New Jersey Supreme Court Plows the Field for Implementation of the Medical Aid in Dying for the Terminally Ill Act

This post is intended to update our prior article printed in the summer edition of Garden State Focus, where we wrote about the newly enacted Medical Aid in Dying for the Terminally Ill Act (the “Act”).

The Act “permits qualified terminally ill patient[s] to self-administer medication to end [their] live[s] in [a] humane and dignified manner.”  Under the Act, “terminally ill” is defined as a patient who “is in the terminal stage of an irreversibly fatal illness, disease, or condition with a prognosis, based upon reasonable medical certainty,” with a life expectancy of six months or less.   Qualified patients choosing to exercise their rights under the Act will be required to submit their request in writing stating, among other things, that they have been fully informed of any available alternatives.  Two individuals, one who must not be a relative, entitled to any portion of the patient’s estate, or the patient’s doctor, must witness and attest to the voluntariness of the patient’s request.  With the passage of the Act, New Jersey became the eighth state in the country to allow competent, terminally-ill adults to exercise their “right to die.”

The Act was set to go into effect on August 1, 2019 when Yosef Glassman, a medical doctor, filed an order to show cause and verified complaint seeking to enjoin the implementation of the Act. Dr. Glassman’s eleven-count verified complaint alleged that the Act violated: (1) “the fundamental right to defend life”; (2) the equal protection clauses of the state and federal constitutions and the Fifth Amendment’s right to due process; (3) religious physicians’ and religious pharmacists’ First Amendment rights under the United States Constitution; (4) the “canon of common law” which prohibits killing oneself and aiding and abetting another’s death; (5) state and federal law prohibiting the felonious possession of narcotics; (6) a physician’s right to practice medicine and a pharmacist’s right to practice pharmacy by involving unwilling participants “to be involved in the machinery of death”; (7) the duty to warn; (8) the Administrative Procedure Act by failing to promulgate rulemaking, “thereby rendering its entire process of death wholly and dangerously unregulated, leaving ambiguities and contradiction in statutory language”; (9) Article Ten of the United States Constitution forbidding the institution of state action that impairs existing contracts between physicians and their patients; and (10) a physician’s obligation not to falsify records. Finally, Dr. Glassman sought declaratory relief deeming the Act unconstitutional and invalid.

 On August 14, 2019, the Chancery Court entered an order preliminarily enjoining the enforcement of the Act, concluding that the failure to promulgate regulations would cause Dr. Glassman “immediate and irreparable injury” based on the significant change in the law when “dealing with individuals who are terminally ill.” That preliminary injunction held in abeyance the effective date of the Act.

At the behest of the State Attorney General to dissolve the preliminary injunction, the Appellate Division ordered expedited briefing, to be completed by August 23, 2019, but declined to dissolve the injunction. On August 20, 2019, the New Jersey Supreme Court entered an order denying the Attorney General’s request to dissolve the preliminary injunction and declined to take any further action concerning “an issue of this magnitude” until the Appellate Division addressed the issue with “thoughtful consideration.” The Supreme Court also requested the Appellate Division to “resolve the matter expeditiously.”

Dr. Glassman raised a number of hard-hitting arguments attacking the lack of standards in the Act and potential disparate impacts on terminally ill patients. He argued that the Act:

  • Sets forth no age or literacy qualifications for witnesses of a request for medication;
  • Permits witnesses to make viatical agreements or will provisions immediately after witnessing a terminally ill patient’s request;
  • Sets forth no due diligence requirements for attending physicians to verify witness signatures;
  • Does not disqualify physicians who determine a terminally ill patient’s capacity by virtue of being a blood relative or beneficiary in a will;
  • Permits an employee or director of a facility in which a patient resides to witness a request;
  • Does not require that a check be made of the Prescription Monitoring Program before writing a prescription for a lethal drug;
  • Permits life or medical insurance agents, or insurance beneficiaries to be a witness to the terminally ill patient’s request;
  • Does not recognize the lack of uniformity in lethal medications which may involve varying degrees of pain and suffering;
  • Does not recognize that non-specialist health care professionals might apply different standards for decision-making capacity;
  • Does not recognize the potential disparate treatment of patients based on economic status and ability to pay for costly lethal pharmaceuticals;
  • Does not recognize that some medications are faster-acting than others; and
  • Does not recognize that terminally ill patients may be of sound mind when they make the request for medication, but may later become incompetent at the time of administration.

Finding that the Chancery Court “abused its discretion in awarding preliminary injunctive relief,” on August 23, 2019, the Appellate Division dissolved the restraints imposed in the Chancery Court’s August 14, 2019 order. In doing so, the Appellate Division applied the well-settled standards for injunctive relief set forth in Crowe v. DeGioia, 90 N.J. 126 (1982). First, the Court found that Dr. Glassman failed to establish that injunctive relief was necessary to prevent irreparable harm. The only harm identified, said the Court, was the Executive Branch’s failure to adopt enabling regulations, but there was no showing that the absence of such regulations harmed Dr. Glassman. At that point, no party had sought medical advice or assistance from Dr. Glassman to implement any provision in the Act. Other than a blanket assertion that there was a “material change in the law” regarding terminally ill patients, neither Dr. Glassman nor the Chancery Court identified a single provision of the Act that lacked clarity necessary for a patient or any affected individual or entity to effectuate the Act’s purpose. Moreover, the Act makes participation by physicians like Dr. Glassman entirely voluntary. “The only requirement the Act imposes on health care providers who, based upon religious or other moral bases, voluntarily decide not to treat a fully-informed, terminally-ill patient interested in ending their lives, is to transfer any medical records to the new provider selected by the patient.” Characterizing the transfer of medical records from one physician to another as a purely “administrative function,” the Appellate Division found that function to have no constitutional import, nor did it run contrary to a physician’s professional obligations.

Second, Dr. Glassman failed to demonstrate that he had a likelihood of succeeding on the merits of the claims he asserted in his complaint. The Appellate Division disagreed with the Chancery Judge’s conclusion that an injunction was necessary because the Executive Branch failed to implement enabling regulations prior to the Act’s effective date, finding that ruling to be contrary to the clear, plain and unambiguous language of the Act. Pointing out that the Act permitted but did not require the relevant administrative agencies with a vested interest in the Act’s implementation to adopt regulations, the Appellate Division stated, “[h]ad the Legislature intended the Act to remain in a period of perpetual quiescence, thereby keeping all interested parties in limbo until a half-dozen administrative bodies decided to engage in their rule-making functions, it could have clearly said so.” In fact, the “absence of agency action here,” said the Court, “may imply . . . that regulations were not necessary to implement the Act.” Further, the Court found that Dr. Glassman did not have standing to assert claims on behalf of other physicians, patients or interested family members. In addition, his claims ignore the voluntary nature of his participation under the Act and his “already existing obligation under relevant regulations to provide a patient with his or her medical records.”

Finally, the Appellate Division weighed the relative hardships that granting injunctive relief would have on the parties and concluded that the Chancery Court failed to adequately consider “the interests of qualified terminally-ill patients, who the Legislature determined have clearly prescribed rights to end their lives consistent with the Act.” Consequently, the Appellate Division dissolved the preliminary injunction.

By order entered on August 27, 2019, the New Jersey Supreme Court likewise found that Dr. Glassman failed to satisfy the Crowe v. DeGioia standards for emergent injunctive relief and determined that the Act could be implemented without further delay. By doing so, the New Jersey Supreme Court has averted a head-on collision between the Medical Aid in Dying for the Terminally Ill Act and the State and Federal Constitutions – at least for the moment…

Hospitals Launch a 5th Amendment Constitutional Takings Challenge against the New Jersey Medicaid and Charity Care Programs

Fourteen acute care hospitals have filed a lawsuit suit, the first of its kind in New Jersey, alleging that the State has “taken” the hospitals’ property without just compensation. The hospitals claim that N.J.S.A. 26:2H-18.64 (the “Take All Comers Statute”), which requires New Jersey hospitals to provide medical treatment to all patients who enter their doors, regardless of the patients’ ability to pay, results in an unconstitutional “taking” of the hospitals’ property in violation of the Takings Clauses of the United States and New Jersey Constitutions.

To comply with the Take All Comers Statute, hospitals must permit continuing access to hospital real property and treatment facilities by all patients, including Medicaid and charity care patients, for the duration of their hospital stay and to the exclusion of other patients.  While physically on the hospitals’ property, these patients also use and consume the hospitals’ personal property in the form of medications, equipment, food, linens, treatment staff time and other services, depriving use of these resources for the benefit of the paying public.

The hospitals argue that the scope of all their property taken through the mandate of the Take All Comers Statute constitutes a “physical invasion and appropriation of property” resulting in what SCOTUS has called a per se unconstitutional Taking.  Several SCOTUS cases support the hospitals’ claims. The first is Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982), which found that a per se taking occurs when there is a permanent physical invasion of property no matter how minor. In that case, the permanent physical invasion was New York’s requirement that landlords install a cable box on landlords’ apartment roof tops.  In a second case, Nollan v. California Coastal Comm., 483 U.S. 825 (1987), SCOTUS focused on the limitation placed on a property owner’s ability to exclude others from physically being on his property (there, the inability of the property owner to exclude the public from using an easement over his property to access a nearby beach).  In such a case, the property owner is not permitted to use his property as he sees fit — a right, SCOTUS found, that “has traditionally been considered one of the most treasured strands in an owner’s bundle of property rights.” In the third and most recent case, Horne v. Dept. of Agriculture, 135 S. Ct. 2419 (2015), SCOTUS made clear that the government’s obligation to pay just compensation not only applies to the “taking” of real property, but also includes the “taking” of personal property. Therefore, the government’s requirement that California raisin growers set aside a portion of their crop in order to stabilize crop prices constitutes a per se taking, requiring the government to pay fair market value for the portion of the raisin crop that they were required to set aside.

In the same way the government’s actions in the Loretto, Nollan, and Horne cases appropriated property from one private party to either the government itself or another private party, so too does the Take All Comers Statute’s requirement that a hospitals’ beds, medications, equipment, supplies and services are to be used to treat Medicaid and charity care patients constitute an affirmative appropriation of that property for a public purpose, entitling the hospitals to receive just compensation from the State. Stay tuned…

Health Care Industry Continues to Provide Opportunities for Private Equity Investors

In 2015, health care will remain an important area of for private equity investors who capture targeted opportunities. Merger and acquisition activity (M&A) peaked in 2014, though opportunities for strategic partnerships between investors and healthcare firms still do exist.

M&A: In 2014, the health care industry experienced unprecedented M&A activity, as corporate health care firms recognized that the high, non-cyclical growth rates they had enjoyed in the past were unlikely to continue.  The firms that merged attempted to populate their portfolios with growth assets, rid themselves of low-growth assets, and take advantage of financial opportunities such as tax inversions.  This level of M&A activity seems to have peaked in 2014.

Private Equity: In 2015, investors will still face hurdles to generate high returns on their investments, due to high valuations persisting from 2014, a small number of large-scale assets, and keen competition from strategic buyers and investors.

Current opportunities for investment include carve-out assets that continue to hit the market, as strategic firms keep repositioning their portfolios for growth.[1] Recent strategic partnerships that have taken advantage of carve-out assets include 1- Water Street Healthcare Partners, LLC, a strategic investor who specializes in growing, middle-market healthcare companies, partnering with Walgreens in a deal that merged Walgreens’ Take Care Employer Solutions worksite health business with Water Street’s CHS Health Services worksite health business, and 2-Madison Dearborn Partners’ (MDP), a private equity firm, partnering with Walgreens on the carve-out of Walgreens’ home infusion business, whereby Walgreens sold fifty one percent (51%) of its infusion services business[2] to MDP.

Funds are expected to continue to invest across a wide variety of segments, including:

  1. Population health management, driven by the changing health care landscape in the US;
  2. Next-generation behavioral health, where behavioral health clinics in the US take more of a role in managing the overall health of their populations;
  3. Dermatology, as growth in the aesthetics product portfolio enable clinics to further insulate themselves from reimbursement risk;
  4. Physical therapy, where consolidation by chains will likely accelerate;
  5. Retail health (e.g., dental and veterinary clinics), which continues to offer insulation from reimbursement risk as well as consolidation opportunities;
  6. Contract Research Organizations (CROs), where fragmentation persists despite the level of private equity activity over the past few years; and
  7. Over-the-counter (OTC) manufacturers, including vitamins, minerals and supplements, where there remains significant opportunity to “pre-consolidate” assets to bring them to sizes that are attractive to large strategic buyers.[3]The opportunity for healthcare investors is still large, and the potential for strong returns remains. Funds should focus on sourcing assets that best fit with their investment strategies, and essay to bring those assets to full potential in order to earn high returns on their investments.

[1] Carve out assets are assets generated from a parent company selling a minority share of a child company, usually in an initial public offering (IPO), while retaining the rest. The child company has its own board of directors and financial statements, but benefits from the parent company’s resources and strategic support.  The parent company may eventually sell the rest of the child company in the open market, also called a partial spinoff.

[2] Infusion therapy is the practice of administering specialty drugs to patients intravenously, either via injection or catheters, in a variety of settings.

[3] Source: Global Healthcare Private Equity Report 2015, Bain & Company.

Amarin Sues FDA Because It Cannot Promote Off-Label Use of Vascepa

A small pharmaceutical company called Amarin — based out of Dublin, Ireland –recently filed a Complaint for declaratory relief against the FDA in the United States District Court for the Southern District of New York. Amarin along with four physicians that prescribe its drug, Vascepa (omega-3 fatty acid derived from fish), allege constitutional violations of the First (freedom of speech) and Fifth (restriction against vague laws) Amendments of the United States Constitution. An Answer has not yet been filed.

The promotion of off-label drugs is the heart of this case. Amarin would like to share with potential prescribers the results of its 2011 clinical study that Vascepa lowers triglycerides, a kind of fat in the blood associated with heart disease, in patients with “persistently high” levels. However, the FDA currently only approves the drug for use in patients with extremely high levels of triglycerides.

Amarin seeks to provide the off-label information to prescribers and not the general public. Physicians, who are permitted to prescribe off-label, are already prescribing the drug in line with the clinical study and Amarin takes the position that these physicians are currently inadequately informed. Further, Amarin seeks to disclose information that is truthful and not misleading.

Opponents have said that Amarin seeks to sidestep the FDA.  If drug companies were permitted to share the results of clinical studies with physicians, there would be no motivation to obtain FDA approval. The FDA has declined to comment other than to state that more comprehensive guidance is on the way. The resolution of the lawsuit as well as the FDAs anticipating guidance may have far-reaching implications for off-label promotion of drugs.