Health Employment And Labor

labor and employment law for the healthcare industry

What Does It Mean to Be a Recipient of Federal Financial Assistance for Purposes of Section 1557 Compliance?

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In May 2016, the U.S. Department of Health and Human Services (“HHS”) published a final rule implementing Section 1557 of the ACA. Section 1557 prohibits discrimination in the health programs and activities of “Covered Entities” on the basis of race, color, national origin, sex, age, or disability. Section 1557 also imposes detailed and specific notice and disclosure requirements on Covered Entities, including, among other things, the requirement to provide information about the use of auxiliary aids and services, the adoption of grievance procedures, and access for individuals with limited English proficiency. Covered Entities are also required to include specific nondiscrimination protections in the design of group health plans.

A “Covered Entity” is one that receives “federal financial assistance” for a health program or activity from HHS. If any part of a health program or activity receives federal financial assistance from HHS, then all of that entity’s programs and activities are subject to the nondiscrimination provisions of the final rule.

While the nondiscrimination provisions of the final rule went into effect on July 18, 2016, and “Covered Entities” subject to the final rule were required to comply with the notification and grievance procedures by October 16, 2016, entities are still struggling to determine if they qualify as “Covered Entities” subject to the final rule.

Is it only federal financial assistance from HHS that matters for this determination?

In general, Section 1557 of the ACA applies to all health programs and activities, any part of which receives federal financial assistance from any federal agency. However, the requirements in the final rule specifically apply only to recipients of federal financial assistance from HHS.

What does federal financial assistance include?

“Federal financial assistance” includes Medicare Parts A, C, and D and Medicaid payments, grants, loans, subsidies, contracts of insurance, and other types of assistance. Such assistance also includes premium tax credits and advance payments of premium tax credits and cost-sharing reductions for health insurance coverage purchased through the federal and state Health Insurance Marketplaces.

Importantly, HHS does not consider Medicare Part B payments to be federal financial assistance.

What are some examples of “Covered Entities”?

HHS defines “Covered Entities” that are subject to the final rule to include:

  • every health program or activity that receives HHS funding;
  • every health program or activity administered by HHS, such as the Medicare Part D program; and
  • the Health Insurance Marketplaces and all plans offered by issuers that participate in those marketplaces.

“Covered Entities” may include entities that receive federal financial assistance through their participation in Medicare or Medicaid (e.g., hospitals, nursing facilities, and home health agencies) or through grants or subsidies from HHS agencies (e.g., health clinics, community health centers, and health-related schools), state Medicaid agencies, state public health agencies, health insurance issuers that participate in the Health Insurance Marketplaces, Medicare Advantage plans and Prescription Drug Plan sponsors, and physician practices receiving Medicaid payments or other payments from HHS (e.g., meaningful use incentive payments).

What about entities that do not receive funding directly from HHS?

A wide array of entities that provide health-related services do not receive funding directly from HHS but do receive payment for their services through other HHS-funded organizations. The “Covered Entity” status for these entities is more complex and must be examined closely.

By definition, a “recipient of federal financial assistance” is an entity to which such funding is extended directly or through another recipient. However, it is important to look to the entity that Congress intended to assist or subsidize with certain funds when determining whether a downstream entity is a recipient of federal financial assistance.

Nonetheless, whether a downstream entity is covered under the final rule remains far from clear, as HHS offers only limited guidance. HHS makes some distinctions in the final rule. For example, an issuer participating in a Health Insurance Marketplace receives federal financial assistance, but a health care provider that contracts with such an issuer does not become a recipient of federal financial assistance by virtue of that contract. Similarly, physicians who contract to provide health services to hospitals or clinics that receive federal financial assistance do not become recipients of federal financial assistance by virtue of those contracts. However, HHS has confirmed that providers that receive reimbursement from a Medicare Advantage plan are subject to the final rule, regardless of whether payments from the plan go directly to the provider or to the patient.

An entity acting as a third-party administrator for an employer’s employee health benefit plan may not be a “Covered Entity” if the entity is legally separate from an issuer that receives federal financial assistance for its insurance plans. Nonetheless, if an issuer that receives federal financial assistance also provides third-party administrator services, the final rule would apply to those third-party administrator services.

As a general rule of thumb, downstream entities contracting with a recipient of federal financial assistance may not qualify as a “Covered Entity” by virtue of the contract alone. Entities unsure of their status should consider whether they are the intended recipient of the federal financial assistance when making this determination. Entities also should be aware that a “Covered Entity” may include provisions regarding compliance with Section 1557’s nondiscrimination requirements in its contracts with downstream entities. Finally, HHS has reserved the right to engage in a case-by-case inquiry to evaluate whether an entity is appropriately subject to Section 1557. A highly fact-specific inquiry should be undertaken to determine if an entity that does not directly receive funding from HHS might still be a “Covered Entity” in the eyes of HHS.

Takeaways

Entities operating a health program or activity should determine the source of funding for any such program or activity. Those programs or activities receiving federal financial assistance are subject to the nondiscrimination requirements of Section 1557, which include providing a notice of nondiscrimination to the public, implementing a grievance procedure, designating a civil rights coordinator, and providing language assistance to limited English proficiency speakers and appropriate accommodations to individuals with disabilities.

Employers sponsoring group health plans should read the following article by our colleagues to determine the extent to which the Section 1557 nondiscrimination rules apply to them.

A version of this article originally appeared in the Take 5 newsletter Five Key Issues Impacting Health Care Employers.”

Texas Federal Court Enjoins New FLSA Overtime Rules: Employer Impact

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Our colleague Michael S. Kun, national Chairperson of the Wage and Hour practice group at Epstein Becker Green, has a post on the Wage & Hour Defense Blog that will be of interest to many of our readers in the health care industry: “Stop! Texas Federal Court Enjoins New FLSA Overtime Rules.”

Following is an excerpt:

The injunction could leave employers in a state of limbo for weeks, months and perhaps longer as injunctions often do not resolve cases and, instead, lead to lengthy appeals. Here, though, the injunction could spell the quick death to the new rules should the Department choose not to appeal the decision in light of the impending Donald Trump presidency. We will continue to monitor this matter as it develops.

To the extent that employers have not already increased exempt employees’ salaries or converted them to non-exempt positions, the injunction will at the very least allow employers to postpone those changes. And, depending on the final resolution of this issue, it is possible they may never need to implement them.

The last-minute injunction puts some employers in a difficult position, though — those that already implemented changes in anticipation of the new rules or that informed employees that they will receive salary increases or will be converted to non-exempt status effective December 1, 2016. …

Read the full post here.

Proposed Increases Under New York State’s Overtime Laws: Not Blocked by Federal Overtime Rule Change Injunction

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Our colleague Jeffrey H. Ruzal, Senior Counsel at Epstein Becker Green, has a post on the Wage & Hour Defense Blog that will be of interest to many of our readers in the health care industry: “Decision Enjoining Federal Overtime Rule Changes Will Not Affect Proposed Increases Under New York State’s Overtime Laws.”

Following is an excerpt:

As we recently reported on our Wage & Hour Defense Blog, on November 22, 2016, a federal judge in the Eastern District of Texas issued a nationwide preliminary injunction enjoining the U.S. Department of Labor from implementing its new overtime exemption rule that would have more than doubled the current salary threshold for the executive, administrative, and professional exemptions and was scheduled to take effect on December 1, 2016. To the extent employers have not already increased exempt employees’ salaries or converted them to non-exempt positions, the injunction will, at the very least, appear to allow many employers to postpone those changes—but likely not in the case of employees who work in New York State.

On October 19, 2016, the New York State Department of Labor (“NYSDOL”) announced proposed amendments to the state’s minimum wage orders (“Proposed Amendments”) to increase the salary basis threshold for executive and administrative employees under the state’s wage and hour laws (New York does not impose a minimum salary threshold for exempt “professional” employees).  The current salary threshold for the administrative and executive exemptions under New York law is $675 per week ($35,100 annually) throughout the state.  The NYSDOL has proposed the following increases to New York’s salary threshold for the executive and administrative exemptions …

Read the full post here.

Election 2016: New Laws Impacting Employers – Employment Law This Week

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The top story on Employment Law This Week: Election Day brings a wave of new laws affecting employers.

While all eyes were on the battle for the White House, voters in a number of states approved new legislation that will directly impact employers. Arizona and Washington will soon require paid sick leave for workers, as well as minimum wage increases. Medical marijuana is now legal in Arkansas, Florida, and North Dakota, while recreational use was approved in California, Maine, Massachusetts, and Nevada. The new laws in Arkansas and Maine explicitly prohibit employment discrimination against medical marijuana users.

View the segment below and see our recent post on marijuana legalization.

Growing Acceptance Nationwide: More States Approve Marijuana Use

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Marijuana LegalizationWhile the presidential election has attracted extreme attention, marijuana legalization initiatives were on the ballots in nine states on November 8, 2016. Four states – Arkansas, Florida, Montana, and North Dakota – approved measures providing for the medical use of marijuana, and three states – California, Massachusetts, and Nevada – approved initiatives allowing for recreational use.  The results in Maine are still close to call, but, if that measure is approved, it will be the fourth measure permitting recreational use.  Only one state (Arizona) defeated a marijuana legalization initiative.

The following chart summarizes the approved initiatives, including implications for employers:

 

State Permitted Use Employment Implications

 

Arkansas Medical Employers cannot discriminate based on “past or present status as a qualifying patient or designated caregiver,” but do not have a duty to accommodate an employee’s use “in a workplace” or “working under the influence.”

 

California Recreational The law does not impact employer’s rights to maintain a drug-free workplace or to prohibit marijuana use by employees or applicants, require the accommodation of marijuana use “in the workplace,” or prevent employers from complying with state or federal law.

 

Florida Medical No express employment provisions.

 

Maine
(results still pending)
Recreational Employers are not required to accommodate use “in the workplace,” may enforce policies restricting use by employees, but may not refuse to employ someone “solely for that person’s consuming marijuana outside of the . . . employer’s . . . property.”

 

Massachusetts Recreational Employers are not required to accommodate use “in the workplace,” and may implement workplace policies regarding use by employees.

 

Montana Medical Employers are not required to accommodate use “by a registered cardholder, and may enter into contracts prohibiting use “for a debilitating medical condition.” Employees have no cause of action for wrongful termination or discrimination.

 

Nevada Recreational Employers may enforce workplace policies restricting or prohibiting use.

 

North Dakota Medical No express employment provisions.

 

While not all of the approved initiatives contain express employment protections for marijuana users, employers must contend with the apparent tension between enforcing a workplace drug policy and the state legalization of marijuana use. Because marijuana remains a controlled substance under federal law, maintenance of a zero-tolerance drug policy is likely the most prudent course of action.  Furthermore, employers may take note that each court to consider the wrongful termination claims brought by marijuana users under state laws has sided with employers’ rights to enforce drug-free workplace policies.

Nonetheless, as more states pass marijuana-related laws, and as off-duty marijuana users are discharged for positive drug tests, these policies may come under additional scrutiny in those states that do provide express employment protections. Going forward, employers should consistently enforce their drug-free workplace policies, and be prepared to educate employees about the potential consequence of a positive test for marijuana, regardless of state law protections.  Employers, however, should continue to monitor the legal landscape, particularly in those states providing express employment protections to marijuana users, in the event that courts in those jurisdictions require the accommodation of a worker’s off-duty marijuana use and to take adverse job action only when such an employee is impaired on the job.

Western District of Pennsylvania Bucks Recent Trend and Permits Sexual Orientation Discrimination Claim to Proceed

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On November 4, 2016, the Western District of Pennsylvania held that the “because of sex” provision in Title VII of the Civil Rights Act prohibits discrimination on the basis of sexual orientation. In doing so, the court broke from the recent trend of federal courts that have felt compelled by prior precedent to dismiss sexual orientation discrimination claims.

In EEOC v. Scott Medical Health Center, P.C., the plaintiff (a gay male) alleged that he was subjected to repeated and unwelcome offensive comments regarding his sexual orientation and his relationship with a male partner, creating a hostile and offensive work environment that resulted in the plaintiff’s constructive discharge.  Relying on the Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), which held that discrimination on the basis of sex stereotyping is prohibited, the court concluded that “discrimination on the basis of sexual orientation is, at its very core, sex stereotyping plain and simple; there is no line separating the two.”

This conclusion contradicts recent decisions in the Seventh Circuit and Southern District of New York, both of which have held that gender discrimination can be “disentangled” from sexual orientation discrimination, and have dismissed claims premised solely on sexual orientation discrimination allegations.  The Western District of Pennsylvania’s departure from prior precedent could signal the beginning of a split in authority that could eventually end up with this issue being considered by the Supreme Court.

This area of law is ripe for further litigation. In the short term, employers should continue to monitor the changing legal landscape and be mindful that other courts could also conclude the discrimination based on sexual orientation is prohibited under Title VII, as well as anti-discrimination provisions in other laws and regulations, such as Executive Order 13672 expressly barring federal contractors from discriminating on the basis of sexual orientation or gender identity.  Regardless of the federal court pronouncements, employers should be aware that various federal agencies are taking the same expansive view of the definition of discrimination on the basis of “sex.”  In the Final Rule implementing Section 1557 of the Affordable Care Act, for example, the Department of Health and Human Services expressly defines discrimination on the basis of sex to include sex stereotyping (and gender identity). Numerous states also expressly prohibit sexual orientation discrimination under their employment law.  Thus, employers seeking to comply with applicable state law and seeking to avoid scrutiny from the EEOC and other federal agencies should train their workforce to eliminate discriminatory or harassing behavior premised on sexual orientation, and review their policies to ensure that such discrimination is prohibited.

Transgender Teenager’s Death Leads to ACA § 1557 Discrimination Suit Against Hospital

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Kyler Prescott was a 14 year old transgender boy who was receiving puberty-delaying medication to help him transition.  Shortly before Kyler’s death he had “suicidal ideation” and was taken to Rady Children’s Hospital – San Diego in April 2015.  The hospital has a Gender Management Clinic to provide services to children with gender dysphoria and related issues.  A lawsuit under the ACA’s non-discrimination provision, § 1557, alleges that after admission, despite assurances that he would be referred to with masculine pronouns, hospital employees referred to Kyler as a girl.  The suit claims that the hospital’s actions discriminated against Prescott “resulting in his inability to access necessary services and treatment during a dire medical crisis.” The federal lawsuit, filed in the Southern District of California, further alleges that the use of female references exacerbated his condition and that he thereafter had further difficulties and ultimately committed suicide.

As discussed in our recent October 6, 2016 webinar and in our Client Advisory, HHS’s Office of Civil Rights (“OCR”) final § 1557 regulations explicitly include coverage for gender identity and sexual stereotypes.  They also state that covered entities must “treat individuals consistent with their gender identity . . . .” 45 C.F.R. § 92.206.  This lawsuit appears to be one of the first under § 1557 for gender identity discrimination.  It will surely not be the last.

The suit focuses on claims that nurses and other staff repeatedly used feminine pronouns in referring to Kyler despite assertions in the court pleadings of multiple calls by his mother to the hospital to explain his distress at this alleged conduct.  Hospital staff failed to use Kyler’s preferred pronouns despite hospital records showing Kyler’s legal name and gender change from female to male, according to the suit.

The results of the lawsuit, which at this time are only unproven allegations, will await further court proceedings. What the suit clearly shows, however, is that compliance with § 1557’s notice and policy requirements, effective October 16, was only the beginning of § 1557 compliance needs for covered health care entities.  Among the necessary next steps in compliance with which we are assisting clients are developing appropriate training of all staff interacting with patients and companions on the requirements of § 1557 in providing services, proper categorization of gender in health care records and in-patient references, as well as the need for training and visibility on provider non-discrimination and grievance policies.  This lawsuit dramatically emphasizes the urgency for continuing efforts to achieve full compliance with § 1557 and the OCR final regulations to avoid § 1557 discrimination claims on the expansive grounds covered by § 1557 as interpreted in OCR’s final regulations.

Final Rule on ACA Issued by OSHA – Employment Law This Week

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Featured on Employment Law This Week: The Occupational Safety and Health Administration (OSHA) has issued a final rule for handling retaliation under the Affordable Care Act (ACA).

The ACA prohibits employers from retaliating against employees for receiving Marketplace financial assistance when purchasing health insurance through an Exchange. The ACA also protects employees from retaliation for raising concerns regarding conduct that they believe violates the consumer protections and health insurance reforms in the ACA. OSHA’s new final rule establishes procedures and timelines for handling these complaints.  The ACA’s whistleblower provision provides for a private right of action in a U.S. district court if agencies like OSHA do not issue a final decision within certain time limits.

Watch the segment below:

ACA Section 1557: Are You Prepared to Meet the October 16 Deadlines?

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In less than three weeks, health care providers covered by the Affordable Care Act must meet various posting obligations required by the recently issued Section 1557 regulations. Epstein Becker & Green, P.C. has written extensively about the Final Rule, including the expansive nondiscrimination standards and the upcoming October 16 deadlines. While we encourage you to review these publications for more detail, covered entities urgently need to prepare by October 16, 2016, nondiscrimination notices and taglines to be posted (1) in significant publications or communications; (2) in conspicuous physical locations where they interact with the public; and (3) in a conspicuous location on their website.

Nondiscrimination notices must include, among other things, a statement of nondiscrimination, the availability of interpretive services for patients with limited English proficiency (LEP), the availability of auxiliary aids and services for individuals with disabilities, and the availability of a grievance procedure for discrimination complaints. In small-sized publications, such as postcards and pamphlets, the notice may be shortened to include only the nondiscrimination policy.

Taglines, which are statements of the availability of language assistance services, must be posted in the same locations. In large-format publications, taglines must be posted in at least the top 15 languages for the relevant state.  In small-sized publications, taglines must be posted in the top two languages.

With the October 16th deadline quickly approaching, in addition to complying with Section 1557’s notice requirements, covered entities should develop a plan to ensure they are able to provide the services and procedures promised in the required notices. On Thursday, October 6, join us as we host a webinar to discuss these topics, address practical considerations, and recommend best practices for compliance.

Employers Under the Microscope: Is Change on the Horizon? – Attend Our Annual Briefing (NYC, Oct. 18)

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Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.