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- [00:01]
A
Welcome to Advancing Health. Legal advocacy is a core part of the work of the American Hospital association. And these days, there is a lot to stay engaged with on that front. In today's podcast, hosted by Tina Friesdecker, president and CEO of Corewell Health and the 2025 board chair of the American Hospital association, we learn more about how the AHA is helping members navigate today's legal thickets and what hospital and health system leaders can do to help.
- [00:34]
B
Hello, and thank you so much for joining us today. I'm Tina Friesdecker. I'm the president and CEO for CoreWell Health, and I'm the Board Chair for the American Hospital Association. A large part of the work that the American Hospital association does on behalf of all of our members is advocacy. And when many of us think of advocacy, legislation and regulation usually are top of mind. But legal advocacy is a key component of the AHA's larger advocacy strategy and is important in so many ways to healthcare today. Whether it's an extension of the tariff conversation that we had last month or 340B and the many other issues that make their way to the courts, there is a lot of work being done on behalf of our hospitals and our health systems. That's why I am so very pleased to be joined today by Chad Golder, AHA's general counsel, who is tracking our all of these issues on behalf of our field. So, Chad, thank you so much for joining us, for being here with us. I've heard you present on a few of these issues recently, and I know that our listeners would so appreciate the insight and updates that you're able to share as it relates to the current legal environment? We have seen a lot of legal challenges to various presidential actions in the past several months. Can you give us your thoughts on how should we make sense of all that's going on between the administration and the courts and the headlines that we are seeing?
- [01:49]
C
Absolutely. And thank you for having me, Tina, and thank you for all you do for the aha. You are certainly right that we have seen a lot of legal challenges over the past few months. There's a website that tracks them. We are now well over 270 legal challenges to administration action. I know that the headlines can be dizzying every day. Whatever paper you're reading, you're seeing some new court decision that did something. So really the way I think about it is this. It's really important to remember that in any lawsuit, the plaintiff, the person who's bringing the challenge, gets to make some important decisions first. The most important at least over the past few months with respect to administration challenges, is where to sue. And what we're seeing is a lot of challenges in friendly jurisdictions, places that are friendly to the plaintiffs. So the Boston Federal Court, the Baltimore Federal Court, where you're going to have a lot of appointees from the Democratic Party who may be more sympathetic to the plaintiff's claims. Now, this is not universally true. There are folks who track this kind of data, and there are plenty of Republican appointed district court judges striking down administrative actions. But I think that is an important feature. So when you see a headline that says court strikes down or Court enjoins, this particular administration action, this Doge cut, this grant condition, what you have to remember first is that the plaintiff's got to choose where they're suing. The second thing to remember is a lot of these challenges involve what's called preliminary relief. They're seeking to just halt things in place with a preliminary injunction. And courts are somewhat more willing to grant those here because they just want to maintain the status quo. They want to say, let's put everything on hold. Let's not let the administration do anything right away until we can sort out all of these legal issues. But what comes with that sometimes is what they call a nationwide injunction. Even though the case was brought, say, in Boston by the Massachusetts Attorney general, the decision to enjoin doesn't just apply to Massachusetts, it will apply all across the nation. And that raises the third point, which is we really do need to pay attention to what happens as they make their way up the chain towards the Supreme Court. As I said earlier, they're filing in friendlier jurisdictions, but over time, as more courts of appeals and the Supreme Court get involved, the win loss record for the administration will change. Now, the administration is not going to win everything, but overall, I think what we've been seeing is a Supreme Court that's friendlier to this administration, at least in the sense that they are not going to invite a conflict with the Trump administration that they don't have to. So hopefully, with that framework, folks can think about, you know, the broad range of challenges that have come, and we've seen them to everything. You know, it was averaging two challenges a day, basically, whether it's a grant, immigration action, all sorts of stuff.
- [05:05]
B
Well, you and your team have been very busy. You know, our current administration appears to be using money you just mentioned, grants, contracts, and other forms of government funding to really effectuate their policy goals. Is that correct? And what sort of legal issues does that raise?
- [05:20]
C
That is a Great insight, Tina. What I think this administration has found is that money is a powerful leverage, and they are able to effectuate their policy goals without making a judgment about those policy goals. Whether it's, you know, DEI or something related to antisemitism, they're able to effectuate those policy goals by using the threat of money or withdrawal of money. Now, this raises a bunch of different legal issues, but, you know, the way I generally think about this is federal grants. Federal money is a privilege and it's not a right. The government has a significant amount of control over what it does with its money. There's a great Washington Post article from early in the administration in March. Folks should look at it. It deals with something that the last Trump administration inserted into the regulations in November of 2020, you know, in the middle of COVID in the middle of an election. And it basically said something along the lines of, we can cancel any grant if it is inconsistent with the priorities of this administration. These awards no longer effectuate agency priorities, is a basis for canceling federal grants. And that's very broad language that lets them cancel a grant for basically anything they want. So that leaves you with two sets of legal challenges to any cancellation. They have the power to do this. They just have to do it the right way. So one is procedural. Did they go through the right processes? Did they give the right notice and comment? Some grants require that. Some monetary action require you to follow a particular process. Just the other day, for example, a district judge struck down some cancellation to AmeriCorps funding because they didn't go through the proper process. The other basis to do it, to challenge it, is the Constitution. You know, even though there are rules on the books, if the Constitution says you can't do something, then you can't do something. And we've seen that in the examples of, like Harvard or the law firms where if there is a claim that the administration has done something in violation of, say, the First Amendment, they're discriminating against you because of your viewpoint or your political positions. We've seen a lot of challenges to that. Now, those are all working their way through the courts. Some have decisions, some don't yet. But I think that will be an important area to watch in the coming weeks and months to see the scope of the executive branch's power to cancel grants based on political preferences and things like that.
- [08:08]
B
It's still quite hard to do planning, especially when you have a grant that is three, four, five years, programs that are that long. And so it's still challenging to do. But it helps, you know, the different processes that that could go.
- [08:22]
C
I have said, you know, I've never felt closer to the GCs of our members than I do now because we at the AHA are a federal contractor. I'm dealing with the same issues and uncertainty that you guys are now. So it is a challenge.
- [08:35]
B
So we both know that hospitals and health systems are subject to a complex web of federal regulations, many of which do increase costs and drive inefficiencies in our operations. And some are, some are very good, too. What has the administration been doing in the regulatory relief space and how has the AHA been engaged in that work?
- [08:52]
C
This is a really big priority of the second Trump administration. We have seen RFIs, requests for information from a number of different agencies, OMB, HHS and others, asking for lists or recommendations of regulations that are wasteful, that can go away. And, and the AHA has been extremely active on this front. This is one of the areas where we think we're working extremely well with the administration. For the first set of these RFIs with OMB and with HHS, we sent over a list of 100 regulations or regulatory areas that the administration can and should take a hard look at. And they, you know, they run the gamut of all the kinds of regulations in that, in that complex web that you mentioned, Tina, of regulations that they should be looking at to either get rid of or alter streamline to make it easier for hospitals to function. These go to things that they did during COVID waivers during COVID that worked very well. Then why can't we have them now? These are all on our website, aha.org, i think, slash regulatoryrelief. Then there is a second wave that we in the legal department here at AHA were particularly focused on. There were RFIs from DOJ and the federal Committee Trade Commission, specifically asking for regulations that were anti competitive, that inhibited competition, that were presenting potential antitrust problems. And we wrote a pretty lengthy letter, 20 single space page letter to these agencies, not only reiterating the 100 regulations that we had sent on, but really focusing on how the regulatory environment has become so uneven that the playing field is so unfair to hospitals as compared to large commercial health insurers. It is our belief that the number one regulatory relief priority, at least as it relates to competition, should be focusing on those regulations that unfairly advantage commercial insurers like United and Aetna. And we offered a range of those, whether it's the, the medical loss ratio requirements or various stark and anti kickback act provisions that allow them to purchase physician practices. All of those things are regulations that shape the real world but do so in unfair ways. So again, those are all available on the AHA website. Take a look. And we hope to continue advancing this regulatory relief agenda as we move forward.
- [11:29]
B
That's really good. We appreciate all of our members that have submitted those regulatory relief ideas, too. We got thousands of ideas. And so it's very helpful to make sure that we're always doing this on behalf of our members. Chad, I know that from previous conversations with you over the past year that you and your legal team have been following very closely the potential impacts of the U.S. supreme Court, but specifically the decision in mid-2024 to repeal the Chevron standard that gave more judicial deference to federal agencies and the rulemaking authority. What impacts do you see from the repeal of the Chevron standard in this new administration?
- [12:03]
C
It remains to be seen in some respects because Chevron only applied to notice and comment rules. And just to take a step back, what the old Chevron doctrine was, this came from a 1984 Supreme Court decision. What it basically said was in the case of an ambiguous federal statute, the agency's interpretation of that statute when they are enacting a regulation would receive deference. So so long as it was a reasonable interpretation of that ambiguous statute, the agency could move forward with this action. Now, last year in the Loper Bright decision, the Supreme Court overturned that. But what we really have not seen a ton of just yet and the full gamut of regulations, if not not come out yet. But when this administration starts issuing notice and comment rules, whether it's the IPPS rule, the OPPS rule, rules related to Medicaid, all those things, if they take aggressive interpretations of federal statutes, there will no longer be any deference to that agency so long as Congress didn't grant them deference. And I think there was a lot of speculation at the start of the administration that this movement against Chevron, which was really done by conservatives and folks who are opposed to the administration state, may end up biting the Trump administration if they want to take aggressive regulatory action. So it's something we are paying close attention to. It is certainly, you know, as you said at the top of this, Tina, legal advocacy is always a weapon in our toolkit. And we will be making robust arguments about statutory authority if the proposed rules exceed the bounds of federal statutes.
- [13:52]
B
So, Chad, I have one final question for you, and I know it's one of your biggest passion areas because you spend so much time on 340B issues, and so do many of us. So the 340B drug pricing program has provided financial help to hospitals serving vulnerable communities to manage rising prescription drug costs. Can you give us an update on these efforts and what is going on right now?
- [14:15]
C
Absolutely. Passion is definitely one word for it, Tina. It is certainly. I consider myself, you know, almost a full time 340B lawyer. There are really two major areas right now in the courts where the 340B program is being litigated. The first is the rebate policies that the drug companies implemented maybe 10 months ago last summer. And, you know, just as a, as a bit of background for those who weren't following it as closely, effectively, what the drug companies did was they said rather than paying hospitals their 340B discounts up front right at the time of sale, they were going to issue rebates. They were going to say, pay us the full price. Now we'll take a look at whether you deserve these rebates and then we'll pay you back. At some point. We were very active, the AHA in working with HHS to explain why this was unlawful and a really bad policy idea. And HHS said they agreed with us and they said the drug companies couldn't do this. So what happened? It's what happens always in 340B. Someone sues. And in this case, it was the drug companies saying that the denial or the rejection of the repaid policies was unlawful. So that litigation unfolded throughout the winter. And just a few weeks ago, one district court judge in the in Washington, D.C. upheld HHS rejection of the drug company rebate policy. So what does that mean? It actually just, I call it kind of an incremental victory. What it means now is that the drug companies will get a chance to make their case to HHS and say, you know, you should allow us to move forward with these rebate policies. This kind of shows you how law and policy and federal relations, all the things you talked about, all the different tools of advocacy come together because we won in the courts or we won this incremental victory in the court. But now we just have to go back to the agency and advocate again using other tools. And regardless of what the agency does, whether they approve it or reject it, going forward, it'll be back in the courts again. The other area that we're extremely active in is the various state contracts, pharmacy laws, states across the country. We're now up to 16 or 17 states have enacted laws saying drug companies cannot impose restrictive policies that prevent shipment of 340B drugs to contract pharmacies for dispensing to patients closer to where they live. And these states have filled the void that the federal government has left by not when other federal courts have held that the federal government, hrsa, can't enforce similar laws. So as new states come into play, as new states enact these laws, the AHA and our allied association partners are active in filing amicus briefs explaining why these are lawful. This litigation will go on for a while. Now we're filing briefs probably on average one or two a week in all of the new states that are enacting these laws. So that is another active area. But you know, you were right, Tina. The ultimate lesson is if something touches 340B, it's going to end up in the courts one of these days. So we have to be vigilant and active on that front.
- [17:39]
B
You have just been a delight to talk to today, even though there's so many different things that are happening. We appreciate all of your work and your team's work for the legal advocacy. It's so critical, as you've described today, the importance of it. And so thank you very much for all the work that you do on behalf of our field and thank you to all of our viewers and listeners for finding the time to tune in today. We'll be back next month for another leadership dialogue conversation.
- [18:06]
A
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