Bloomberg Law | BY Justin Wise | June 14, 2024

A Texas federal judge said she will decide a challenge to the Federal Trade Commission’s near-total ban on worker noncompetes without a hearing.

A hearing on the “requested injunctive relief is not necessary,” said Ada E. Brown of the US District Court for the Northern District of Texas in a brief order submitted late Thursday.

Brown has said she will make a decision by July 3 on a motion for a preliminary injunction seeking to block the regulation, which is set to go into effect in September. A ruling will carry significant weight, as noncompete provisions are utilized across the economy, including in industries such as tech and finance.

A Texas tax firm, Ryan LLC, filed a lawsuit mere hours after the rule was finalized in April seeking an injunction preventing it from becoming law. Ryan LLC, the Chamber of Commerce and other business groups claim the FTC stepped beyond its authority with the rule and that the regulation does not account for certain non-competes that have been rendered lawful in the past.

The FTC in April passed the new regulation in a 3-2 commission vote. The rule, if it goes into effect, will prohibit virtually all noncompete provisions that keep employees from making job moves in a certain industry for a period of time.

The FTC has said the rule falls within its mandate to regulate unfair methods of competition. Some states, including California, a hub for jobs in the tech industry, already have restrictions on the use of noncompete provisions.

Ryan LLC is represented by Gibson Dunn & Crutcher and The Fillmore Law Firm.

The case is Ryan LLC v. Federal Trade Commission, N.D. Tex., No. 24-cv-00986, 6/13/24.

WISCA NOTE: The Ambulatory Surgery Center Association submitted formal comments opposing the proposed rule, but did not take a position on the appropriateness of noncompete agreements specifically. In the comments, ASCA noted, “Under this proposal, surgery centers and other tax-paying healthcare providers would be subject to restrictions that tax-exempt systems would not. Hospitals are more likely to employ physicians currently, and this rule would allow nonprofit providers to more aggressively engage in noncompetitive behavior that would impede a physician’s ability to eventually move to an ASC or other healthcare provider.”

The 2023-24 legislative has come to an end, and legislators have shifted their focus to the upcoming election season and the need to connect with voters. With that in mind, it is more important than ever for WISCA members to strengthen their relationships with their state lawmakers (and new legislative candidates) to educate them on the ASC model of care, the regulatory challenges we face, and the legislative solutions we need to increase access to affordable, quality care provided in the ASC setting. Remember, decisions state legislators make in the Capitol can have a significant impact on the ASC industry, your organization, and your profession.

One of the best ways you as a WISCA member can engage your local legislators is to invite them to tour your ASCs to illustrate firsthand the many benefits of surgery center care. These visits provide a tremendous advocacy opportunity, which is why WISCA members across the state have already hosted numerous successful legislative tours. But we need to maintain the enthusiasm for this critical grassroots advocacy program, and WISCA is excited and ready to set-up additional tours today.

If you would like to host a legislative tour at your site, please contact the WISCA office at WISCA@badgerbay.co. We will work with you and your legislators to coordinate the meetings and will provide participating members with full support, including legislator bios, advocacy tips, issue briefings, and supporting documents.   

WISCA needs your help...  Please share your thoughts on what state legislative issues you believe WISCA should prioritize during the 2025-26 Wisconsin Legislative Session. We are in the process of identifying challenges faced by Wisconsin ASCs that have a potential legislative solution, and your input is critical. If you have ideas or thoughts, please email the WISCA office at WISCA@badgerbay.co. The earlier we have these discussions, the more prepared we will be to impact change in the 2025-26 legislative session. Thank you!

It’s official... The election field is set for state legislative races in Wisconsin, and we now know which incumbent legislators will be running for reelection and which ones will face primary challenges. While the Presidential race at the top of the ticket will garner most of the attention and play a large role in voter turnout, down ticket races in the state Senate and state Assembly will be very interesting this cycle. 

Of course, this election cycle is unique, as lawmakers will be running in new legislative districts after the State Supreme Court required new maps to be drawn. And with the new maps comes some political uncertainties. First, while Senate Republicans will return in the majority, the key question is how many seats Democrats can pick up, and whether it will be enough to give them a shot to win the majority in 2026.  State Senators run on staggered four-year terms, meaning half of the seats are up in 2024 and the other half are up in 2026.  Democrats have four pick-up opportunities this cycle and need to hit most of them to have a shot at the majority in 2026. 

While Assembly Republicans can’t guarantee they will return in the majority, the odds are heavily in their favor.  New maps will lead to gains for Assembly Democrats, but they would have to essentially run the table to get to a majority. Their pathway could be greatly impacted by top of the ticket dynamics. 

Maybe the most interesting development to come out of the Assembly is that Speaker Robin Vos, who is the longest tenured Speaker in the country has avoided a primary this fall. Though he is still facing recall attempts, those efforts will not deny him a return to office next January. While a primary opponent did turn in signatures, that opponent has since dropped out of the race, eliminating any real potential challenge. 

Here are some interesting primary races to watch in both houses of the Wisconsin Legislature:

·        Senate

o   District 4 – This seat will see a July special election in Milwaukee, pitting two current Democratic representatives against each other. Reps. Dora Drake and LaKeshia Myers face off in what used to be Sen. Lena Taylor’s seat.  Sen. Taylor held the seat for nearly 20 years.  Whoever wins the primary will win the seat, as there is no Republican running in the general election.

o   District 16 – This seat became open when Senator Melissa Agard decided to run for Dane County Executive. There is a crowded primary on the Democratic side featuring three current state representatives.  They were all required to give up their Assembly seat to run.  Reps. Jimmy Anderson, Samba Baldeh, and Melissa Ratcliffe will square off in August for the opportunity to replace Agard.  No Republican has filed to run in the seat, so similar to the 4^th Senate District, this is a winner take all primary. 

o   District 20 – This seat features Republican incumbent Senator Dan Feyen, who is being challenged by former GOP State Representative Tim Ramthun.  Feyen is a member of Senate leadership and is the perceived favorite against Ramthun who unsuccessfully ran for Governor in 2022 (garnering 6% of the primary vote).

·        Assembly

o   AD 6 – In this northeastern Wisconsin seat, two GOP incumbents – Reps. Peter Schmidt and Behnke – will square off for the opportunity to remain in the Assembly. Behnke moved into the 6^th Assembly District to challenge Schmidt after he was drawn out of his current district.   

o   AD 24 – This Germantown/Menomoniee Falls area seat may be the most interesting primary of the election season, as it pits Republican legislators Janel Brandtjen and Dan Knodl against each other. Brandtjen has been an outspoken critic of Speaker Vos and Knodl is a sitting Senator who lost his seat due to the new maps. He is moving into AD 24 to run for this safe GOP seat. 

o   AD 55 – In this Oshkosh area seat, veteran GOP lawmaker Mike Schraa will face-off against Republican freshmen legislator Nate Gustafson. Political insiders thought Schraa (63) might retire from the legislature and were somewhat surprised when he decided to run for reelection. However, they were more surprised when Gustafson announced he would challenge Schraa. The winner of this primary is positioned to win the general election.

o   AD 86 – This seat has a similar set-up to AD 55, as the new district has two sitting GOP legislators drawn into it.  Reps. John Spiros and Donna Rozar are two accomplished veteran legislators who will face each other in the race for this Marshfield area seat. 

The 2023-24 legislative has come to an end, and legislators have shifted their focus to the upcoming election season and the need to connect with voters. With that in mind, it is more important than ever for WISCA members to strengthen their relationships with their state lawmakers (and new legislative candidates) to educate them on the ASC model of care, the regulatory challenges we face, and the legislative solutions we need to increase access to affordable, quality care provided in the ASC setting. Remember, decisions state legislators make in the Capitol can have a significant impact on the ASC industry, your organization, and your profession.

One of the best ways you as a WISCA member can engage your local legislators is to invite them to tour your ASCs to illustrate firsthand the many benefits of surgery center care. These visits provide a tremendous advocacy opportunity, which is why WISCA members across the state have already hosted numerous successful legislative tours. But we need to maintain the enthusiasm for this critical grassroots advocacy program, and WISCA is excited and ready to set-up additional tours today.

If you would like to host a legislative tour at your site, please contact the WISCA office at WISCA@badgerbay.co. We will work with you and your legislators to coordinate the meetings and will provide participating members with full support, including legislator bios, advocacy tips, issue briefings, and supporting documents. 

WISCA works closely with our national association partner – the Ambulatory Surgery Center Association (ASCA) – on advocacy and other issues important to our members. In fact, the WISCA Government Affairs Team joinsCLproductsupport@wheda.com a national ASCA state chapter call twice a month for a federal regulatory and legislative briefing and closely follows their published Government Affairs Updates. Here is the latest federal government affairs news from ASCA:

• ASCA Comments on CMS Prior Authorization Demonstration Project: On Tuesday, April 16, ASCA submitted comments in response to the Centers for Medicare & Medicaid Services’ (CMS) proposed prior authorization demonstration project for ASCs. ASCA also submitted sign-on letters with 27 states and 16 specialty organizations supporting our comments. CLICK HERE to view the state chapter letter, which WISCA signed-on to. ASCA opposes the demonstration because it will create an undue burden for ASCs with no clear benefit to Medicare or its beneficiaries.
• • CMS’ Supporting Statement Part B, which provides more information on the proposed prior authorization demonstration project for ASCs, includes 40 codes that would be subject to prior authorization in the demonstration project. CMS indicated that data “from 2019 to 2021 shows these services have experienced significant increases in utilization in the ASC setting” and that it “selected the targeted services for inclusion in this demonstration, based upon problematic events, data, trends, and potential billing behavior impacts of the OPD [hospital outpatient department] Prior Authorization Program which requires prior authorization as a condition of payment for these services.”
  • ASCA’s analysis of the codes, however, determined that only one of the 40 codes, J0585, saw an increase from 2019 to 2021, and only a modest increase of 1.5 percent during that time frame. In addition, five of the codes—15847, 36474, 36476, 36479 and 36483—have a payment indicator N1, meaning they are not separately payable in the ASC setting. Since surgery centers do not receive reimbursement, it does not make sense to include them in a prior authorization demonstration.

• • As ASCA previously reported, the states proposed for inclusion in the demonstration are Arizona, California, Florida, Georgia, Maryland, New York, Ohio, Pennsylvania, Tennessee and Texas. The 40 codes fall within the following categories: 1) Blepharoplasty, Blepharoptosis Repair, and Brow Ptosis Repair; 2) Botulinum Toxin Injection; 3) Panniculectomy, Excision of Excess Skin and Subcutaneous Tissue (Including Lipectomy), and related services; 4) Rhinoplasty, and related services; and 5) Vein Ablation, and related services.
• FTC Non-Compete Rule: On Tuesday, April 23, the Federal Trade Commission (FTC) announced a final rule titled the “Non-Compete Clause Rule” that bans new noncompete clauses on or after the effective date of the final rule. The FTC specified that noncompete clauses are an “unfair method of competition” and, therefore, a violation of Section 5 of the FTC Act. Existing noncompetes “can remain in force” for senior executives, but existing noncompetes “with other workers are not enforceable after the effective date” of the final rule.
• • Last January, the FTC first proposed to ban noncompete clauses, and ASCA submitted comments raising concerns with this proposal. The FTC voted 3 to 2 to issue the final rule that defined a noncompete clause as “a term or condition of employment that prohibits a worker from, penalizes a worker for, or functions to prevent a worker from (1) seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (2) operating a business in the United States after the conclusion of the employment that includes the term or condition.” The Commission indicated that the “final rule will increase competition and efficiency in healthcare markets, as workers at for-profit healthcare entities will be able to spin off new practices or work for different employers where their productivity is greater.”
  • The final rule will become effective 120 days after publication in the Federal Register. Once the rule is effective, market participants can report information about a suspected violation of the rule to the Bureau of Competition by emailing noncompete@ftc.gov.

The rule could increase costs for surgery centers

The ASCA Journal | BY ALEX TAIRA | MAY 3, 2024

The Federal Trade Commission (FTC) voted 3-2 to adopt the “Non-Compete Clause Rule” or the final rule, last week. The final rule states that the use of noncompete agreements is an unfair method of competition and is thus comprehensively banned effective 120 days after the final rule’s publication in the Federal Register. The rule is scheduled for publication on May 7, 2024, corresponding to a September 4, 2024, effective date. The FTC first proposed this policy in a proposed rule released January 2023, which received more than 26,000 public comments in 90 days.

ASCA submitted formal comments opposing the proposed rule, but did not take a position on the appropriateness of noncompete agreements specifically. In the comments, ASCA noted, “Under this proposal, surgery centers and other tax-paying healthcare providers would be subject to restrictions that tax-exempt systems would not. Hospitals are more likely to employ physicians currently, and this rule would allow nonprofit providers to more aggressively engage in noncompetitive behavior that would impede a physician’s ability to eventually move to an ASC or other healthcare provider.”

The final rule “adopts a comprehensive ban on new non-competes with all workers, including senior executives.” Existing noncompete agreements will be voided after the effective date, except for senior executives who are defined as workers in a “policy-making position” earning more than $151,164 per year. The final rule creates a definition for “policy-making position” based on job duties rather than job titles, focusing on roles whose decisions have a significant impact on the business. The FTC expects that approximately 0.75 percent of the workforce are senior executives and would thus be allowed to maintain existing noncompete agreements.

The FTC also clarifies that certain, tax-exempt nonprofit entities would fall under the commission’s jurisdiction and be subject to the noncompete prohibition. FTC states that it can determine on a case-by-case basis whether an organization is engaged in solely charitable business practices or whether an organization’s business operations are intended to generate profit. Those organizations whose business goal is profit for itself or its members would be considered under FTC jurisdiction and subject to the noncompete prohibition, regardless of the organization’s tax status.

The FTC acknowledges receiving many comments requesting the exclusion of some or all of the healthcare industry but was not persuaded. The commission remains unconvinced of negative effects, and “specifically finds that non-competes increase healthcare costs.” The FTC press release states that the final rule is “expected to lower health care costs by up to $194 billion over the next decade.”

The American Hospital Association released a strong statement opposing the final rule, calling it “bad law, bad policy, and a clear sign of an agency run amok.” The Federation of American Hospitals also released a statement opposing the final rule, asserting that the prohibition would make it “more difficult to recruit and retain caregivers … while at the same time creating an anti-competitive, unlevel playing field between tax-paying and tax-exempt hospitals.” On the other side, the American Academy of Family Physicians released a statement supporting the rule. The American Medical Association has yet to release an official statement, but the association has been a supporter of restricting noncompete agreements.

The final rule was subject to legal challenges almost immediately, most notably by the US Chamber of Commerce, the largest business trade organization in the world. On April 24, just one day after the final rule release, the Chamber of Commerce filed a lawsuit in a US District Court in Texas challenging the rule and seeking an injunction that would prevent implementation. Additional legal challenges are expected, and ASCA will monitor the progress of lawsuits over the coming months.

WISCA wants your help in identifying potential issues that you and your ASC team would like to see addressed at the state level in the next legislative session.  If you have ideas, questions, or concerns, please email the WISCA office at WISCA@badgerbay.co. The earlier we have these discussions, the more prepared we will be to impact change in the 2025-26 legislative session. Thank you!

The Joint Finance Committee endorsed a plan providing $36 million to address the opiate crisis.  The plan included a provision that directed DHS to allocate $500,000 for a program that provides safe disposal kits for drugs and $500,000 to provide grants for small facilities (like ASCs) to buy electronic lock boxes for storing and tracking narcotics.  Read the approved motion. 

As the election season ramps up, so too does the frequency of polling in the state.  With Wisconsin positioned to be a national battleground, November will yield competitive statewide races for President and US Senate.

See the latest Marquette Poll of Wisconsin voters, published April 17, here. The poll found that the statewide races are close, with Donald Trump leading Joe Biden 51-49 and Tammy Baldwin leading Eric Hovde 52-47 percent among registered voters. A recent CBS News poll of registered voters found Trump leading Biden 50-49 and Baldwin leading Hovde 48-41. An Emerson College poll of swing state voters published yesterday found Trump ahead of Biden by two points in Wisconsin, 47-45, with eight percent undecided.

Democrat incumbent Tammy Baldwin is seeking a third term in the U.S. Senate and while Wisconsin is considered a swing state, Baldwin has outperformed fellow Democrats in rural areas in previous races. She has already raised and spent millions on early advertising and finished the first quarter of the year with more than $10 million cash on hand.

Republican challenger Eric Hovde is a businessman from Madison with experience in real estate and financial services. He officially entered the race in February with the backing of the National Republican Senatorial Committee and has since received Donald Trump’s endorsement. So far, Hovde has self-funded his campaign to the tune of $8 million.

Republicans may have caught a break if they can avoid a primary and focus all their attention on Baldwin.  Fellow Republican businessman Scott Mayer opted not to enter the race out of a desire to avoid a primary election while former Milwaukee County Sheriff David Clarke has also been discussed as a possible candidate, although the later it gets the less likely he would be to jump in.