Leonard Lipsky and Carly Eisenberg Hoinacki from Sheppard Mullin’s Healthcare Team recently sat down with Nick Francia[i] and Sarah Bothner[ii] of The Capital ESOP Group at UBS Financial Services Inc.[iii], to explore the ins and outs of employee stock ownership plan (ESOP) transactions as a potential exit strategy for physician practices. Below is the Q&A from their conversation.
Continue Reading Selling Your Physician Practice? Don’t Miss Out on ESOPs as an Alternative Exit Strategy

At the end of May, the Department of Justice (DOJ) announced the formation of a Civil Rights Fraud Initiative to “utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.” In connection with the Initiative, we will see DOJ’s False Claims Act practitioners in the Civil Division and the U.S. Attorneys’ Offices pairing with DOJ’s Civil Rights Division to “identify and root out instances in which recipients of federal funds fail to uphold their basic obligations under federal civil rights laws.”…
Continue Reading DOJ Civil Rights Fraud Initiative Will Use the False Claims Act to Target Antisemitism and DEI Programs

Congress is weighing a sweeping proposal that could significantly reshape how artificial intelligence (AI) is regulated across the United States. At the end of May, the United States House of Representatives passed, by a vote of 215-214, the One Big Beautiful Bill Act (OBBBA), a budget reconciliation bill with a provision imposing a 10-year moratorium on the enforcement of most state and local laws that target AI systems. If enacted, OBBBA would pause the enforcement of existing state AI laws and regulations and take precedence over emerging AI legislation in state legislatures across the country.
Continue Reading The One Big Beautiful Bill Act’s Proposed Moratorium on State AI Legislation: What Healthcare Organizations Should Know

A federal judge in D.C. recently ruled in favor of the U.S. Health Resources and Services Administration (“HRSA”), an administrative agency under the U.S. Department of Health and Human Services (“HHS”), by finding that drug manufacturers must obtain pre-approval from HRSA before implementing rebate models under the 340B Program. Specifically, U.S. District Judge Friedrich (“Friedrich”) found that HHS and HRSA did not exceed their authority when they required Eli Lilly & Co., Bristol Myers Squibb Co., Sanofi-Aventis U.S. LLC, Novartis Pharmaceuticals Corp. (“Novartis”) and Kalderos Inc., a health care tech company (together, the “Companies”) to seek pre-approval of the rebate…
Continue Reading Federal District Court Upholds Authority of HHS to Pre-Approve 340B Rebate Programs; HRSA Submits Proposed 340B Rebate Guidance

On Thursday, May 22, 2025, the U.S. House of Representatives narrowly passed the One Big Beautiful Bill Act, a budget reconciliation bill introduced by House Republicans, by a 215-214 vote. The bill extends key provisions of the 2017 Tax Cuts and Jobs Act, currently set to expire at the end of 2025, and allocates additional funding for defense and other federal priorities. It also includes reductions in government spending and revised eligibility requirements for several federal aid programs.
Continue Reading House-Passed Budget Bill – the One Big Beautiful Bill Act – Includes Major Changes to Medicaid

On May 15, 2025, the Centers for Medicare & Medicaid Services (“CMS”) released a proposed rule, entitled “Preserving Medicaid Funding for Vulnerable Populations – Closing a Health Care-Related Tax Loophole” to address a financing loophole that allows states to shift more Medicaid costs to the federal government than intended (the “Proposed Rule”). If finalized as proposed, states that received CMS-approved waivers for state healthcare-related taxes within the last year—including California, New York, Michigan, and Massachusetts—would be required to modify or eliminate those state taxes immediately or risk losing federal matching funds for expenditures paid using those tax revenues.
Continue Reading Proposed Rule on Medicaid Tax Waivers: CMS Moves to Close a Loophole Shifting Costs to the Federal Government

“Kicking Off Accountable Care” served as the theme for this year’s America’s Physician Groups’ (“APG”) Spring Conference, a three-day event packed with compelling speakers and breakout sessions focused on the state of accountable or value-based care. While the overall tone of the conference was optimistic, primarily being focused on the promises and expansion of value-based care models, there was also another theme which colored many of the presentations and breakout sessions: expect turbulent times.
Continue Reading Takeaways from the America’s Physician Groups’ Spring Conference: Turbulent Times Call for Change and Innovation

The Administrator for the Centers for Medicare & Medicaid Services (CMS), Dr. Mehmet Oz, spoke to non-profit health system executives, investors, and industry observers this week at the 25th Annual Not-for-Profit Healthcare Investors Conference sponsored by Barclays, HFMA and the American Hospital Association. Dr. Oz outlined his vision for CMS – after joking that the difference between a “vision” and a “hallucination” is whether a person can bring others along with them – and addressed some of the critical policy issues related to Medicaid currently under debate in the United States Congress. …
Continue Reading CMS Administrator Outlines His Vision for CMS at NFP Healthcare Investors Conference

On May 15, 2025, the U.S. Departments of Labor (“DOL”), Health and Human Services (“HHS”), and Treasury (“Departments”) issued a Statement announcing that they will not enforce portions of a final rule relating to the Mental Health Parity and Addiction Equity Act (“MHPAEA”), which was adopted in 2024. This non-enforcement policy will likely be well received by plan sponsors, employers and health plans, many of whom have been critical of additional reporting obligations and unclear guidance from the Departments. Perhaps more significantly, the statement provides that the Departments will reconsider broader issues related to mental health parity, including the Departments’…
Continue Reading Enforcement of Mental Health Parity Rules Paused with Further Changes Anticipated

In a recent decision with important implications for artificial intelligence (AI) driven innovation, the Patent Trial and Appeal Board (PTAB) denied a patent for an AI-based medical tool.[1] The refusal was not because the invention was not new or inventive. Rather, the refusal was because the invention did not meet a fundamental rule of U.S. patent law. In Ex parte Michalek, the PTAB specifically acknowledged that the patent claims at issue recited new information about the nexus between certain biomarkers and the development of lung cancer as facilitated by machine learning. In fact, prior to appeal, the applicant had…
Continue Reading PTAB Rejects AI-Driven Medical Patent – Not for Novelty, But Eligibility

Utah is one of a handful of states that has been a leader in its regulation of AI. Utah’s Artificial Intelligence Policy Act[i] (“UAIPA”) was enacted in 2024 and requires disclosures relating to consumer interaction with generative AI with heightened requirements on regulated professions, including licensed healthcare professionals.
Continue Reading Utah Enacts AI Amendments Targeted at Mental Health Chatbots and Generative AI

The Centers for Medicare & Medicaid Services (CMS) recently published the fiscal year (“FY”) 2026 proposed rule for Hospital Inpatient Prospective Payment Systems (IPPS) (the “Proposed Rule”). Comments to the Proposed Rule must be submitted by 5 p.m. EDT on June 10, 2025.
Continue Reading CMS Proposes Medicare Payment Policies for Hospital Inpatient Services for Federal Fiscal Year 2026

Earlier this month, the Eleventh Circuit (the “Court”) issued a decision in a False Claims Act (“FCA”) case against a medical supplier that offers welcome clarity for companies facing whistleblower allegations. In Vargas ex rel. Alvarez v. Lincare, Inc., 2025 U.S. App. LEXIS 9084 (11th Cir.), the Court emphasized high pleading requirements FCA plaintiffs must satisfy to survive a motion to dismiss. Specifically, the court held that it is not enough to allege a general scheme; the FCA plaintiff must also plead, with detail, how the scheme caused the actual submission of false claims to the government. The decision is…
Continue Reading Inferential Leaps and Conclusory Kickback Allegations Remain Verboten in False Claims Act Complaints