only if the FDA concludes that “permitting such tobacco product to be marketed would be appropriate for the protection of the public health” can the product be approved. Manufacturers seeking advance permission to market new products. In 2020, the FDA began taking aggressive action to remove fruit- and dessert-flavored e-cigarettes (electronic nicotine delivery systems (ENDS)) from the market, leaving aside tobacco- and menthol-flavored ENDS. More recently, based on additional studies and market data, the FDA has denied the applications of importers and manufacturers to market menthol-flavored ENDS.An importer challenged that denial, arguing that it was arbitrary and capricious for the FDA to apply the same regulatory framework to menthol that it used to assess the appropriateness of sweeter flavors, to ultimately reject its applications for its menthol-flavored ENDS to remain on the market, and to do so without granting a transition period. The Third Circuit denied a petition for review. The FDA applied a regulatory framework consistent with its statutory mandate, provided a reasoned explanation for its denial, and based its decision on scientific judgments that courts may not second-guess. View "Logic Technology Development LLC v. United States Food and Drug Administration" on Justia Law

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Former employees of Alternatives, a for-profit hospice provider, sued under the False Claims Act, 31 U.S.C. 3729, alleging that Alternatives submitted claims for Medicare reimbursement despite inadequate documentation in the patients’ medical records supporting hospice eligibility, under 42 C.F.R. 418.22(b)(2). For a patient to be eligible for Medicare hospice benefits, and for a hospice provider to be entitled to reimbursement, a patient must be certified as “terminally ill.” The district court granted Alternatives summary judgment based on lack of materiality, finding “no evidence” that Alternatives’ insufficiently documented certifications "were material to the Government’s decision to pay.” The court reasoned that “[t]he Government could see what was or was not submitted” yet never refused any of Alternatives’ claims, despite the inadequacy or missing supporting documentation or where compliance was otherwise lacking.The Third Circuit vacated. When a government contractor submits a claim for payment but fails to disclose a statutory, regulatory, or contractual violation, that claim does not automatically trigger liability. The Act requires that the alleged violation be “material” to the government’s decision to pay. The Supreme Court has identified factors to assist courts in evaluating materiality. In this case, the court based its decision principally on the government’s continued payments after being made aware of its deficient documentation, overlooking factors that could have weighed in favor of materiality— and despite an open dispute over the government’s “actual knowledge.” View "Druding v. Care Alternatives" on Justia Law

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Drug makers participating in Medicare or Medicaid must offer their drugs at a discount to certain “covered entities,” which typically provide healthcare to low-income and rural individuals, 42 U.S.C. 256b, 1396r-8(a)(1), (5) (Section 340B). Initially, few covered entities had in-house pharmacies. A 1996 HHS guidance stated that covered entities could use one outside contract pharmacy each; a 2010 HHS guidance stated that covered entities could use an unlimited number of contract pharmacies. Drug makers thought that contract pharmacies were driving up duplicate discounting and diversion and adopted policies to limit any covered entity’s use of multiple contract pharmacies. A 2020 HHS Advisory Opinion declared that Section 340B required drug makers to deliver discounted drugs to an unlimited number of contract pharmacies.In 2010, Congress told HHS to establish a process for drug makers and covered entities to resolve Section 340B–related disputes. In 2016, HHS issued a notice of proposed rulemaking and accepted comments on the proposed ADR Rule. HHS subsequently listed the proposed rule as withdrawn. In 2020, HHS stated that it had just “paus[ed] action on the proposed rule,” responded to the four-year-old comments. and issued a final ADR Rule.Drug companies sued. The Third Circuit held that Section 340B does not require drug makers to deliver discounted drugs to an unlimited number of contract pharmacies. HHS did not violate the APA by purporting to withdraw the proposed ADR Rule before later finalizing it. View "Sanofi Aventis US LLC v. United States Department of Health and Human Services" on Justia Law

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In March 2020, New Jersey Governor Murphy responded to the spread of COVID-19; Executive Order 107 prohibited in-person gatherings and ordered New Jersey residents to “remain home or at their place of residence,” except for certain approved purposes, such as an “educational, political, or religious reason.” EO 107 excepted businesses deemed “essential,” including grocery and liquor stores, which could continue to welcome any number of persons (consistent with social distancing guidelines). Violations of EO 107 were subject to criminal prosecution for “disorderly conduct.” The order granted the Superintendent of the State Police, “discretion to make clarifications and issue [related] orders[.]” He exercised that power, declaring (Administrative Order 2020-4) that gatherings of 10 or fewer persons were presumptively permitted. Neither EO 107 nor AO 2020-4 contained an exception for religious worship gatherings or other First Amendment activity.Two New Jersey-based, Christian congregations, believing that the Bible requires them to gather for in-person worship services, violated the Orders and were cited. Less than a week after the filing of their complaint, challenging the Orders, Governor Murphy raised indoor gathering limits to 50 persons or 25 percent of room capacity (whichever was less), allowing outdoor religious gatherings without any gathering limits. The district court denied the congregations’ motion for a preliminary injunction. The Third Circuit dismissed an appeal as moot. View "Clark v. Governor of New Jersey" on Justia Law

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Liquid Labs manufactures and sells e-liquids that generally contain nicotine and flavoring for use in e-cigarettes. The e-liquids qualify as “new tobacco product[s]” under the Family Smoking Prevention and Tobacco Control Act, 21 U.S.C. 387-387u, and may not be introduced into interstate commerce without the FDA’s authorization. The FDA must deny a premarket tobacco product application (PMTA) if the applicant fails to “show[] that permitting such tobacco product to be marketed would be appropriate for the protection of public health,” as determined with respect to the risks and benefits to the population as a whole, including users and non-users of the tobacco product.” FDA Guidelines have highlighted that flavored e-liquids’ had a “disproportionate appeal to children.”Liquid Labs submitted PMTAs covering 20 e-liquid products and submitted a marketing plan setting forth plans to discourage youths from using its products. The FDA denied the PMTAs, concluding that Liquid Labs had not shown that the benefits of the products sufficiently outweighed the risks they posed to youths. The documents indicated that evidence could have been provided through “randomized controlled trial[s] and/or longitudinal cohort stud[ies],” or other evidence that reliably and robustly evaluated the impact of the new flavored vs. tobacco-flavored products on adult smokers’ switching or cigarette reduction over time.” The Third Circuit denied a petition for review. The FDA’s order was within its statutory authorities and the Administrative Procedure Act. View "Liquid Labs LLC v. United States Food and Drug Administration" on Justia Law

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Englewood, a non-profit corporation with a single community hospital in Bergen County, New Jersey, provides primary, secondary, and some non-complex tertiary services to patients. It lacks the expertise, regulatory approvals, and facilities to provide more complex tertiary and quaternary services. Hackensack, New Jersey's largest hospital system, has multiple academic medical centers, community hospitals, specialty hospitals, a medical school, and a research institution, including two hospitals in Bergen County.The Federal Trade Commission opposes a merger between Englewood and Hackensack and filed an administrative complaint citing the Clayton Act, 15 U.S.C. 18. To prevent the parties from merging before the administrative adjudication, the FTC filed suit under Section 13(b) of the Federal Trade Commission Act. The Third Circuit affirmed the entry of a preliminary injunction. The FTC established that there is a reasonable probability that the merger will substantially impair competition. The court upheld the district court’s acceptance of the FTC’s proposed relevant geographic market defined by all hospitals used by commercially insured patients residing in Bergen County; price discrimination is not a prerequisite for a patient-based market. The district court did not err in finding that there would be a significant price impact and any benefits that would result from the merger did not offset anticompetitive concerns. View "Federal Trade Commission v. Hackensack Meridian Health Inc" on Justia Law

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Dr. Polansky was an official at the Centers for Medicare and Medicaid Services (CMS) before consulting for EHR, a “physician advisor” company that provides review and billing certification services to hospitals and physicians that bill Medicare. Polansky became concerned that EHR was systematically enabling its client hospitals to over-admit patients by certifying inpatient services that should have been provided on an outpatient basis.In 2012, Polansky filed suit under the False Claims Act (FCA), 31 U.S.C. 3729, alleging EHR was causing hospitals to bill the government for inpatient stays that were not “reasonable and necessary” for diagnosis or treatment as required by the Medicare program, 42 U.S.C. 1395y(a)(1)(A). His complaint remained under seal for two years while the government conducted its own investigation and ultimately determined it would not participate in the case.In 2019, the government notified the parties that it intended to dismiss the entire action under 31 U.S.C. 3730(c): “[t]he Government may dismiss the action notwithstanding the objections of the [relator]” so long as the relator receives notice and an opportunity to be heard on the Government’s motion. The district court eventually granted the motion. The Third Circuit affirmed. The government is required to intervene before moving to dismiss and its motion must meet the standard of FRCP 41(a). The district court acted within its discretion in granting the government’s motion. View "Polansky v. Executive Health Resources Inc" on Justia Law

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The estates of New Jersey nursing home residents, who died from COVID-19, alleged that the nursing homes acted negligently in handling the COVID-19 pandemic. The nursing homes removed the case to federal court. The district court dismissed the cases for lack of subject-matter jurisdiction.The Third Circuit affirmed rejecting three arguments for federal jurisdiction: federal-officer removal, complete preemption of state law, and the presence of a substantial federal issue. The 2005 Public Readiness and Emergency Preparedness Act (PREP Act), 42 U.S.C. 247d-6d, 247d6e, which protects certain individuals—such as pharmacies and drug manufacturers—from lawsuits during a public-health emergency, was invoked in March 2020 but does not apply because the nursing homes did not assist or help carry out the duties of a federal superior. The PREP Act creates an exclusive cause of action for willful misconduct but the estates allege only negligence, not willful misconduct; those claims do not fall within the scope of the exclusive federal cause of action and are not preempted. The PREP Act’s compensation fund is not an exclusive federal cause of action. The estates would properly plead their state-law negligence claims without mentioning the PREP Act, so the PREP Act is not “an essential element" of the state law claim. View "Estate of Joseph Maglioli v. Alliance HC Holdings, LLC" on Justia Law

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The hospital, located in Philadelphia, received a reclassification into the New York City area, which would sizably increase the hospital’s Medicare reimbursements due to that area’s higher wage index, 42 U.S.C. 1395ww(d). Although a statute makes such reclassifications effective for three fiscal years, the agency updated the geographical boundaries for the New York City area before the close of that period and reassigned the hospital to an area in New Jersey with an appreciably lower wage index. The hospital successfully sued three agency officials in the Eastern District of Pennsylvania.The Third Circuit vacated and remanded for dismissal. The Medicare Act, 42 U.S.C. 1395oo(f)(1), channels reimbursement disputes through administrative adjudication as a near-absolute prerequisite to judicial review. The hospital did not pursue its claim through administrative adjudication before suing in federal court. By not following the statutory channeling requirement, the hospital has no valid basis for subject-matter jurisdiction. View "Temple University Hospital, Inc. v. Secretary United States Department of Health & Human Services" on Justia Law