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…

More Patient Data Has Been Compromised Through the First 7 Months of 2019 Than All of 2018

Each year, businesses in the health care sector invest more and more money into cybersecurity and data protection as the number of cyber-attacks and compromised patient records increases.  However, despite these efforts, successful cyber-attacks are significantly outpacing the health care sector’s efforts to protect patient data.

For example, in 2018, 15 million patient records were compromised as a result of slightly more than 500 breaches in the health care sector.  Through the first seven months of 2019, the three largest cyber-attacks alone affected more than 29.5 million patients.  The majority, and the most dangerous, of the attacks were carried out by hackers infiltrating third-party vendors or implementing successful phishing attacks. 

Of the biggest breaches thus far this year, the American Medical Collection Agency (“AMCA”) breach resulted in the largest compromise of patient data, affecting approximately 25 million patients.  Securities and Exchange Commission filings revealed that AMCA was hacked for eight months, between August 2018 and March 2019.   The compromised records included personal and financial data, such as Social Security numbers, credit card numbers, bank details, patient contact information, and sensitive medical information.  Since the breach, AMCA’s parent company, Retrieval-Masters Creditors Bureau, has filed for Chapter 11 bankruptcy protection.  It is unclear how the data breach remained undetected for such an extended period of time.  According to the company’s filing, it had slashed its staffing numbers from 113 to 25 at the end of 2018.

Another of the largest data breaches so far this year involved Inmediata Health Group, affecting 1.57 million patients.  Inmediata Health Group provides clearinghouse services and software and business processes outsourcing tools for health plans, hospitals, independent physician associations, as well as independent physicians. Officials discovered the data breach in January 2019.  Electronic health information was exposed due to a search engine function that allowed internal webpages used for business operations to be indexed.  Compromised data included patient names, contact information, medical claims data, and Social Security numbers.  Furthermore, patients affected by the data breach received multiple breach notification letters, some addressed to other patients.

Data breaches in the health care industry occur frequently and continue to grow in terms of affected patients.  Health care providers and affiliated organizations remain attractive targets for hackers due to the amount of personal information they possess.  According to the 2019 Cost of a Data Breach Report, a joint report issued by IBM Security and the Ponemon Institute (the “Report”), data breaches in the health care industry are the most costly.  According to the Report, the average cost of a data breach is $3.9 million.  The average cost of a data breach in the health care industry is $6.45 million – a difference of over $2.5 million.  Similarly, the average cost per record lost is $150, whereas the cost per record lost in the health care industry is $429.  Furthermore, according to the Report, formation of an incident response team and the extensive use of encryption reduce the cost of a data breach by an average of $360,000 each. 

Although the frequency and magnitude of data breaches have grown year by year, there are many actions that entities participating in the health care industry can implement.  These include, but are not limited to: (1) investment in, and expansion of, the information technology department, (2) implementation of updated security policies and periodic training for employees, and (3) the formation of a well-rounded incident response team.  

Legislation to Increase Financial Resources Provided through New Jersey Medicaid Program and to Establish County Option Hospital Fee Pilot Program Quietly Took Effect in April

On April 30, 2019, N.J.S.A. 30:4D-7r et seq., the County Option Hospital Fee Pilot Program Act (“Act”) establishing the County Option Hospital Fee Pilot Program (the “Pilot Program”), went into effect.  The bill was sponsored by Senators Joseph F. Vitale and M. Teresa Ruiz, and Assemblyman Craig J. Coughlin.  Governor Phil Murphy signed the bill on November 1, 2018.    

The Act creates a pilot program which will be overseen by the Commissioner of the New Jersey Department of Human Services (“DHS”).  The Act will initially allow seven qualified counties to participate in the Pilot Program, and grant them the authority to “impose a local health-care related fee on hospitals.”  The stated purpose of the Pilot Program is “to increase financial resources through the Medicaid program to support local hospitals and to ensure that they continue to provide necessary services to low-income citizens; and to provide participating counties with new fiscal resources.” 

In order to qualify for the Pilot Program, a county must have “a population greater than 250,000,” based on the most current federal census data available as of the effective date of the Act, with a municipality that is classified as a first or second class municipality, or a fourth class municipality with a population greater than 20,000, pursuant to N.J.S.A. 40A:6-4.  Furthermore, the municipality must have a Municipal Revitalization score greater than sixty, based on the New Jersey Department of Community Affairs’ calculations. 

Participating counties must submit proposed fees and expenditure reports to the Commissioner to ensure compliance with state and federal law.  Prior to submitting the fees and expenditure reports, the counties are required to “consult with affected hospitals within” their jurisdictions.  After submission, the Commissioner shall provide affected hospitals with twenty-one calendar days to provide comments.  The proposed fees must be “implemented in accordance with the provisions of 42 U.S.C.A. 1396b(w)(3)(A),” and subject to the limitations of 42 C.F.R. 433.68(f)(3).  42 U.S.C.A. 1396b(w)(3)(A) outlines the requirements for a fee to qualify as a “health care related tax,” and requires at least eighty-five percent of the burden of the tax to fall on health care providers.  42 C.F.R. 433.68(f)(3) sets forth the conditions under which a taxpayer will be considered to be held harmless. 

Additionally, a county may exempt a specific hospital from within its jurisdiction from the imposed fee, as long as “the exemption complies with the requirements of 42 C.F.R. 433.68.”  Furthermore, at least ninety percent of the funds collected must be used to benefit hospitals within the collecting county’s jurisdiction, and at least one percent of the fee must be transferred to DHS to cover administrative costs.  The Act is silent with respect to how the remaining nine percent of the collected funds can be utilized. 

The Act explicitly prohibits affected hospitals from passing on the costs of the fee to patients or insurers.  Notably, the Act acknowledges that “funds generated by the fee shall not supplant or offset any current or future State funds allocated to a county participating in the pilot program” and “payments distributed to hospitals . . . shall not supplant or offset any current or future funds paid to hospitals through other State or federal funding mechanisms or pools.”

Based on the requirements set forth in the Act, the counties most likely to be eligible for the Pilot Program are: Atlantic, Burlington, Camden, Gloucester, Essex, Hudson, Mercer, Middlesex, Monmouth, and Passaic.  According to Senator Vitale, “while Medicaid is the safety net that prevents low-income New Jerseyans from falling through the cracks, hospitals need to be well-funded and supported to properly deliver expert care to the community they serve.”  Furthermore, Senator Vitale believes the “pilot program will expand the resources for Medicaid and funnel funds into those facilities that ensure the disadvantaged continue to receive the quality care they need.”

It will be interesting to monitor the health care community and county legislators’ reactions to the actual implementation of this Act.  On the one hand, only seven out of ten potentially eligible counties will be authorized to participate in the Pilot Program, leaving at least three, if not more, counties unable to impose health-care related fees on hospitals within their jurisdictions to raise funds like their sister counties.  On the other hand, hospitals in seven counties will be subject to additional financial burdens, unlike the hospitals in the remaining fourteen counties not qualified or chosen for the Pilot Program.  Furthermore, the Act’s silence with respect to the remaining nine percent of the funds collected through the Pilot Program (requiring at least ninety percent to be distributed to hospitals within a county’s jurisdiction and at least one percent to be transferred to DHS for administrative costs) may become a point of contention for hospitals and counties alike.

New Jersey becomes Eighth State to Pass Death with Dignity Legislation

On March 25, 2019, both the New Jersey Assembly and the New Jersey Senate passed the Medical Aid in Dying for the Terminally Ill Act (the “Act”).  The final version of the bill was sponsored by Assemblyman John J. Burzichelli and Assemblyman Tim Eustace.  Governor Phil Murphy signed the bill into law on April 12, 2019 stating, “Today’s bill signing will make New Jersey the eighth state to allow terminally ill patients the dignity to make their own end-of-life decisions – including medical aid in dying.  We must give these patients the humanity, respect, and compassion they deserve.”

The Act “permits qualified terminally ill patient[s] to self-administer medication to end [their] live[s] in [a] humane and dignified manner.”  New Jersey is now only the eighth state in the country to allow competent, terminally-ill adults to exercise their “right to die.”  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.” 

Furthermore, qualified patients choosing to exercise their rights under this 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 the voluntariness of the patient’s request. 

A “right-to-die” bill was first introduced in New Jersey in 2012.  Proponents of the Act believe it gives adults the right to control their lives, die with dignity if they so choose, and decrease their prolonged pain and suffering.  Proponents of the Act also believe that there are enough safeguards in place to protect vulnerable, elderly adults. For example, the Act requires a patient to make several requests prior to receiving a prescription.  Additionally, not all terminally-ill patients who request and receive the medication will actually end up self-administering the medication – some patients simply like having the option of requesting such medication. 

Opponents of the bill argue that once a “right-to-die” bill is passed, New Jersey will be unable to outlaw the practice.  Further, they argue that vulnerable adults may misuse the Act, while certain adults may feel pressured to end their lives, viewing themselves as burdens to their families.  A 2015 Rutgers-Eagleton poll found that sixty-three percent of New Jersey residents support the passing of a “right-to-die” bill. 

It will be interesting to monitor the effects of these statutes on physicians, psychologically and professionally.  It is debatable whether providing such medications to terminally ill patients in pain can be reconciled with a physician’s Hippocratic oath to do no harm.  It will also be interesting to see what, if any, pressure will be placed upon doctors to provide such services to patients given that many may have moral objections to administering such medications.

United States Department of Health and Human Services Pushes for the Elimination of Certificate of Need Laws among States in an Effort to Decrease Healthcare Costs

In December 2018, the United States Department of Health and Human Services (“HHS”) issued a report entitled “Reforming America’s Healthcare System Through Choice and Competition” (the “Report”) in which HHS recommended “state action to repeal or scale back Certificate of Need laws.”  This recommendation was motivated by HHS’s desire to decrease healthcare costs through competition, by allowing additional competitors into certain healthcare markets. 

Most states adopted Certificate of Need laws following the enactment of the Health Planning Resources Development Act of 1974 (the “Act”).  The Act required states to create agencies or programs to oversee the creation or expansion of healthcare facilities.  The enactment of the Act was motivated by the assumption that healthcare costs were rising due to the overbuilding of healthcare facilities.  Specifically, due to an abundance of hospitals and other healthcare facilities, these facilities were unable to fill their beds, resulting in fixed costs being met through higher charges to patients.  Therefore, under the Act, a Certificate of Need would only be issued following the demonstration of actual need or demand by the entity seeking to expand an existing facility or build a new facility.  

Congress repealed the Act in 1986 for various reasons.  To date, fifteen states have eliminated their Certificate of Need requirements altogether.  New Jersey continues to maintain its Certificate of Need requirements.  Furthermore, between 2011 and 2016, the items covered under New Jersey’s Certificate of Need laws increased from twelve (12) to twenty-six (26), placing it amongst the top five most restrictive states when it comes to issuing a Certificate of Need. 

Based on the Report, Certificate of Need laws, in actuality, impose costs, including loss of beneficial competition; fail to improve healthcare quality or access; and foster unintended competition problems.  According to the Report, repealing Certificate of Need laws leads to “greater competition [which] incentivizes providers to become more efficient” and “hospitals faced with a more competitive environment have better management practices.”  Further, “evidence suggests [Certificate of Need] laws are ineffective,” and “[t]here is no compelling evidence suggesting that [Certificate of Need] laws improve quality or access, inefficiently or otherwise.”  Lastly, Certificate of Need laws impose costly barriers to provider entry and interfere “with market forces that normally determine the supply of facilities and services,” which can lead to the suppression of supplies, misallocation of resources, and shielding of “incumbent healthcare providers from competition from new entrants.” 

Since the publication of the Report, several states, including Georgia, South Carolina, Virginia, and Alaska, have proposed legislation to either reduce the scope of Certificate of Need laws or to repeal them altogether.  Interestingly enough, moving in the opposite direction, Indiana has introduced legislation that would create a new Certificate of Need law. 

With legislators across the aisle concerned about the increasingly high costs of healthcare, and the Report’s arguments that Certificate of Need laws have been ineffective, the Report may serve as a catalyst to repealing individual Certificate of Need requirements in various states, including New Jersey. 

Dental Practice and Private Equity-backed Dental Support Organization Settle With Government Regarding Allegations of Improper Billing and Violations of the Corporate Practice of Dentistry

ImmediaDent of Indiana, LLC (“ImmediaDent”), the operator of nine dental care practices in Indiana, and Samson Dental Partners, LLC (“Samson”), the provider of administrative support services to ImmediaDent, have agreed to pay $5.1 million to settle allegations of improper Medicaid billing and violations of the Indiana corporate practice of dentistry.  As part of the settlement, the two companies will pay approximately $3.4 million to the federal government and $1.78 million to the State of Indiana.

ImmediaDent owns and operates thirty-three dental locations in Indiana, Kentucky, and Ohio.  Kansas-based Samson provides management, administrative, and other support services to ImmediaDent, but does not have an ownership interest in ImmediaDent.

The U.S. Attorney’s Office intervened in this matter after Dr. Jihaad Abdul-Majid filed a qui tam, or whistleblower, suit in February 2013 against ImmediaDent and Samson in federal court.  According to the complaint, Dr. Abdul-Majid worked for ImmediaDent from July 2011 to March 2012.  His efforts to speak out against the alleged false billing practices he witnessed resulted in the termination of his employment.

Allegations constituting improper Medicaid billing by the two entities included billing tooth extractions as surgical extractions and billing for “deep cleanings” that were never performed or were not medically necessary.  Further, Samson was accused of violating Indiana’s law prohibiting the corporate practice of dentistry, Ind. Code §25-14-1-23.  See also Orthodontic Affiliates, P.C. v. OrthAlliance, Inc., 210 F. Supp. 2d 1054, 1059 (N.D. Ind. 2002).  Specifically, it was alleged that Samson improperly influenced ImmediaDent’s medical professionals and staff by rewarding employees for reaching production goals, disciplining employees for failing to meet production objectives, and exerting influence over staff in a manner that compromised their clinical judgment.

According to the U.S. Attorney’s Office, both companies refused to enter into corporate integrity agreements, which would have required oversight of the company by the United States Department of Health and Human Services, Office of Inspector General (“OIG”).  Corporate integrity agreements typically last for a period of five years and require companies to hire additional compliance staff, develop compliance training, have annual external reviews performed, and submit performance reports to the OIG.  Due to both entities’ refusal to enter into corporate integrity agreements, the OIG has determined that ImmediaDent and Samson “pose a continuing high risk to the federal health care programs and their beneficiaries.”

There is a small, but growing trend, of federal and state governments filing claims against management companies of medical and dental practices, and, in some instances, the private equity firms that invest in these management companies, for the alleged misdeeds of the billing providers.  Even though the firms do not have direct equity interests in the providers themselves, federal and state governments are more closely scrutinizing the influence that the firms have in the providers through the management relationships and trying to argue that such influence is so great that the management companies and the firms should also be liable for the liabilities of the providers.  It is important that management companies and private equity firms take great care in their relationships with health care providers to remain at arms’-length, so as to try to avoid being implicated in these actions.