The Weekly Articles

On April 7, 2026, the Ninth Circuit issued its opinion in Fresenius Medical Care Orange County, LLC v. Bonta, affirming in part and reversing in part the district court’s summary judgment on the constitutionality of California Assembly Bill 290 (AB 290). AB 290 targeted the relationship between dialysis providers and the American Kidney Fund (AKF), a nonprofit that helps end-stage renal disease (ESRD) patients pay insurance premiums through its Health Insurance Premium Program. AB 290 sought to regulate the relationship between the dialysis providers and AKF by placing a cap on reimbursement rates for providers who donate to charities like AKF (“Reimbursement Cap”), requiring that AKF disclose to insurers the names of patients receiving premium assistance (“Patient Disclosure Requirement”), restricting AKF’s ability to condition financial assistance on patient eligibility factors (“Financial Assistance Restriction”), and requiring financially interested entities to inform patients of all available health coverage options, including Medicare, Medicaid, and employer plans (“Coverage Disclosure Requirement”).

The Ninth Circuit held that three of AB 290’s provisions violated the First Amendment. The Court found that AB 290’s Reimbursement Cap burdens the providers’ right to donate to an expressive association, and, while California's interest in preventing insurance risk pool distortion is important, the cap is not narrowly tailored because California could have directly regulated reimbursement rates without conditioning them on charitable donations. The Court found that the Patient Disclosure Requirement also violates the AKF’s associational rights because the sole justification was enforcing the Reimbursement Cap that the Court found was unconstitutional. The Court also found that the Financial Assistance Restriction violated the First Amendment because it unconstitutionally burdens AKF's right to choose which patients to support, and is not narrowly tailored to California's interest in protecting vulnerable populations. Finally, the Court found that the Coverage Disclosure Requirement that compels disclosure of “of all available health coverage options, including, but not limited to, Medicare, Medicaid, individual market plans, and employer plans, if applicable” was constitutional, but could not be severed from the unconstitutional provisions.

The Ninth Circuit’s decision is a significant development in First Amendment jurisprudence as applied in the health care context. The ruling underscores the limits of state regulatory power when legislation burdens associational freedoms, even where the state pursues legitimate interests such as stabilizing insurance risk pools. The decision leaves AB 290 largely inoperative so the California legislature would need to enact a more tailored regulatory framework to address any concerns with these dialysis arrangements.

Curious about CSHA’s leaders?  Meet the Board!

We started our new leadership year at the 2026 Annual Meeting & Spring Seminar, with new elected officers stepping up, and two new Directors joining the six who were returning.  Directors may serve for up to two, two-year terms.  Traditionally, one of the Directors who has finished a four-year term is nominated for election as CFO the next year, which begins the officer ladder. 

This group of dedicated leaders brings a wide range of experience, insight, and commitment to advancing the mission of CSHA and supporting our members. I am so excited to work with them in the year ahead!

Dayna Nicholson
daynanicholson@dwt.com

Heavy hospice enforcement continues.  This month, the UPIC (Qlarant) has issued many temporary payment suspensions based on a “credible allegation of fraud” under 42 C.F.R. § 405.372.  While temporary suspensions are nothing new, these suspensions are being put in place before Qlarant reviews any individual patient charts. Instead, suspensions are being triggered by utilization patterns, most notably live discharges.  This approach marks a shift in how early enforcement actions are initiated in hospice, with important consequences for providers that may first learn of compliance concerns through a payment suspension rather than through a medical review or ADR.

A particularly consequential aspect of these suspensions is their timing and effect: payment suspensions take effect immediately, without advance notice or any pre‑deprivation opportunity for the provider to respond. Once imposed, the suspension initially lasts up to 180 days and can be extended, leaving many providers without incoming Medicare payments for months at a time. For most hospices, that interruption is existential. And, if they survive, what comes next is often uncertain, but we expect increased use of ADRs to examine past claims, as well as the possibility of downstream actions such as enrollment revocation, civil enforcement, or even criminal investigation.

Importantly, this trend is not confined to hospice: similar pre‑claims‑review suspensions were first deployed in the laboratory space and are now being applied to hospices, signaling an enforcement model that is expanding over time—and one that healthcare providers across sectors should be paying close attention to.

On October 1, 2025, the Respiratory Care Board of California (RCB) adopted a regulation at California Code of Regulations, title 16, section 1399.365, which defines Basic Respiratory Tasks and Services that may be performed without a respiratory assessment. Though the Board of Vocational Nursing and Psychiatric Technicians regulates licensed vocational nurses (LVN)s, the RCB’s regulation impacted the scope of practice of LVNs by prohibiting them from performing tasks and services considered to be within their scope of practice.

 The California Hospital Association (CHA) subsequently submitted concerns about implementation of this regulation to the RCB, noting expected significant impacts on admissions and continuity of care and patient care and safety; staffing challenge and workflow disruptions; and increased costs and operational burden. Multiple stakeholders also expressed concerns and raised questions about the limitations imposed by the regulation to the RCB. Thereafter, on January 12, 2026, the Office of Administrative Law approved an emergency amendment adding subsection (d) to clarify that section 1399.365 does not apply to LVNs performing respiratory care services identified by the RCB while working in, and under the conditions specified for, certain home and community-based exempt settings listed in subdivisions (i) and (j) of section 3765 of the Business and Professions Code.

Assembly Bill (AB) 2096, introduced by Assembly Member Blanca Pacheco on February 28, 2026, would restore the LVN scope of practice by rolling back limitations on what respiratory care services an LVN may perform that were enacted by SB 1436 (2022). If passed, AB 2096 would permit LVNs to make ventilatory adjustments and perform suctioning, oxygen titration, and respiratory assessments — tasks that LVNs previously performed in various settings.

Senate Bill (SB) 1304, introduced by Senator Aisha Wahab on February 20, 2026, would remove the requirement that an LVN be employed by a home health agency to perform respiratory tasks and services identified by the RCB. Rather, the bill would permit an LVN to perform respiratory tasks and services identified by the RCB in various settings including congregate living health facilities, group homes, and adult residential facilities following the completion of specified training and competency standards. However, the bill would not permit LVNs to perform certain functions that they previously performed in various settings, including skilled nursing facilities (SNFs) and hospitals.

SB 1304 was heard before the Senate Business Professions Economic Development Committee on April 20, 2026. CHA and the California Associate of Health Facilities stated their opposition to the bill unless it is amended to include SNFs and hospitals where LVNs can perform specified respiratory tasks. The RCB stated its support of the bill, noting that it does not believe that the training LVNs receive in school is sufficient to provide respiratory care in higher acuity settings. AB 2096 has not yet been heard, but it has received support from CHA, with CHA noting that the bill would allow LVNs to resume the performance of respiratory tasks for which they are trained and qualified, across the many settings where they have practiced with clinical supervision. The passage of either of these bills would have significant impacts on LVN respiratory care delivery in various settings.

Assembly Bill 2311, introduced by Assembly Member Schiavo on February 19, 2026, would create a new exception to California’s corporate practice of medicine restrictions by authorizing certain health care districts to employ physicians and surgeons and charge for those physicians’ professional services. More specifically, the bill would apply to a health care district, or a nonprofit corporation whose sole corporate member is a health care district, that owns or controls a general acute care hospital. The bill would also prohibit the district from interfering with, controlling, or otherwise directing the physician’s professional judgment. AB 2311 passed the Assembly Health Committee on March 24, 2026, by a 14-0 vote, was re-referred to the Assembly Committee on Business and Professions, and is scheduled to be heard there today (April 21, 2026).

AB 2311 brings together two familiar California health law issues: the state’s longstanding prohibition on the corporate practice of medicine and persistent provider access challenges facing community and safety-net hospitals. According to the Assembly Health Committee analysis, 17 of California’s 33 district hospitals already may employ physicians because they qualify as federally certified critical access hospitals, while AB 2311 would primarily affect the remaining district hospitals that do not currently have that authority. The analysis also notes that California has experimented with narrower versions of this concept before, including an earlier district hospital pilot and the critical access hospital pilot that later became permanent. Supporters, including the Association of California Healthcare Districts and several district hospitals, argue that the bill would give those hospitals another recruitment and retention tool, particularly in communities with high Medi-Cal utilization, workforce shortages, and difficulty maintaining specialty coverage.

The bill has also drawn organized opposition rooted in concerns about physician autonomy and patient care. The California Chapter of the American College of Emergency Physicians, the California Society of Pathologists, and the California Orthopaedic Association oppose the measure, contending that direct employment by hospital districts could subject physicians to institutional and financial pressures that compromise independent clinical decision-making. The California Medical Association is opposed unless amended and has requested narrower eligibility criteria, stronger protections for independent clinical judgment, a sunset and reporting requirement, and safeguards against displacement of existing physicians. As AB 2311 moves to the Assembly Committee on Business and Professions, the central question remains whether direct employment authority for district hospitals should be expanded as an access tool, or only with tighter statutory limits and guardrails.

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The Attorney General’s amicus brief takes aim at continuity agreements between medical group owners and MSOs.

On April 1, 2026, California Attorney General Rob Bonta waded into a physician’s private suit against a private-equity-backed MSO, filing an amicus brief in Art Center Holdings, Inc. v. WCE CA Art, LLC, pending in the Second Appellate District. The physician, who owns a women’s health practice, had signed a continuity agreement and a consulting agreement with the MSO managing his medical practice. The consulting agreement gave the MSO the right to terminate without cause, and termination of the consulting agreement, in turn, triggered a provision in the continuity agreement requiring the physician to relinquish his shares in the practice to another physician of the MSO’s choosing. When disagreements arose between the physician and the MSO, the MSO terminated the consulting agreement and invoked the ownership-transfer provision of the continuity agreement. The trial court granted a motion to appoint a receiver for the purpose of transferring control of the practice back to the physician, concluding that the MSO’s control of the group through these contractual mechanisms violated the corporate practice of medicine. The MSO appealed.

While the Attorney General filed the amicus brief “in support of neither party,” he nonetheless argues that the trial court got the CPOM issue right. The corporate practice of medicine occurs, the AG contends, when corporations exercise control over or “reserve the right to exercise control” medical practices. Because the agreements at issue gave the MSO “the right to replace the physician-owner of a medical practice with a different physician of its choice,” the AG contends, “the corporation effectively owns and controls all aspects of the practice.” Additionally, the AG argues, where a physician cannot “replace the unlicensed corporation without fear of losing ownership over their practice, the corporation has undue control over the practice.”

While California’s corporate practice ban broadly prohibits non-licensed corporations from practicing medicine, the Attorney General emphasized his unique concerns with private-equity-owned entities making medical decisions. The State’s brief invokes Senate Bill 351, signed by Governor Newsom on October 6, 2025, which empowers the AG to “investigate and take action against private equity firms that unlawfully interfere in the patient-physician relationship.” (Sen. Judiciary Com., Analysis of Sen. Bill No. 351 (2025-2026 Reg. Sess.) p. 7.)  AG Bonta’s press release announcing the filing of the amicus brief similarly emphasizes the State’s interest in policing the corporate practice of medicine “[a]s private equity investment in healthcare grows.” Cal. Atty. Gen., Attorney General Bonta Files Amicus Brief in Defense of California’s Ban on Corporate Practice of Medicine (Apr. 1, 2026), available here.

On March 19, 2026, a federal district court in the District of Oregon ruled that the “Kennedy Declaration” lacks the authority to establish superseding standards of care to exclude providers from federal health care programs for providing gender-affirming care. In December 2025, HHS Secretary Kennedy issued a declaration asserting that gender affirming care are not safe or effective for children and adolescents, and “fail to meet the recognized standards of health care.” The declaration purports to supersede state-level and national standards of care. HHS then relied on the declaration to publicly refer 13 children’s hospitals to its Office of the Inspector General for investigation and possible exclusion from Medicaid and other federal health care programs. This action is one part of a larger effort by the Trump Administration to ban gender-affirming care for minors nationwide, including pending rulemaking.

On December 23, 2025, a coalition of 19 states, including California, filed a lawsuit challenging the enforcement of the Kennedy Declaration. The lawsuit sought declaratory and injunctive relief arguing that the Kennedy Declaration exceeds HHS’s statutory authority and violates rulemaking requirements under the Medicare Act and the Administrative Procedure Act. The Plaintiff States filed a motion for summary judgment, and the federal Administration filed a motion to dismiss in January and at the March 19 hearing, the district court issued an order from the bench, stating that the Court will issue a formal written opinion and order denying the Defendants’ motion to dismiss and granting the Plaintiffs’ motion for summary judgment.

For more information, see the California Attorney General Press Release here and Litigation Tracker here.

On March 19, 2026, the U.S. Department of Health and Human Services Office for Civil Rights (OCR) announced investigations of thirteen states, including California, under the Weldon Amendment, a federal health care conscience law. The Weldon Amendment, originally passed as a rider to a HHS appropriations act in 2004 and reenacted in subsequent appropriation bills, prohibits the provision of federal Labor, Education, and Health and Human Services funds to any governmental entity that subjects a health care entity to “discrimination on the basis that the health care entity does not provide, pay for, provide coverage of, or refer for abortions.” OCR launched these investigations based on information that states are allegedly coercing health care entities — both providers and health care plans — to provide coverage of, or pay for, abortion despite religious or conscientious objections to those requirements. In addition to California, Colorado, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, Oregon, Vermont, and Washington are under investigation and have 20 days to respond to OCR.

California law requires all Knox-Keene regulated plans to cover all “basic health care services,” which include abortion services. In 2020, the first Trump administration took similar action under the Weldon Amendment when it issued a Notice of Violation regarding California’s abortion coverage requirements and threatened to withhold millions of dollars in Medicaid funding from California. The 2020 action was withdrawn by the Biden administration in a 2021 letter to the California Attorney General. OCR’s announcement last week follows OCR’s announcement in January that it plans to promote compliance with the Weldon Amendment when it issued a notice of violation to Illinois and rescinded previously issued notices and guidance from the Biden administration, including the 2021 Letter to California stating that it no longer represent the views of HHS or the Administration.

For more information, see coverage here.

The Spring 2026 edition highlights the squeeze on hospital budgets complying with fast-approaching seismic requirements, newly enacted statutory protections for immigration data, and recent court rulings on the use of volunteers or unpaid interns and the employment law obligations that follow. An electronic copy of CHLN may be downloaded from CSHA's website, here.