Healthcare

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During the 2020 term, many long-term legal health care challenges will finally make their way to the Supreme Court.

Medicaid Work Requirements

Within the next year, the Supreme Court is likely to consider legal challenges to changes to state Medicaid policies, including the addition of work requirements. These proposed changes could fundamentally change the Medicaid program. They also would place adults age 50 to 64 at risk of losing access to health care services.

The Supreme Court is currently considering whether to grant certiorari in the Gresham v. Azar Medicaid work requirements case. 950 F.3d 93 (D.C. Cir. 2020). This case stems from a January 2018 State Medicaid Director letter in which the Centers for Medicare and Medicaid Services (CMS) announced a new policy that, for the first time, allows states to condition Medicaid eligibility on participation in work or a “community engagement” program under the waiver provision of Section 1115 of the Social Security Act. Letter from Brian Neale, Dir., Ctr. For Medicaid & CHIP, Ctrs. for Medicare & Medicaid Servs., to State Medicaid Dirs. (Jan. 11, 2018). That section grants the Secretary of the U.S. Department of Health and Human Services (HHS) the authority to waive a state’s compliance with certain requirements of the Medicaid Act only for an “experimental, pilot, or demonstration project” likely to help promote the objectives of the Medicaid Act. The Secretary of HHS has delegated that authority to CMS.

Arkansas was the first state to implement work requirements for people who received health coverage under Medicaid expansion. The Arkansas demonstration waiver program, known as Arkansas Works, conditioned Medicaid eligibility for people between the ages 19 and 49 on proving they have worked or volunteered for 80 hours per month. Those who fail to provide documentation for three months in a calendar year lose coverage for the rest of the calendar year. It exempted the medically frail and disabled, pregnant women, and people in substance abuse treatment, people caring for a sick person or minor child, and those persons exempt from work requirements for the Supplemental Nutrition Assistance Program.

When Arkansas implemented its waiver, more than 18,000 beneficiaries lost coverage. See Benjamin Hardy, Over 18,000 Lost Coverage in 2018 Due to Medicaid Work Rule, But Only Fraction Have Reapplied, Ark. Times (Jan. 16, 2019 at 2:11 AM). A review of the program found that over 95 percent of people who lost coverage were either working or qualified for an exemption. See Benjamin D. Sommers et al., Arkansas’s Medicaid Work Requirements Contributed to Higher Uninsured Rate and No Change in Employment, Commonwealth Fund (June 19, 2019).

Medicaid beneficiaries in Arkansas, Kentucky, and two other states challenged the Secretary’s approval of their state waivers in separate cases in federal district court. The beneficiaries claimed that the Secretary exceeded his authority in approving these waivers. They also claimed that the waivers placed them in danger of losing Medicaid, and, thus, access to needed healthcare. AARP and the Foundation filed amicus briefs in the Kentucky case. Brief for AARP et al. as Amici Curiae Supporting Plaintiffs-Appellees Urging Affirmance, Stewart v. Azar, Nos. 19-5095 & 19-5097 (D.C. Cir. Aug. 1, 2019).

In March 2019, the District Court for the District of Columbia vacated HHS’s approval of the Kentucky and Arkansas waivers in Gresham v. Azar, 363 F. Supp. 3d 165 (D.D.C. 2019), and Stewart v. Azar, 366 F. Supp. 3d 125 (D.D.C. 2019). The district court held that the federal government could not approve changes to state Medicaid programs that are inconsistent with the central objective of the Medicaid program to furnish medical assistance to low-income people and people with disabilities.

The Federal and State defendants appealed that decision to the D.C. Circuit, though Kentucky withdrew its appeal when the newly elected Governor terminated Kentucky’s program. The D.C. Circuit unanimously affirmed the lower court’s decision, holding that the approval of Arkansas Works violated the Administrative Procedure Act and was contrary to the objectives of the Medicaid Act. Gresham v. Azar, 950 F.3d 93 (D.C. Cir. 2020).

Arkansas and the United States now seek Supreme Court review of the D.C. Circuit’s decision. If the Supreme Court accepts this case, it will determine whether Medicaid programs can condition eligibility on work requirements. This will be a difficult obstacle for many to overcome, as the country is dealing with dual economic and public health crises.

Anti-Discrimination Provisions of the Affordable Care Act (Section 1557)

Another set of cases likely to reach the Court concern Section 1557 of the ACA. Section 1557 prohibits discrimination in health care for protected classes. 42 U.S.C. § 18116. In drafting the law, Congress recognized the need to ensure all individuals have access to health services and insurance, regardless of their race, color, national origin, sex, age, or disability. To meet this goal, the law prohibits discrimination by applying existing civil rights laws to the health care context.

The law applies to every health program or activity that receives Department of Health and Human Services (HHS) funding, including to most hospitals, skilled nursing facilities, pharmacies, clinics, health insurance market places, and any other program that HHS administers. It went into effect in 2010. Since that time, the law has been a powerful tool for combatting discrimination in health care.

The prior regulations interpreting Section 1557 made clear that sex discrimination prohibited by the law includes discrimination based on sexual orientation and gender identity. 81 Fed. Reg. 31,376 (May 18, 2016) (codified at 45 C.F.R. pt. 92). However, HHS recently finalized a rule that would strip these protections out of the regulations, and potentially eviscerate them entirely. The rule also eliminates key language access provisions that enable Americans with limited English proficiency to obtain health care.

Five lawsuits have been filed, each arguing that the rule violates the Administrative Procedure Act. The lawsuits are not identical, but each alleges that the new rule is not in accordance with the ACA and that its adoption was arbitrary and capricious. See Whitman Walker Clinic, Inc. v. U.S. Dep’t of Health and Human Servs., No. 1:20-cv-01630 (D.D.C); Asapansa-Johnson Walker v. Azar, No. 1:20-cv-2834 (E.D. N.Y.); Bagly v. HHS, No. 1:20-cv-11297 (D. Mass.); State of Washington v. HHS., No. 2:20-cv-1105 (W.D. Wash.); State of New York v. HHS, No. 1:20-cv-5583 (S.D. N.Y.).

AARP and AARP Foundation filed an amicus brief in the Whitman Walker Clinic case, in support of Plaintiffs’ effort to stop implementation of the rule. The brief argues that allowing the rule to take effect would harm older adults, including members of the LGBTQ community and those with limited English proficiency. The brief also argues that implementing the rule now, during a public health crisis when access to care is critical, would have devastating consequences.

On August 17, the District Court for the Eastern District of New York issued a preliminary injunction in the Asapansa-Johnson Walker case, blocking implementation of the portions of the rule that rolled back anti-discrimination protections for LGBTQ people. On September 2, the District Court for the District of Columbia also issued a preliminary injunction in the Whitman Walker case, similarly stopping implementation of the portions of the rule rolling back anti-discrimination protections for LGBTQ people. The injunction also blocks a provision that would have extended Title IX’s religious exemption to Section 1557. The injunction applies nationwide, and will remain in effect while the case proceeds.

Insurance-Related Cases (STLDI & AHPs)

Two cases challenging rules issued by the administration designed to expand the availability of short-term, limited-duration insurance (STLDI) and association health plans (AHPs) continue to work their way through the courts. Ass’n for Cmty. Affiliated Plans v. U.S. Dep’t of Treasury, No. 18-2133 (RJL) (D.D.C.); State of N.Y. v. U.S. Dep’t of Labor, No. 18-1747 (JDB) (D.D.C.). STLDI and AHPs are two types of health insurance not subject to the requirements of the ACA. The challengers argue that the agencies that issued these rules exceeded their authority and that the rules are in conflict with the ACA.

The district court invalidated the rule on association health plans, describing the rule as “designed to end run the requirements of the ACA[.]” N.Y. v. U.S. Dep't of Labor, 363 F. Supp. 3d 109, 141 (D.D.C. March 28, 2019). The government appealed, and the D.C. Circuit held oral argument in November 2019.

In contrast, the district court upheld the STLDI rule. 2019 U.S. Dist. LEXIS 120834 (D.D.C. July 19, 2019). Plaintiffs appealed to the D.C. Circuit. AARP and AARP Foundation filed a brief in support of the plaintiffs-appellants, highlighting how the proliferation of these plans will harm older adults. Insurers who offer these plans can deny coverage because of preexisting conditions and charge exorbitant rates based on age alone, and they need not provide the minimum essential benefits that ACA-compliant plans must offer. The D.C. Circuit affirmed the lower court’s decision, holding that the rule does not violate the Administrative Procedure Act. Ass’n for Cmty. Affiliated Plans v. U.S. Dep’t of Labor, No. 19-5212, 2020 WL 4032806 (D.C. Cir. July 17, 2020). The plaintiff-appellants have filed a petition for rehearing en banc.

Resident Rights Under the Federal Nursing Home Reform Act

The Federal Nursing Home Reform Act (NHRA) defines and guarantees the legal rights of nursing facility residents, such as the right to be free of chemical restraints. The purpose of the NHRA is to ensure that nursing facility residents receive high-quality care and are protected from physical, emotional, and social abuse and neglect. Nursing facilities must provide for residents “in such a manner and in such an environment as will promote maintenance or enhancement of the quality of life of each resident.” Pub. L. No. 100-203, § 4211(b)(1)(A), 101 Stat. 1330, 1330-183 (1987).

There is still an open question about whether nursing facility residents can sue under Section 1983 of the Civil Rights Act to enforce their NHRA rights. The Third and Ninth Circuits have held they can. Grammer v. John J. Kane Reg’l Ctrs., 570 F.3d 520 (3d Cir. 2009); Anderson v. Ghaly, 930 F.3d 1066 (9th Cir. 2019). Section 1983 provides a private right of action against state actors who have violated rights guaranteed by a federal statute. 42 U.S.C. § 1983. Without Section 1983, residents cannot enforce their rights under the NHRA and hold facilities accountable for harm.

The Seventh Circuit is considering this issue for the first time in Talevski v. Health & Hosp. Corp. of Marion Cty. Notice of Appeal, No. 20-1664 (7th Cir. Apr. 22, 2020). In that case, a nursing facility resident is suing a government-owned facility and others under the NHRA after they allegedly chemically restrained and illegally discharged him. The district court dismissed the case, holding that a resident cannot use Section 1983 to challenge a violation of the NHRA. Talevski v. Health & Hosp. Corp. of Marion Cty., No. 2:19 CV 13, 2020 WL 1472132 (N.D. Ind. Mar. 26, 2020). The resident appealed that decision to the Seventh Circuit. AARP and AARP Foundation filed an amicus brief in support of the resident.

This case is important to nursing facility residents because it will explore whether residents can require states and state entities to enforce the rights guaranteed to them by the NHRA. Holding nursing facilities accountable allows residents to obtain redress for injuries and deters future misconduct. No matter the outcome, this case is likely to be appealed to the Supreme Court.

Prescription Drugs

Prescription drug prices continue to skyrocket each year, with the prices of brand name drugs increasing at an exorbitant rate. An AARP study found that in 2018, retail prices for 267 widely used brand name prescription drugs increased by 5.8 percent, more than twice the rate of inflation. See Stephen W. Schondelmeyer & Leigh Purvis, AARP Pub. Policy Inst., Brand Name Drug Prices Increase More than Twice as Fast as Inflation in 2018 (2019).

These escalating drug prices disproportionately hurt older adults. Many older adults, who average 4.5 brand name prescription medications each month, cannot afford them. Id. As a result, many risk their health by not filling their prescriptions or by taking less than the prescribed dose. See Ashley Kirzinger, Data Note: Prescription Drugs and Older Adults, Kaiser Fam. Found. (Aug. 9, 2019).

States and other stakeholders are taking various actions to lower the price of drugs for consumers. The State of California enacted Assembly Bill 824, also known as the California Pay-For-Delay Bill, to combat the effect that anticompetitive prescription drug agreements have on consumers. A.B. 824, Reg. Sess. (Cal. 2019). The law is the first-of-its-kind. Its specific targets are pay-for-delay agreements. These are settlements where a brand name drug manufacturer agrees to settle a patent lawsuit by paying a generic drug company to delay entering the market. During the delay, the branded manufacturer has a monopoly on the market and can charge consumers higher prices for the drug. As a result, consumers pay millions more for the brand name drug because they cannot access a lower-cost generic.

The California law creates a presumption that any transfer of value from a brand name drug manufacturer to a generic drug company settling patent infringement litigation, combined with a delay of the generic drug’s entry into the market, has an anticompetitive effect. Shortly after its passage, generic drug lobbying group Association for Accessible Medicines sued in federal district court to invalidate the California law and preliminarily enjoin its implementation and enforcement. In Ass’n for Accessible Meds. v. Becerra, No. 2:19-cv-02281-TLN-DB, 2019 WL 7370421 (E.D. Cal. Dec. 31, 2019), it alleged that, among other things, the law violates the dormant Commerce Clause of the U.S. Constitution by directly regulating out-of-state conduct. A district court denied the injunction, and AAM appealed to the Ninth Circuit. Notice of Appeal, Ass’n for Accessible Meds. v. Becerra, No. 20-15014 (9th Cir. Jan. 2, 2020). AARP and AARP Foundation submitted a brief explaining that the law is in the public interest because it ensures that consumers can access lower-cost generic drugs. Brief for AARP & AARP Foundation, as Amici Curiae Supporting Defendant-Appellee, Ass’n for Accessible Meds. v. Becerra, No. 20-15014 (9th Cir. Mar. 5, 2020). The Ninth Circuit should issue its decision before the end of 2020.

In addition, continued litigation attacks are filed against the Patent Trial and Appeal Board (PTAB), which may affect drug pricing. The latest petition in the Supreme Court claims that PTAB judges were unconstitutionally appointed. Petition for Writ of Certiorari, Arthrex, Inc. v. Smith & Nephew, Inc., 2020 WL 3805820 (U.S. June 30, 2020) (No. 19-1458). Congress created the PTAB to overturn improperly granted patents expeditiously. Limits on the Board’s authority can delay the invalidation of dubious patents, including drug patents, which could ultimately increase consumer costs.

As research for a coronavirus vaccine focuses on antibody research, pharmaceutical giants Amgen and Sanofi continue to litigate about how narrowly patents involving antibodies must be claimed. Amgen, Inc. v. Sanofi, 872 F.3d 1367 (Fed. Cir. 2017), cert. denied, 139 S. Ct. 787, 202 L. Ed. 2d 568 (2019). While the patents at issue in the dispute involve cholesterol-lowering antibodies, many of the new drugs for cancer therapy and other immune immune-related diseases are antibody drugs. Amgen argues that an entire genus of antibodies can be patented, whereas Sanofi maintains that inventors must narrow their patents to the specific antibodies that will be used in a drug, since a genus can include millions of antibodies. Id. at 1377-1378. If drug companies are allowed to patent an entire genus of antibodies, drug costs may increase.

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