Supreme Court term has mixed results for healthcare industry
Last year, healthcare leaders had their eyes trained on one big case— King v. Burwell— and they celebrated when the Supreme Court upheld a key provision of the Affordable Care Act.
The court’s term that ended late last month wasn’t nearly so straightforward for the industry. At least half a dozen notable cases left some people cheering and others wringing their hands. And the midterm death of Justice Antonin Scalia appears to have affected some of the outcomes.
Abortion and contraception
One of the most talked-about cases, Whole Woman’s Health v. Hellerstedt, was over a Texas abortion law that the plaintiffs said limited women’s access to abortion. The justices voted 5-3 to strike provisions requiring doctors performing abortions to have admitting privileges at local hospitals and requiring clinics to meet the same standards as ambulatory surgical centers.
That decision could lead to litigation over similar laws in dozens of other states. Many declared the decision the court’s most significant one on abortion in decades.
Tim Jost, a professor who focuses on health law at Washington and Lee University in Virginia, wondered whether the decision might have gone the other way had Scalia lived. Scalia very likely would have sided with Texas and might have persuaded Justice Anthony Kennedy to join him, Jost said. “He was pretty persuasive.”
Another case that grabbed the public’s interest was Zubik v. Burwell, a case over how religious not-for-profits must respond to the ACA’s requirement that employers offer workers birth control coverage. An Obama administration workaround requires religious not-for-profits that want to opt out of contraception coverage to notify their third-party administrators or provide information to HHS so the government can arrange for other coverage—which the not-for-profits argued violates their religious beliefs by making them complicit.
The justices punted the matter to lower courts to reach compromise decisions.
The abortion and contraception cases were striking but perhaps not as relevant to healthcare business as another decided this term, Gobeille v. Liberty Mutual Insurance Co. The justices’ 6-2 decision in that case was a win for insurers and a loss for states trying to reform healthcare.
The court decided that the federal Employee Retirement Income Security Act, known as ERISA, protects self-funded insurers and their thirdparty administrators from having to share certain data with states. Vermont argued it needed the data— such as on claims and member eligibility—for an all-payer database devised to improve the cost and effectiveness of healthcare. But insurer Liberty Mutual said it didn’t have to share that data under ERISA.
Business and insurance industry advocates praised the decision, saying it would keep insurers from getting tangled in conflicting patchworks of state laws and requirements.
False Claims Act
The Supreme Court often takes one False Claims Act case per term, said Larry Freedman, a member at Mintz Levin Cohn Ferris Glovsky and Popeo. This term, that case was Universal Health Services v. United States ex rel Escobar.
Providers watched the case closely because it had the potential to allow more or fewer False Claims Act suits against them.
The justices chose a middle path. They unanimously upheld a legal theory known as implied certification that makes providers liable for submitting false claims to government programs if they fail to follow certain regulations— even if the government never explicitly stated that following the regulations was a condition of payment and even if the provider never explicitly vouched that it had complied with the regulations.
But the high court also tried to limit when the theory can be invoked. Under the ruling, an organization’s lack of compliance would have to render its representations about its goods or services misleading.
The high court’s term left some in the industry cheering, others wringing their hands.
Scalia’s absence also made a big difference in Friedrichs v. California Teachers Association. The court deadlocked 4-4 on whether public employee unions can continue to charge dues to nonmembers who benefit from their collective bargaining activities. The tie vote automatically affirmed a lower court’s ruling that they can.
Though the case involved teachers’ unions, it will affect unions at public hospitals as well. About one-fifth of U.S. hospitals are owned by federal, state or local governments.
Jost said the case “may be one of the most important for healthcare in the long run” because many of those facilities are unionized.
“Scalia’s absence there made a huge difference between making a dramatic change in the law and leaving the law the way it is.”