Proposed Rule Issued by CMS Modifies Requirements for LTC Facilities Participating in Medicare and Medicaid Programs

As previously discussed here on our Health Industry Washington Watch blog, CMS is publishing a notice extending by 30 days the comment period for its July 16, 2015 proposed rule entitled “Reform of Requirements for Long-Term Care Facilities.” The revisions of the “Proposed Rule” indicate an increased cost of $729 million in the first year (or an estimated $46,491 per facility) and would cost approximately $638 million in the second and subsequent years (or $40,685 per facility).  Given the substantial costs estimated by CMS in the Proposed Rule and the scope and sometimes highly-detailed and arduous provisions, comments have been extended from September 14, 2015 until October 14, 2015.

For more information on CMS’ modified requirements of the “Proposed Rule” and the implications it may have for LTC facilities participating in Medicare and Medicaid programs, read the full Client Alert written by Carol Loepere, Daniel Cody, Susan Edwards, Jacquelyn Godin and Vicki Morris.

Preparing for a HIPAA Data Breach: Easy Steps to Ensure “Breach Readiness”

The 2013 changes to HIPAA’s privacy and security regulations in combination with the government’s bolstered approach to compliance and enforcement reinforces the need for health care providers to remain focused on preparing for the inevitable likelihood that privacy or security issues will occur. With the number of significant data breaches expected to rise, it is critical that hospitals, health systems and other health care providers plan ahead and have a compliance program in place to quickly and appropriately respond when a breach occurs. As outlined in “Are You Prepared if the Next Big HIPAA Breach Happens to You,” Reed Smith attorney Brad Rostolsky outlines the key steps providers should take to ensure they are appropriately prepared:

  1. Be prepared to respond quickly
  2. Get the right (internal and external) team in place
  3. Make sure there is insurance for everything
  4. Pick the low-hanging fruit

For more details on these key steps, read the full article.


Cure of Security Rule Violations Following Breach of EPHI Cannot Save Covered Entities from $750,000 Settlement; Non-Breach Related Security Complaint Leads to $218,000 HIPAA Settlement

More than three years after the Cancer Care Group, P.C. (“CCG”) notified the U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) of a breach of unsecured electronic protected health information (“ePHI”), the radiation oncology private practice settled and implemented a corrective action plan (“CAP”) with OCR for $750,000. This settlement comes on the heels of another July 2015 settlement involving St. Elizabeth’s Medical Center (“SEMC”), a tertiary care hospital in Brighton, Massachusetts. St. Elizabeth’s entered in a settlement agreement and CAP with OCR for $218,400 arising from two HIPAA unrelated incidents, one non-breach incident in November 2012 and a breach in August 2014.

The enforcement actions related to both CCG and SEMC are discussed below and reinforce the importance of implementing appropriate safeguards and policies and procedures to secure ePHI.

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Attention Out-of-State Plaintiffs: The Tour Ends Here. Next Stop, Home

Last year, the Supreme Court sent a resounding message regarding personal jurisdiction when it decided Daimler AG v. Bauman, 134 S.Ct. 746, 752 (2014).  Bauman announced a significantly more stringent standard for finding a corporation to be “essentially at home” in a foreign jurisdiction and, as a result, made personal jurisdiction harder to establish in courts outside the state of a company’s place of incorporation or principal place of business.  For more discussions about Bauman and its effect, see our prior posts here or those over at the Drug and Device Law blog.

In this post, we highlight two recent post-Bauman personal jurisdiction opinions from a medical device product liability multi-district legislation (MDL) as good examples of how Bauman is useful in mass litigation where joinder provisions are misused to file multi-plaintiff lawsuits.  In such circumstances, a single complaint will include a number of plaintiffs from different jurisdictions, with the only connection between them being that the plaintiffs took the same prescription drug or received the same medical device.  Filing multi-plaintiff lawsuits can save on filing fees, and can also thwart the defendant’s ability to remove the case to federal court on diversity grounds (as described here and here).

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OSHA Initiative Regarding Workplace Safety For In-Patient Care Facilities

The Occupational Safety and Health Administration (OSHA) recently announced an initiative affecting inspections at in-patient care facilities. The Agency plans to:

  • Expand the resources OSHA directs for inspections at these sites, and
  • Direct inspectors to focus on five recently identified “key hazard” areas:  (1) musculoskeletal disorders related to patient and resident handling; (2) bloodborn pathogens; (3) workplace violence; (4) tuberculosis; and (5) slips, trips and falls.

In addition to this announcement, OSHA released a Directive to Regional Administrators and State Designees, which provides guidance to OSHA investigators on how to detect each of the new five newly identified hazards.

Employers should familiarize themselves with the details of the directive now, before OSHA inspectors are at their door.

For more details on this initiative, read the Reed Smith Employment Law Watch blog post written by Sara A. Begley and Amanda D. Haverstick here.


First Amarin Pharm v. FDA, Now Pacira Pharm, Inc. v. FDA

The Southern District of New York certainly is becoming a hotbed for issues relating to the FDA’s ability to take enforcement action against manufacturers who promote their FDA-regulated products for uses outside the approved label indications.  The Amarin Pharm v. FDA litigation has garnered a good deal of attention, and after Amarin and the FDA sought and received a stay of that case through October 30, 2015, so the parties can discuss settlement, commentators have begun to speculate about what comes next.

The immediate answer, not surprisingly, seems to be “more lawsuits.”

Taking a page out of the Amarin playbook, Pacira Pharmaceuticals, Inc. has now filed its own lawsuit in the Southern District of New York seeking “to establish its right to speak in a truthful and non-misleading fashion about lawful uses of its product EXPAREL.”

According to Pacira’s complaint, EXPAREL combines a local anesthetic used for controlling postsurgical pain (bupivacaine) with a “novel delivery platform called DepoFoam that allows the drug to be administered with precision and provide[s] more extended pain relief than plain bupivacaine.”  Two successful clinical trials involving “two very different surgical procedures” (bunionectomies and hemorroidectomies) are alleged to have “provide[d] a valid basis . . . to determine that EXPAREL can be used safely and effectively in any surgical site.”

The FDA approved the New Drug Application (NDA) for EXPAREL with a broad “Indications and Usage,” for “administration into the surgical site to produce postsurgical analgesia.”  And with that in hand, according to the complaint, “Pacira spoke with physicians, surgeons, and anesthesiologists about use of EXPAREL to produce postsurgical analgesia in different surgical sites” in “truthful and non-misleading ways.”  It also shared “the actual experiences that other physicians had administering EXPAREL in different surgical sites.”  In doing so, Pacira submitted its promotional materials to the FDA for review.  After three years, however, the FDA issued a Warning Letter criticizing promotion of EXPAREL for use outside of bunionectomies and hemorroidectomies, and cautioned that some of Pacira’s promotion was criminal.   A July 24, 2015, letter from the FDA closing out the Warning Letter declared Pacira’s promotion to be “violative” of the FDCA, and noted that Pacira had stopped disseminating materials with statements referenced in the Warning Letter.

As the complaint makes clear, Pacira and the FDA are in disagreement over the scope of the approved indications for use of EXPAREL, and thus in disagreement over whether Pacira is even engaged in so-called “off-label” promotion.  Nevertheless, seeking a preliminary injunction like that issued by Judge Paul Engelmayer of the Southern District of New York in Amarin Pharm, Inc. v. FDA, No. 15 Civ. 35888, 2015 WL 4720039, 2015 U.S. Dist. LEXIS 103944 (S.D.N.Y. Aug. 7, 2015), Pacira seeks its own declaration that the FDA cannot take action against it for truthful, non-misleading statements about EXPAREL. Whether Judge Ronnie Abrams will follow suit, of course, remains to be seen, but Pacira has Second Circuit precedent—United States v. Caronia, 703 F.3d 149 (2d Cir. 2012)—on its side as well.

The Amarin and Pacira lawsuits provide one proactive strategy that other manufacturers might consider if the FDA has taken action over—or threatens to take action over—what the company believes to be truthful, non-misleading statements about its FDA-regulated product.  If this trickle of litigation turns into a torrent, however, courts might start to resist their new role in adjudicating the truthful, non-misleading nature of particular promotional statements, and Article III standing issue—and whether a given lawsuit seeks an improper advisory opinion—may come under closer scrutiny.

As with Amarin, there surely will be more to come on Pacira as well.

3D Printing of Medical Devices: When a Novel Technology Meets Traditional Legal Principles

3D printing is quite possibly the next greatest chapter in the industrial revolution, and the technology is moving rapidly.  Reed Smith’s Life Sciences Health Industry Group recently launched its first 3D printing publication white paper – 3D Printing of Medical Devices:  When a Novel Technology Meets Traditional Legal Principles.  This paper explores unchartered legal issues arising out of one of the hottest product trends:  the use of 3D printing to manufacture medical devices. Much interest surrounds this topic given the rapid rise in 3D manufacturing of all kinds of products – ranging from household goods, guns, medical devices and even cars.  Just recently, the FDA even approved the first ever 3D printed drug tablet.

In addition to providing an overview of a wide range of developing legal issues, the paper also includes sections on:

  • Regulatory Issues
  • Intellectual Property
  • Tort Liability
  • Environmental Effects and Health Risks in the Work Place
  • Insurance Issues
  • Reimbursement
  • Litigation

3D printing technology has the potential to radically transform the way medical devices are used to treat patients and save lives, a potential that is already beginning to be felt.  One can foresee numerous potential benefits to patients as this technological trend continues – but at the same time, unknown risks and consequences exist. As the legal environment surrounding 3D technology evolves, as well as the technology itself, this white paper will be updated to offer a comprehensive, up-to-date resource.

To read the full 3D printing white paper, click here.

Cybersecurity Concerns for Medical Device Companies: A Risk Mitigation Checklist

Cybersecurity issues are nothing new to those operating in the health care industry. But while these issues have most commonly been faced by hospitals and health care providers, medical device companies must now take note. As reported recently in the news, medical devices have increasingly become the targets for cybersecurity breaches, given the information contained on device computer systems and the data transmitted by medial devices to health care professionals and institutions. To help clients navigate these issues, Reed Smith’s IP, Information & Innovation Group and Life Sciences Health Industry Group have therefore joined up to create a Task Force of specialty legal practices to guide medical device and other medical application companies through a risk mitigation assessment process. Their first order of business included developing a Risk Mitigation Checklist for in-house counsel of medical device companies. To access this Client Alert, authored by Colleen Davies, Barry Coyne and Steven Boranian, please click here. You can also view a PDF of the Client Alert here.

UPDATE: Corporate Counsel magazine features Reed Smith’s medical device cybersecurity risk mitigation checklist for in-house counsel on its blog. Read their post here.

Federal Departments and Agencies Release Proposed Rule to Modernize Regulations Under Common Rule

As discussed on our Health Industry Washington Watch blog here, on September 2, 2015, the Department of Health and Human Services (HHS),  along with fifteen other federal departments and agencies, released a proposed rule to modernize regulations governing human research subjects under the Common Rule. Currently the Common Rule applies to all research involving human subjects that is conducted or supported by a federal department or agency that has adopted the policy. Subject to only specified exclusions, the proposed rule extends the Common Rule’s requirements to all clinical trials regardless of funding source if: (1) the clinical trial is not regulated by the FDA, and (2) is performed at a US institution that receives any support from a federal agency. Other major changes introduced in the proposed rule include Informed Consent, Single IRB Review and Exclusions & Exemptions.

The notice of proposed rulemaking is scheduled to be published in the Federal Register on September 8, 2015. Comments to the proposed rule are due by December 7, 2015.

Stay tuned for a Reed Smith Client Alert on the proposed rule and its impact on FDA-regulated entities.

FDA to Hold Upcoming Medical Device Patient Labeling Workshop

The FDA announced that it will be holding a public 2-day workshop on September 29-30, 2015, from 8:00 a.m. to 5:00 p.m. titled, “Medical Device Patient Labeling.” The purpose of the public workshop is to discuss issues associated with the development and use of medical device patient labeling including content, testing, use, access, human factors, emerging media formats, and promotion and advertising. The Center for Devices and Radiological Health is seeking input about these topics from patients and advocacy groups, academic and professional organizations, industry, standards organizations and governmental agencies.

For more information on the location, agenda and how to register, please click here.