Judge blocks noncompete ban nationwide; not clear if FTC will appeal
Editor’s note: Due to the upcoming holiday, Our Take will return on Sept. 9.
A federal judge in Texas issued a nationwide injunction against the Federal Trade Commission’s noncompete ban on Tuesday.
When U.S. District Judge Ada Brown temporarily blocked the FTC’s ban in July, she said the injunction applied only to the plaintiffs and plaintiff-intervenors in that particular case and denied their request for a nationwide injunction.
But she also said she would rule on the ban’s merits no later than Aug. 30. Her ruling last week makes the injunction both nationwide and permanent.
In her ruling, Judge Brown described the noncompete ban as “unreasonably over broad without a reasonable explanation.”
Her decision is the latest twist in a lawsuit initiated in April by Ryan LLC, a Dallas-based tax services company, and subsequently joined by the U.S. Chamber of Commerce and others to block the ban when the FTC announced its final rule. The chamber called the ban “unnecessary and unlawful” and said it was “a blatant power grab that will undermine American businesses’ ability to remain competitive.”
When the FTC issued its final rule, which would have applied to all industries (though there was some question about its applicability to nonprofit organizations), Chair Lina Khan said the noncompete ban would “ensure Americans have the freedom to pursue a new job, start a new business, or bring a new idea to market.”
The FTC estimated that roughly 30 million people, or about one in five American workers, are subject to a noncompete agreement. The agency also estimated that the ban could lower health care costs by as much as $194 billion over the next decade.
According to the FTC, banning noncompetes could lead to wage increases of nearly $30 billion annually and the creation of 8,500 new businesses each year, with workers free to pursue new opportunities without having to worry about their employers taking legal action, NPR reported.
The FTC’s vote in April to approve the ban was 3-2, with the two Republican commissioners voting against it because, according to Healthcare Dive, they said the FTC did not have congressional authority to enact it.
At the time, the CEO of the Federation of American Hospitals, Chip Kahn, referred to the rule as “a double whammy,” adding that it “makes it more difficult to recruit and retain caregivers, while at the same time creating an anticompetitive, unlevel playing field between tax-paying and tax-exempt hospitals.”
With regard to Judge Brown’s ruling last week, Kahn said she “made the right call.”
“[The AHA has] been clear from the start that this rule would threaten patient access to care by making it more difficult for hospitals to recruit and retain physicians and invest in training and technology,” Kahn said in a statement. “In addition, this rule would create an unlevel playing field for tax-paying hospitals, an outcome completely at odds with FTC’s mission to promote competition. Especially at a time of workforce shortages and other challenges, this was the right decision.”
Set to go into effect Sept. 4, the ban would have made it easier for health care workers, including physicians and nurses, to change jobs. It may also have resulted in higher wages.
According to the American Medical Association, which supported the ban, between 37% and 45% of physicians are bound by noncompete agreements. The organization said noncompete clauses limit physicians’ opportunities for career advancement and restrict their ability to provide care to patients in economically or socially marginalized communities.
But Chad Golder, general counsel for the American Hospital Association, said the FTC’s rule “was a breathtaking assertion of regulatory power,” and that the FTC commissioners “did not attempt to understand the disruptive impact it would have on hospitals, health systems, and the patients they serve,” Healthcare Dive reported.
Judge Brown said in her latest decision that the Federal Trade Commission Act grants the FTC “some authority to promulgate rules to preclude unfair methods of competition,” but she also said the FTC “lacks the authority to creative substantive rules.”
Our Take: The FTC can appeal this latest judicial ruling, particularly in light of another federal judge’s ruling last month, in which the judge sided with the FTC.
In that case, Judge Kelley Hodge of the U.S. District Court for the Eastern District of Pennsylvania said the plaintiff, a tree service company, failed to show that the noncompete ban would cause irreparable harm or that the ban exceeds the FTC’s statutory authority.
Judge Hodge issued her ruling 20 days after Judge Brown’s decision in July to temporarily block the ban. Like Judge Brown did in her most recent ruling, Judge Hodge cited the text of the Federal Trade Commission Act — though she interpreted the law somewhat differently, ruling that it does not prohibit the FTC from issuing substantive rules such as the ban on noncompete agreements.
“The plain text of the statute provides no express limitations on the FTC’s rulemaking authority and the Court will not read in such limitations,” Judge Hodge stated in her ruling, according to HR Dive.
Artificial intelligence was the star at Epic Systems’ annual Users Group Meeting in Verona, Wisc. Executives described how the company is “turbocharging” its products — including MyChart, Cosmos (a research database with deidentified data from 270 million patient records), and Health Grid — with AI. CEO Judy Faulkner said Epic has more than 100 AI features in development, including the use of AI to queue up orders for prescriptions and labs, and automatically populate flowsheets and specialty forms, Fierce Healthcare reported. Generative AI projects in the works include auto-adverse drug reaction tagging, a hospital billing code assistant, and an AI agent patients can use to explain their bills. By next February, Epic expects to have available an AI feature that combs through patients’ charts to find key information. And two health systems are testing an Epic tool called Best Care Choices, which provides treatment recommendations based on similar patient profiles, according to Fierce Healthcare.
Epic is also continuing work on its payer platform to streamline prior authorization requests and potentially even facilitate direct claims submissions, which could eliminate the need for clearinghouses. Faulkner also talked about Epic’s AI tools already in use at health systems, including a Cosmos tool called Look Alikes, which physicians can use to help them diagnose challenging cases by finding patients with symptoms similar to their own patient’s symptoms, Fierce Healthcare noted. Physicians can then use the tool to connect with one another and share resources. Faulkner said 150 health systems and medical groups are using Epic’s MyChart augmented response technology to automatically draft responses to patient messages, and 186 organizations are using an Epic tool that combines AI with ambient voice technology to assist with charting progress notes in a patient’s EHR after an exam.
Mayo Clinic reported second-quarter operating income of $449 million, up from $300 million in the same quarter last year. The Rochester, Minn.-based health system’s revenue for the second quarter was slightly more than $5 billion, a year-over-year increase of 12.1%. At $4.6 billion, expenses increased 9.4% relative to the second quarter of 2023. Mayo Clinic attributed the 7% increase in its labor costs for the most recent quarter to staff growth in response to higher volumes, as well as a 4% annual pay increase for its workforce. The health system reported a profit of $613 million for the second quarter of 2024, including nonoperating items such as philanthropy and returns on investments; this compares with a reported profit of $547 million for the same quarter a year ago. During the first half of this year, Mayo Clinic said its outpatient visits increased 5.9% and admissions increased 7.1%.
Walgreens formed a strategic partnership with the federal government to use its clinical trial ecosystem in an effort to make decentralized clinical trials more accessible and more representative of the U.S. population. The five-year partnership, part of the Decentralized Clinical Operations for Healthcare and Research program launched by the Biomedical Advanced Research and Development Authority (BARDA) a year ago, could be valued as high as $100 million, Walgreens said in a news release. According to the release, Walgreens has reached more than 5 million patients to potentially recruit them into clinical trials since launching the company’s clinical trial network in 2022. Additionally, the company said, it “has consistently met recruitment goals and has continuously surpassed national averages for recruiting diverse clinical trial participants.”
Kaiser Permanente Ventures, Texas Medical Center Venture Fund, and Yale New Haven Health participated along with other investors in a recent $10.5 million strategic financing round for Clarium, a New York City-based health care technology startup. In tandem with the financing announcement, Clarium introduced an AI-powered workflow platform and data ecosystem called Astra OS designed to help providers “dramatically optimize spend, enhance workforce productivity, and ultimately improve patient outcomes” through the automation of their supply chain operations, according to Clarium CEO Steve Liou. Clarium said Astra OS was developed in collaboration with several leading health systems and noted that CommonSpirit, Yale New Haven Health, Geisinger, Ochsner Health, and Boston Children’s Hospital are existing partners of the company. Venture capital firm General Catalyst led the financing round.
The FDA approved updated COVID-19 vaccines made by Pfizer and BioNTech (Comirnaty) and Moderna (Spikevax) for individuals ages 12 and older. The vaccines, which target the KP.2 strain of the SARS-CoV-2 Omicron JN.1 lineage, are also authorized for emergency use for children ages 6 months through 11 years. Pfizer and BioNTech said they would ship their updated vaccine immediately; all of the companies expect their vaccines to be in pharmacies and other care settings “in the coming days.”
What we’re reading
Why one health system thinks its new PBM can disrupt the market. Modern Healthcare, 8.23.24 (subscription or registration required)
Judy Faulkner’s 25-to-50-year plan for Epic. Becker’s Health IT, 8.23.24
Why Primary Care Practitioners Aren’t Joining Value-Based Payment Models: Reasons and Potential Solutions. The Commonwealth Fund, 7.17.24
