The Weekly Articles

The California Department of Justice recently announced a stipulation with Eureka-based Providence St. Joseph Hospital regarding access to emergency abortion care while its lawsuit against the hospital proceeds. The stipulation comes nearly a month after the Department of Justice filed a lawsuit and motion for preliminary injunction in state court against the Catholic health system for alleged violations of state law after refusing to provide abortion care to a pregnant patient experiencing a medical emergency after her water broke while she was 15 weeks pregnant with twins.

The complaint alleges that, while doctors at Providence Hospital agreed that the patient’s pregnancy was no longer viable and immediate intervention through an abortion was necessary to prevent serious complications to the patient’s health, hospital policy prohibited doctors from providing an abortion as long as there was a detectable fetal heart tone. The hospital discharged the patient with instructions to drive to a community hospital 12 miles away to receive medical care. That facility recently closed its labor and delivery unit in late October, leaving Providence as the only hospital with an L&D unit in Humboldt County. The DOJ lawsuit alleges that the hospital’s policy and actions violated California’s Emergency Services Law (Health & Safety Code § 1317 et seq.) by discharging the patient without providing emergency care, and by transferring the patient for a nonmedical reason.

The stipulation, if approved by the court, would resolve the DOJ’s motion for preliminary injunction, and includes commitments by Providence Hospital to allow physicians to terminate a pregnancy when they determine in their professional judgement that the pregnancy would be reasonably expected to place the patient’s health in serious jeopardy, or result in serious impairment or dysfunction of bodily functions or organs. The stipulation also requires Providence to comply with other aspects of California’s Emergency Services Law, including pre-transfer treatment requirements and transfer protocols. A copy of the parties’ stipulation can be found here.

California's minimum wage increase for health care workers is in effect as of October 16, 2024. Last year, Governor Newsom signed Senate Bill 525 that, over the next few years, gradually raises the pay of certain health care workers to a $25 per hour minimum that will be adjusted for inflation every year. While the law was initially set to go into effect on June 1, 2024, implementation was delayed contingent on certain triggers based on state revenues or after the Department of Health Care Services initiated data retrieval related to hospital quality assurance fees for the program. (See Labor Code §1182.16, added by SB 159.)  On October 1, 2024, DHCS notified the Legislature that the data retrieval was initiated. The first phase of the law became effective 15 days later, raising the minimum wage for certain health care workers ranging from $18 per hour to $23 per hour depending on the type of health care employer. For more information on the types of covered health care employers, the wage schedule, and effective dates, the California Department of Industrial Relations has published a Health Care Worker Minimum Wage FAQ.

The Departments of Health and Human Services, Labor, and the Treasury released proposed rules on October 21, 2024 entitled "Enhancing Coverage of Preventative Services Under the Affordable Care Act." The proposed rules would require health plans and insurers to cover over-the-counter contraception without a prescription and without cost-sharing and provide beneficiaries with information about contraceptive coverage. In addition, the Departments released additional guidance focusing on coverage of pre-exposure prophylaxis (PrEP)—reiterating that plans and insurers must cover preventive PrEP without cost-sharing. Comments on the proposed rules are due on December 27, 2024. For more information, see the CMS fact sheet.

The end of the 2024 legislative session in California included the passage of multiple artificial intelligence (AI) bills, including two that directly impact the provision of healthcare services:   

• Artificial Intelligence in Health Care Services: Assembly Bill 3030, signed into law by Governor Newsom in late September and effective on January 1, 2025, will require a health facility, clinic, physician’s office, or office of a group practice that uses generative artificial intelligence to create written or verbal patient communications pertaining to patient clinical information to ensure that those communications include both: (i) a disclaimer that indicates to the patient that a communication was generated by generative artificial intelligence and (ii) clear instructions describing how a patient may contact a human health care provider, employee, or other appropriate person.
  • The disclaimer must appear as follows:
    • For written communications (e.g., letters, emails): Prominently included at the beginning of each communication.
    • For written communications involving continuous online interactions (e.g., chat-based telehealth): Prominently displayed throughout the interaction.
    • For audio communications: Provided verbally at the start and end of the interaction.
    • For video communications: Prominently displayed throughout the interaction. 
  • These requirements apply only to "patient clinical information," which is defined as "information relating to the health status of a patient," and explicitly excludes communication regarding administrative matters, such as appointment scheduling, billing, or other clerical or business matters.  In addition, these requirements do not apply if the communication is generated by generative artificial intelligence, and read and reviewed by a licensed or certified healthcare provider. 
  • The law is enforced via existing regulatory enforcement mechanisms.  Failure to comply by a physician could result in enforcement actions by the Medical Board of California or the Osteopathic Medical Board of California, as applicable.  Failure to comply by a licensed hospital or clinic could result in civil penalties and administrative fines as detailed in the California Health and Safety Code. 

• Use of AI for Utilization Review or Utilization Management: Senate Bill 1120, also effective on January 1, 2025, will require a health care service plan or disability insurer that uses an artificial intelligence, algorithm, or other software tool ("AI Tool") for the purpose of utilization review or utilization management functions, or that contracts with or otherwise works through an entity that uses an AI Tool, to ensure compliance with specified requirements for the AI Tool. 
  • The requirements, detailed in Section 1367.01 (k) of the California Health and Safety Code and Section 10123.135 (j) of the California Insurance Code, include that the AI Tool (i) base any determination on: (a) an enrollee’s medical or other clinical history; (b) individual clinical circumstances as presented by the requesting provider; and (c) other relevant clinical information contained in the enrollee’s medical or other clinical record; (ii) not base any determination solely on a group dataset; and (iii) not supplant health care provider decision making.  Other requirements relate to fair and equitable application of the AI Tool, compliance with patient data protection laws, and the ability to inspect and audit the AI Tool and its use. 
  • Further, the AI Tool cannot deny, delay, or modify health care services based, in whole or in part, on medical necessity.  The determination of medical necessity can only be made by a licensed physician or a licensed health care professional competent to evaluate the specific clinical issues involved in the health care services requested by the provider by reviewing and considering the requesting provider’s recommendation, the enrollee’s medical or other clinical history, as applicable, and individual clinical circumstances.
  • Failure to comply with the law may result in administrative penalties, or criminal penalties for willful violations.

On September 28th, Governor Newsom vetoed Assembly Bill 3129, a bill that would have required stricter regulatory oversight for private equity and hedge fund acquisitions of healthcare facilities in California.  The bill aimed to require private equity and hedge fund firms to obtain written consent from the California Attorney General before proceeding with acquisitions and aimed to prevent monopolistic practices in the healthcare market.  In his veto message, Governor Newsom explained that the oversight functions of the California Office of Health Care Affordability (OHCA) established in 2022 made the bill unnecessary.  OHCA is tasked with reviewing significant California healthcare transactions and can refer cases to the Attorney General for further scrutiny.

Governor Newsom’s veto could boost private equity M&A activity in California’s healthcare sector, which has slowed amid uncertainty over the bill’s potential impact.  The decision may also influence other states, such as Pennsylvania and Indiana, as they consider similar legislation and further shape the national conversation on healthcare regulation and private equity's role in the industry​.  Critics of the veto argue that without stricter state oversight, there could be increased risks of market concentration, potentially leading to higher patient costs and reduced transparency in the ownership structures of healthcare providers.

On September 30, 2024, California Attorney General Rob Bonta filed a lawsuit against Providence St. Joseph Hospital in Eureka for allegedly denying a pregnant woman emergency abortion care, despite her life being at risk. The case centers around Anna Nusslock, who was 15 weeks pregnant with twins when her water broke. Doctors informed her that her twins would not survive and that she required an abortion to save her own life. However, Providence St. Joseph, following its policy, refused to perform the abortion as long as fetal heartbeats were detectable. Nusslock was forced to seek emergency care at another hospital 12 miles away, putting her health at further risk.

This lawsuit is significant because it is the first time a state has sued a hospital for denying abortion care after the Supreme Court’s decision to overturn Roe v. Wade. Bonta’s lawsuit argues that Providence violated California’s emergency care laws, which mandate necessary medical treatment regardless of the hospital’s policies. Bonta is seeking an injunction to ensure that hospitals like Providence comply with these laws, particularly as access to labor and delivery services in rural areas like Humboldt County becomes increasingly limited. The hospital, part of a larger Catholic health system, has stated that it is reviewing the case and that it provides emergency services in compliance with state and federal laws.

This case sheds light on the intersection of religious hospital policies and patients’ access to reproductive healthcare, particularly in regions where alternative medical services are scarce. The lawsuit highlights ongoing challenges in ensuring abortion access, even in states like California with robust reproductive rights protections. This case may have broader implications for how hospitals with religious affiliations handle emergency care for pregnant patients in the future. 

Under new legislation, SB 1061, signed into law by Governor Newsom on September 24, 2024 and taking effect January 1, 2025, a health care provider may not provide medical debt information to a consumer credit reporting agency; medical debt will be void and unenforceable if a provider knowingly violates this prohibition. Sponsored by Senator Monique Limón (D-Santa Barbara), the bill also prohibits any person or entity that uses a consumer credit report in connection with a credit transaction from using medical debt listed on the report as a negative factor when making a credit decision. By no later than July 1, 2025, language dictated in Civil Code Section 1785.27 (c)(1) related to the new prohibition on reporting of medical debt information must be included in any medical debt contract. Failure to include the statutory language will make such medical debt contract unenforceable.

Newly added Health and Safety Code Section 127425(j)(1) imposes new record keeping requirements and includes a list of records a hospital must maintain relating to money owed to the hospital by a patient or a patient’s guarantor. Health and Safety Code Section 127425(j)(2) requires that in any contract entered into by a hospital related to the assignment or sale of medical debt, the hospital include a provision requiring the assignee or buyer and any subsequent assignee or buyer to maintain records related to litigation for 5 years.

Other provisions in the legislation expand on existing Department of Insurance regulations for health insurers related to collections of cost-sharing amounts that an insured has failed to pay. Health insurers will be required to send notices, with specified information, to an insured and provider if the insurer sends payment directly to the insured and not to the provider for services provided. If the provider does not receive the payment from the insured within 60 days of the notice to the insured, or within one year after initial billing for the service, whichever is later, the insurer’s share of cost in possession of the insured that has not been paid to the provider may be reported to a credit reporting agency as medical debt.

On July 31, 2024, the California Department of Managed Health Care (DMHC), which regulates health care services plans licensed in the state, released All Plan Letter (APL) 24-017, establishing amendments to the Knox Keene Act’s implementing regulations on Timely Access to Non-Emergency Health Care Services at 28 CCR Section 1300.67.2.2. The amendments establish an 80% compliance benchmark for follow-up appointments with non-physician mental health providers, subject to exceptions found in the Knox Keene Act under Health and Safety Code, Section 1367.03(c)(5)(H), and its implementing regulations at 28 CCR Section 1300.67.2.2(c)(5)(H). The amendments also set a sampling error insufficiency standard at greater than 5% for any appointment type. A plan’s compliance will be determined by its reported Provider Appointment Availability Survey (PAAS) results. These standards are to be effective beginning in reporting year (RY) 2025 / measurement year (MY) 2024.  A reporting plan that does not meet these thresholds will be required to submit a summary of investigation and corrective action information and may be subject to further disciplinary action pursuant to 28 CCR Sections 1300.67.2.2(i) and (j).

On November 14th, CSHA will present its third “California Healthcare Law Essentials” seminar in Sacramento.  We thought you might like to hear from alumni of the first “class” (2022) thinking back on the experience:

• As a junior health care associate, I found the Essentials course to be a great one-day primer on key issues that have since popped up regularly in my practice.  The collegial atmosphere also made it easy to connect with other attorneys taking the course, many of whom I now meet regularly at CSHA events.  M.H. Joshua Chiu, ArentFox Shiff LLP

• CSHA’s Essentials seminar gave me a great chance to meet others starting out in health law and learn from experts at the same time. It was a great way to kickstart my professional network and begin to learn about the massive world of health law.  Sofia Pedroza, Planned Parenthood Affiliates of California

• Essentials was a great introduction for me when I was a brand new lawyer.  The topics covered were representative of many issues that I now interact with regularly, and it was great to meet others in the field too!  Erin A. Sclar, Hooper, Lundy and Bookman, P.C.

• Attending the Essentials seminar is a must for any attorney in the early stages of their healthcare law career. The seminar laid a solid foundation for my work in healthcare law and provided an excellent opportunity to network with fellow attorneys who share my interests.  Esen Sainz, Deputy County Counsel, Riverside County

CSHA will offer its popular California Healthcare Law Essentials program for the third time on November 14, 2024, the day before the CSHA Fall Seminar in Sacramento.  We recently caught up with Marty Knutson, Assistant County Counsel for the County of Ventura, to find out what Essentials is about.

What is Essentials?

Essentials is a one-day intensive course on California healthcare law – focusing on differences from federal law that are not covered in law schools.  The program covers topics such as fraud and abuse laws in California, hospital-physician transactions, privacy, etc., and is taught by CSHA members who are experts in the field and available all day long for questions.

Who Should Attend Essentials?

The program is geared towards new attorneys or attorneys who are new California or new to healthcare law.  The idea was that attorneys could go to Essentials and then to regular CSHA conferences and have a greater understanding of the conference programs, which often aren’t “basic.”  Essentials also introduces the participants to the faculty members and CSHA board members.

How Did Essentials Come About?

Essentials was Ben Durie’s (UC Legal – Office of Legal Affairs) and my brainchild.  We both had the experience of lawyers being familiar with federal healthcare law but finding California law on the same topics completely foreign.  For example, I remember shortly after moving to California (and twenty years in practice elsewhere) attending a CSHA program discussing anti-SLAPP motions and not having any idea what the speakers were talking about.  To my knowledge, there is no other program providing comprehensive coverage of the basics of California healthcare law.

Is There Anything Else You Can Tell Us About Essentials?

We videotaped the first presentation of Essentials in 2022 and the tapes are available to members free of charge on the CSHA website.  If you can’t make it to Sacramento this year, feel free to check those out.

Registration for this event will open soon—stay tuned for updates!