Sidley Austin LLP

New York NY

Sidley’s New York office, with more than 340 lawyers, is one of New York City's largest law offices. Located in the heart of the world’s financial center, this office has served the global financial community with innovative legal solutions for over 90 years.

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Updates

Banking

Court permits New York DFS suit against OCC regarding fintech charter
USA | 24 May 2019

A federal district judge recently denied a motion to dismiss filed by the US Office of the Comptroller of the Currency (OCC) in a lawsuit brought by the New York State Department of Financial Services, which challenged the OCC's decision to begin accepting applications from fintech companies for special purpose national bank charters.

Volcker Rule: agencies propose to implement community bank exemption and revise name-sharing rule
USA | 18 January 2019

The five US federal agencies responsible for implementing the Volcker Rule have individually released a related notice of proposed rulemaking. The notice proposes amendments to the Volcker Rule regulations that would implement two statutory changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act. Comments in response to the notice must be received by the agencies within 60 days of its publication in the Federal Register.

US election results: five key matters for financial services industry
USA | 07 December 2018

In the recent election, the Democrats captured a majority in the House of Representatives and Representative Maxine Waters (D-Calif) is now in line to lead the House Financial Services Committee. As such, it is expected that a significant shift in legislative efforts relating to the financial services industry will occur. During the first Financial Services Committee hearing since the election, Waters announced that deregulation efforts are finished.

New York State Department of Financial Services challenges OCC authority on fintech charters
USA | 12 October 2018

In July 2018 the Office of the Comptroller of the Currency (OCC) announced its decision to begin accepting applications from fintech companies for special purpose national bank charters (the Fintech Charter Decision). The New York State Department of Financial Services recently filed a federal court complaint seeking to enjoin further actions by the OCC to implement the Fintech Charter Decision and related actions, arguing that such acts are lawless, ill-conceived and destabilising for financial markets.

OCC to issue fintech charters
USA | 24 August 2018

The Office of the Comptroller of the Currency (OCC) recently announced – to much anticipation – that it will begin accepting applications from fintech companies for special purpose national bank charters (commonly referred to as 'fintech charters'). However, state banking regulators are likely to once again challenge the OCC's authority to grant fintech charters, which could create some uncertainty for early applicants.

New FAQs on customer due diligence requirement
USA | 04 May 2018

The Financial Crimes Enforcement Network recently issued new frequently asked questions regarding its customer due diligence (CDD) rule. The CDD rule applies to banks, among others, and includes four core elements of CDD, each of which should be included in anti-money laundering programmes.

Federal Reserve revises FR Y-7 and responds to questions on enhanced prudential standards for FBOs
USA | 16 February 2018

The Board of Governors of the Federal Reserve System has announced revisions to the Annual Report of Foreign Banking Organisations (FR Y-7) which will enable foreign banking organisations (FBOs) to certify their compliance with US risk committee and home country capital stress testing requirements under Regulation YY. The FR Y-7 is an annual report submitted by qualifying FBOs to provide financial, organisational, shareholder and managerial information to the board.

California credit card surcharge prohibition found unconstitutional on First Amendment grounds
USA | 26 January 2018

The US Court of Appeals for the Ninth Circuit recently held that California's statute prohibiting credit card surcharges violated the First Amendment as applied to the proposed surcharge practices of the merchant-plaintiffs. The Ninth Circuit used the same reasoning as a recent Supreme Court case to hold that California's surcharge ban regulated speech rather than conduct, therefore posing First Amendment concerns.

CFPB principles for data aggregation services could have broad implications
USA | 08 December 2017

The Consumer Financial Protection Bureau recently released a set of consumer protection principles designed to protect consumer interests in the market for services built around consumer-approved use of financial information. The principles are targeted at so-called 'data aggregation' or 'screen scraping' services that collect customer information in order to provide financial planning or other services.

Volcker Rule: OCC requests public input on potential revisions
USA | 29 September 2017

The US Office of the Comptroller of the Currency (OCC) recently released a notice seeking public input regarding how to revise the Volcker Rule. The notice cites a report released by the US Treasury Department, which included recommendations for significant changes to the rule. Although the OCC did not propose specific changes to the rule in its notice, it stated that the information that it is soliciting could support the revisions to the final rule advanced in the Treasury report and elsewhere.

CFPB proposes amendments to final rule for pre-paid accounts
USA | 21 July 2017

The Consumer Financial Protection Bureau recently issued proposed amendments to its final rule to expand existing consumer protections for electronic fund transfers to pre-paid accounts. Among other things, the proposal would modify the final rule to exempt pre-paid account issuers from the error resolution and limitation of liability provisions with respect to unregistered cardholders and provide more flexibility to issuers of digital wallet accounts that are covered by the final rule.

Treasury releases report to reform US financial system
USA | 14 July 2017

The Treasury Department recently released its long-awaited report to reform the US financial system. The report includes dozens of recommendations to reform laws, treaties, regulations, guidance, reporting and recordkeeping requirements and other government policies that inhibit federal regulation of the financial system in a manner consistent with the set of core principles enunciated by President Trump in Executive Order 13772.

OCC issues third-party relationship FAQs
USA | 07 July 2017

The Office of the Comptroller of the Currency recently issued a set of frequently asked questions (FAQs) to supplement its 2013 bulletin on third-party relationship risk management. The FAQs affirm the bulletin's broad applicability, while re-emphasising the need for third-party relationship oversight to be risk based and tailored to individual institutions' needs and delving into several more detailed compliance questions.

Former MoneyGram CCO settles FinCEN complaint
USA | 26 May 2017

The former chief compliance officer of MoneyGram, Thomas E Haider, and the Financial Crimes Enforcement Network (FinCEN) have jointly filed a stipulation and order of settlement and dismissal in the US District Court of Minnesota. This follows FinCEN's earlier-filed complaint against Haider seeking to hold him personally liable for MoneyGram's violations of the Bank Secrecy Act and its implementing regulations.

Trump executive actions forecast major potential changes to financial industry regulation
USA | 17 February 2017

President Trump recently issued two executive actions which constitute the first official statements on how his frequent criticism of the Dodd-Frank Act and the broader financial regulatory climate following the financial crisis may be translated into actual reform efforts. The executive order sets out core principles for regulatory reform without making any specific policy recommendations, while the memorandum directs the Department of Labour to re-examine its 2016 Fiduciary Duty Rule.

OCC moves forward with proposal to issue fintech charters
USA | 23 December 2016

The Office of the Comptroller of the Currency (OCC) has confirmed its intention to explore issuing limited-purpose national bank charters to financial technology (fintech) firms engaged in banking activities, commonly called 'fintech charters'. Earlier this year, the OCC had signalled this possibility; now, through the release of a policy paper and a speech by the comptroller, it has taken a more formal step.

Federal banking agencies request comment on enhanced cyber-risk management standards
USA | 18 November 2016

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation recently issued a joint advanced notice of proposed rulemaking regarding enhanced cyber-risk management standards for certain entities. The enhanced standards would establish increased supervisory expectations for the entities and services that potentially pose a heightened cyber-risk to the safety and soundness of the financial sector.

DC Circuit rules CFPB structure unconstitutional
USA | 11 November 2016

In a significant setback for the Consumer Financial Protection Bureau, a panel of the DC Circuit recently held that its structure violates the Constitution and invalidated its order to impose a $109 million civil penalty and broad injunctive relief on mortgage lender PHH for alleged violations of the Real Estate Settlement Procedures Act.

Consumer Financial Protection Bureau finalises consumer protections for pre-paid accounts
USA | 28 October 2016

The Consumer Financial Protection Bureau recently issued its final rule to extend consumer protections to most pre-paid accounts and to extend certain other protections for credit cards to pre-paid accounts that are associated with certain lines of credit or overdraft credit plans. The rule will cover reloadable and non-reloadable plastic pre-paid cards, certain mobile wallets and electronic accounts that hold pre-paid value and the financial institutions that issue such pre-paid accounts.

Towards a national fintech charter: OCC proposes receivership rule for uninsured banks
USA | 14 October 2016

The Office of the Comptroller of the Currency recently published a notice of proposed rulemaking and a request for public comment introducing a regulatory regime to govern the receivership of national banks. While the proposed rule would apply to the existing pool of 52 uninsured national trust banks, its broader impact would be to establish a receivership regime that supports the creation of new forms of limited purpose, uninsured banks for the financial technology industry.

FDIC issues proposed guidance on third-party lending
USA | 19 August 2016

The Federal Deposit Insurance Corporation recently issued proposed examination guidance on third-party lending arrangements. The proposed guidance would apply broadly to any lending arrangement where a third party performs a significant aspect of the lending process and may affect a swathe of loan programmes, including private-label and co-branded credit cards and marketplace, automobile and basic mortgage lending.

Volcker Rule: final extension of conformance period for certain legacy covered funds
USA | 05 August 2016

The Federal Reserve System recently issued an order extending the Volcker Rule conformance period with respect to investments in, and relationships with, covered and foreign funds that were in place before December 31 2013 (legacy covered funds). The extension reiterates the intention that banking entities must plan how they will conform or divest legacy covered fund investments and relationships well in advance of the end of the extension.

New York banking regulator issues rules for transaction monitoring and filtering programmes
USA | 22 July 2016

The New York State Department of Financial Services recently issued a final rule setting out the minimum requirements for transaction monitoring and filtering programmes used by regulated institutions to monitor potential Bank Secrecy Act and anti-money laundering violations, suspicious activity reporting and sanctions violations. It also requires regulated institutions to confirm annually that all necessary steps have been taken to ensure compliance.

Fed issues risk management guidance for institutions with under $50 billion in consolidated assets
USA | 08 July 2016

The Federal Reserve System has issued supervisory guidance for assessing risk management at supervised institutions with total consolidated assets of less than $50 billion. The guidance sets out various factors that examiners and staff will consider when assessing the adequacy of a covered institution's risk management controls and deciding on the overall risk management rating.

Final rule on customer due diligence requirements issued
USA | 17 June 2016

The Financial Crimes Enforcement Network has published a final rule that formalises new and existing customer due diligence requirements for banks (including branches and agencies of foreign banks in the United States), broker-dealers in securities, mutual funds, futures commission merchants and introducing brokers in commodities. This is intended to promote a more level playing field across and within financial sectors.

US federal regulators re-propose joint rule on incentive-based compensation arrangements
USA | 27 May 2016

US federal financial regulators are seeking comment on a joint re-proposed rule implementing Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The proposed rule would prohibit covered institutions from awarding incentive-based compensation and would impose mandatory deferral and clawback provisions; it is intended to reflect developments since 2011 in compensation practices in the financial services industry.

CFPB arbitration proposal would ban class action waivers
USA | 27 May 2016

The Consumer Financial Protection Bureau (CFPB) has issued a proposal that would ban the use of arbitration clauses that prohibit class actions and require companies to report to the CFPB on all arbitrations that do occur. The proposal has been anticipated for several years, as the Dodd-Frank Act required the CFPB to study consumer arbitrations and provided authority for the CFPB to issue a rule to address its findings.

Agencies and FinCEN issue guidance on applying CIP rule to prepaid cards
USA | 08 April 2016

The federal banking agencies and the Financial Crimes Enforcement Network recently published interagency guidance to issuing banks on the application of the joint regulations implementing customer identification programme (CIP) requirements to their prepaid cards. The guidance clarifies that a bank should apply its CIP to the cardholders of certain prepaid cards issued by the bank and other prepaid access devices that meet the criteria in the guidance.

Washington State regulates payment processors as money transmitters
USA | 18 March 2016

The Division of Consumer Services of the Department of Financial Institutions in the State of Washington recently issued an interpretation providing that merchant payment processing constitutes money transmission under the Washington Uniform Money Services Act. The interpretation concludes that merchant payment processors are subject to licensing and other requirements under the act unless a waiver is granted by the department.

Regulation of Virtual Currency Businesses Act: drafting process continues
USA | 11 March 2016

To address the need for uniformity in state regulation of virtual currencies, a drafting committee of the Uniform Law Commission has been working on a proposed uniform state Regulation of Virtual Currency Businesses Act. The committee recently met to discuss a revised draft of the act. The committee's stated mission is to harmonise state-level regulation of virtual currencies in the absence of an overarching federal payments regulatory framework.

Motion to dismiss FinCEN complaint against former MoneyGram CCO denied
USA | 12 February 2016

The District Court for the District of Minnesota recently denied the motion of defendant Thomas E Haider to dismiss the federal government's complaint seeking to hold Haider personally liable for violations of the Bank Secrecy Act and its implementing regulations by MoneyGram International Inc during his tenure there as chief compliance officer. The parties have been ordered to appear for a pre-trial conference.

New York banking regulator proposes new anti-money laundering rules
USA | 15 January 2016

A new anti-money laundering regulation was recently proposed that would apply to banking institutions that are chartered or licensed under the New York Banking Law. It sets forth the minimum attributes of a robust transaction monitoring and watch list filtering programme for detecting illegal transactions, and requires an institution's senior compliance officer to certify annually that it has sufficient programmes in place to comply with the regulation.

Interagency guidance clarifying Volcker Rule's regulatory capital deduction
USA | 11 December 2015

The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System recently issued interagency guidance clarifying the relationship between their regulatory capital rule and the capital treatment of certain private funds, known as covered funds, under the Volcker Rule.

CFPB finalises Home Mortgage Disclosure Act expansion
USA | 20 November 2015

The Consumer Financial Protection Bureau recently issued a final rule that significantly amends and expands the scope of data reporting requirements under Regulation C and the Home Mortgage Disclosure Act. The rule implements changes to existing Home Mortgage Disclosure Act data reporting and includes an entirely new set of data points that institutions were not previously required to collect and report.

CSBS issues model virtual currency framework
USA | 23 October 2015

The Conference of State Bank Supervisors has issued its Model Regulatory Framework for State Regulation of Certain Virtual Currency Activities to assist states in developing regulatory approaches to licensing and supervising virtual currency activities. The model framework is a high-level outline that will require substantial elaboration as individual states attempt to use it to guide their own rule-writing efforts.

New York DFS issues final BitLicence rule
USA | 26 June 2015

The New York State Department of Financial Services (DFS) recently released its final BitLicence rules to regulate virtual currency businesses. Nearly all the changes in the final rules are of a technical or clarifying nature. However, the final rules eliminate the obligation to file transaction reports and suspicious activity reports with the DFS where such reports already must be filed with the federal government.

Ripple Labs Inc fined for failure to register with FinCEN as MSB
USA | 05 June 2015

Virtual currency exchanger Ripple Labs Inc and its wholly owned subsidiary XRP II LLC recently entered into a consent agreement with the Financial Crimes Enforcement Network in which Ripple consented to a $700,000 civil penalty and admitted that it had failed to register as a money services business (MSB). This was the first civil enforcement action against a virtual currency exchanger for failing to register as an MSB.

Volcker Rule: clarification of covered fund 'SOTUS' exemption
USA | 27 March 2015

The government has released new guidance under the Volcker Rule in the form of an addition to its frequently asked questions (FAQs). The new FAQ clarifies the circumstances under which a foreign banking entity may continue to hold, or may make, investments in a "third-party covered fund" and provides useful guidance to foreign banking entities and the managers of third-party covered funds in which foreign banking entities invest.

New York DFS publishes revised BitLicence regulations
USA | 06 March 2015

The New York State Department of Financial Services (DFS) has issued a revised version of its proposed 'BitLicence' regulatory framework for public comment, amending the original rules proposed in July 2014. While the DFS has responded to comments on a number of key elements of the regulations and has taken steps to make the revised regulations more workable for the industry, other issues remain.

FinCEN seeks penalty and injunction against former CCO
USA | 30 January 2015

The US Financial Crimes Enforcement Network recently filed a civil complaint against Thomas Haider, former chief compliance officer for MoneyGram International Inc. The complaint seeks monetary and injunctive relief from Haider in his personal capacity, alleging a wilful failure to implement an effective anti-money laundering compliance programme and properly file suspicious activity reports.

Volcker Rule: conformance period extended for certain legacy covered funds
USA | 16 January 2015

The Board of Governors of the Federal Reserve System issued an order that extends, until July 21 2016, the conformance period under the Volcker Rule for the purposes of giving banking entities additional time to conform investments in, and relationships with, 'covered funds' and certain foreign funds (legacy covered funds).

CFPB proposes consumer protections for pre-paid cards
USA | 12 December 2014

The Consumer Financial Protection Bureau recently issued a far-reaching proposal to extend consumer protections to most pre-paid cards and accounts. The proposed rule would also extend protections for credit cards to pre-paid cards and accounts that are associated with lines of credit or overdraft credit plans.

No disparate impact liability under Fair Housing Act
USA | 05 December 2014

A federal court has ruled that disparate impact claims are not cognisable under the Fair Housing Act. This is the latest decision in a long-developing debate over the use of disparate impact claims in discrimination cases brought under the Fair Housing Act and the Equal Credit Opportunity Act.

FinCEN issues administrative rulings on virtual currency activities
USA | 21 November 2014

The Financial Crimes Enforcement Network (FinCEN) has issued two administrative rulings on companies engaged in virtual currency activities. Companies engaged in activities involving virtual currencies should note that FinCEN does not recognise the exchange of virtual currency as a non-money transmission related service.

FinCEN's proposed rule for enhanced verification and identification of beneficial owners
USA | 05 September 2014

The Financial Crimes Enforcement Network has published a notice of proposed rulemaking in the Federal Register pertaining to the development of customer due diligence requirements that would be applicable to banks, broker dealers, mutual funds and futures commission merchants and introducing brokers in commodities. The proposed rule focuses on the four core elements of customer due diligence.

Licensing requirements for businesses engaged in virtual currency activities proposed
USA | 22 August 2014

The New York State Department of Financial Services (DFS) recently issued for public comment its proposed 'BitLicense' regulatory framework and an accompanying press release. The release of the proposed regulations follows the announcement that the DFS would consider proposals and applications in connection with the establishment of virtual currency exchanges in New York.

10 insider tips for successfully navigating a CFPB enforcement action
USA | 01 August 2014

Companies often ask how they should approach a Consumer Financial Protection Bureau (CFPB) enforcement matter if it lands on their desk. Because the industry is still trying to figure out how the CFPB operates, they are concerned about making a misstep during the course of an investigation. This update sets out essential tips from a former enforcement attorney for successfully navigating an investigation while positioning your company for the best outcome.

Federal banking agencies publish addendum to income tax allocation policy
USA | 25 July 2014

The federal banking agencies have published an addendum to their 1998 income tax allocation policy statement. The addendum instructs insured depository institutions and their holding companies and other affiliates to review and revise their tax allocation agreements to ensure that the agreements expressly acknowledge that the holding company receives any tax refunds as an agent for the insured depository institution.

Money transmission definitions and exemptions to certain business models
USA | 16 May 2014

The Financial Crimes Enforcement Network (FinCEN) recently published five administrative rulings, providing additional information on how exemptions from money transmitter status may or may not apply to certain business models under the regulations promulgated by FinCEN under the Bank Secrecy Act.

Final rule on prudential standards for foreign banking organisations
USA | 04 April 2014

The Federal Reserve Board has approved a final rule to implement certain enhanced prudential standards required under Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule includes risk-based and leverage capital requirements, liquidity standards, risk management and risk committee requirements and stress testing.

FinCEN guidance for virtual currency miners and investors
USA | 28 February 2014

The Financial Crimes Enforcement Network (FinCEN) has published rulings regarding whether companies engaged in 'mining' software development and investment with respect to virtual currencies must register as money services businesses. The rulings provide insight on how FinCEN will interpret the recent regulations and guidance.

Proposed rule on larger participants of international money transfer market
USA | 14 February 2014

The Consumer Financial Protection Bureau (CFPB) has issued a proposed rule that would permit it to supervise non-bank international money transfer providers that satisfy the proposed rule's definition of 'larger participant'. The rule's impetus is to provide the CFPB with supervisory authority to ensure that non-bank international money transfer providers adhere to consumer protection rules for international remittances.

Federal Reserve issues new guidance on managing outsourcing risk
USA | 07 February 2014

The Federal Reserve System's new Guidance on Managing Outsourcing Risk is the most recent publication in a series of supervisory and enforcement actions by federal regulators of financial institutions clarifying regulatory expectations with respect to outsourcing and selection and management of third-party service providers. It describes the heightened regulatory scrutiny that now applies to the outsourcing activities of covered financial institutions.

OCC issues new guidance on third-party relationships risk management
USA | 22 November 2013

The Office of the Comptroller of the Currency (OCC) recently released a bulletin highlighting the enhanced scrutiny to which national bank engagements of third-party service providers are now subject. National banks should revisit their policies, procedures and processes for evaluating, engaging and monitoring third-party service providers in light of this new articulation of the OCC's supervisory expectations.

Banking agencies provide guidance on qualified mortgages and fair lending risk
USA | 15 November 2013

Federal banking agencies recently released an inter-agency statement responding to inquiries about whether a creditor would be liable under the disparate impact doctrine of the Equal Credit Opportunity Act and its implementing regulation, Regulation B, by originating only qualified mortgages.

Court strikes down debit card interchange fee and network exclusivity regulation
USA | 23 August 2013

The US District Court for the District of Columbia has granted summary judgment in NACS v Board of Governors of the Federal Reserve System, ruling in favour of a group of retailers and retailer trade associations in a lawsuit in which those parties sought to overturn the final rule of the board of governors of the Federal Reserve System that set standards for debit card interchange transaction fees and network exclusivity prohibitions.

Federal Reserve approves final rule implementing Basel III capital reforms
USA | 02 August 2013

The Federal Reserve System recently approved a final rule that substantially revises the capital rules for US banking organisations. Key reforms include increased requirements for both the quantity and quality of capital held by banks so that they are more capable of absorbing losses and withstanding periods of financial distress, and the establishment of alternative standards of creditworthiness in place of credit ratings.

Federal Reserve clarifies application of swaps push-out rule to foreign banks
USA | 05 July 2013

The Federal Reserve Board has released an interim final rule clarifying that uninsured US branches and agencies of foreign banks will be treated as insured depository institutions for purposes of Section 716 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the 'swaps push-out rule'). In practical terms, uninsured US branches and agencies of foreign banks may continue certain limited swap activities.

First enforcement action for abusive conduct against debt-relief company
USA | 14 June 2013

The Consumer Financial Protection Bureau has brought its first enforcement action for alleged abusive acts or practices under the Consumer Financial Protection Act of 2010. The allegations relate to misrepresentations commonly associated with deceptive acts claims, but also emphasise elements in the statutory definition of 'abusive', including the reasonable reliance of vulnerable consumers on the debt-settlement company.

CFPB finalises remittance rule
USA | 17 May 2013

The Consumer Financial Protection Bureau (CPFB) has released a final rule implementing the remittance transfer provisions in Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule provides important new flexibility for remittance transfer providers, especially in open-loop environments such as international wire transfers. The CFPB also extended the effective date of the final rule to October 28 2013.

CFPB tackles discrimination in auto lending
USA | 10 May 2013

The Consumer Financial Protection Bureau (CFPB) recently issued guidance stating that it intends to use its regulatory tools, including enforcement lawsuits, to address discriminatory practices in auto lending. The CFPB bulletin represents an important development for the exercise of its fair-lending authority, as well as its authority over auto loans.

FinCEN guidance on application of Bank Secrecy Act to virtual currencies
USA | 19 April 2013

The Financial Crimes Enforcement Network recently issued guidance on how the Bank Secrecy Act applies to users, administrators and exchangers of 'convertible virtual currency'. Companies engaged in activities involving such currencies should assess the impact of the guidance on their obligations. Administrators and exchangers of such currencies should re-evaluate their status under money transmitter licensing laws.

FFIEC requests comment on proposed social media guidance
USA | 08 March 2013

The Federal Financial Institutions Examination Council has issued a request for comment on proposed guidance entitled "Social Media: Consumer Compliance Risk Management Guidance". Once finalised, institutions will be expected to use the guidance in developing and implementing risk management policies and practices to manage and control risks associated with social media.

Federal Reserve proposes enhanced supervision for foreign banking organisations
USA | 08 February 2013

The Federal Reserve Board has issued a notice of proposed rule making which would implement the enhanced prudential standards and early remediation requirements in Sections 165 and 166 of the Dodd-Frank Wall Street Reform and Consumer Protection Act for certain foreign banking organisations (FBOs). The new rules are designed to respond to vulnerabilities in FBO activities observed during and after the financial crisis.

CFPB proposes revisions to remittance rule and extension of effective date
USA | 25 January 2013

The Consumer Financial Protection Bureau has released a proposed rule and request for comments outlining a limited set of revisions to its previously published final rule on international money transfers, and an extension of the date on which the rule would become effective. The proposal would amend the rule implementing Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act on remittance transfers.

Eleventh Circuit provides guidance on risk allocation for agreed security procedures
USA | 04 January 2013

A recent Eleventh Circuit opinion has provided an important precedent for the banking industry. The Chavez decision should prompt financial institutions to review the language of their funds transfer agreements to ensure that the agreements unambiguously reference the bank's discretionary security procedures as part of the Article 4A security procedures agreed to by customers.

FTC and CFPB warn companies of misleading mortgage advertisements
USA | 14 December 2012

The Federal Trade Commission and the Consumer Financial Protection Bureau have announced a joint investigation into allegedly misleading mortgage-related advertisements. This is the first time that the two agencies have announced a joint enforcement action. Potentially affected companies should review their practices in light of this regulatory activity.

Standardised approach for risk-weighted assets
USA | 03 August 2012

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have proposed amending their general capital rules to increase their risk sensitivity by revising the methodology for computing a banking organisation's total risk-weighted assets (the denominator of the banking organisation's risk-based capital ratios).

Federal banking agencies issue proposed capital reforms
USA | 13 July 2012

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation recently released three proposed rules and one final rule (the market risk rule) which would substantially revise the federal banking agencies' current capital rules. Comments on the proposals are due by September 7 2012.

California court holds state disclosure law pre-empted by National Bank Act
USA | 06 July 2012

In a case with potentially significant implications for state regulation of national banks, the California Supreme Court has ruled unanimously that a state law mandating the form and content of disclosures printed on the front of convenience checks issued to credit card customers was pre-empted by the National Bank Act.

Federal Reserve clarification of Volcker Rule conformance period
USA | 18 May 2012

The Board of Governors of the Federal Reserve System has announced that banking entities subject to Section 13 of the Bank Holding Company Act of 1956 (known as the 'Volcker Rule') will have the full two-year period provided by statute to conform with the Volcker Rule's restrictions on proprietary trading and investment in and sponsorship of covered funds.

Proposed regulations define 'predominantly engaged in financial activities'
USA | 11 May 2012

The Federal Reserve System Board of Governors recently issued a supplemental notice of proposed rulemaking and a request for comment that would amend the board's Regulation Y to establish the criteria for determining whether a company is 'predominantly engaged in financial activities' for purposes of Title I of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

FinCEN issues proposal to expand beneficial ownership identification requirements
USA | 23 March 2012

The Financial Crimes Enforcement Network recently published in the Federal Register an advance notice of proposed rulemaking pertaining to the development of a customer due diligence regulation applicable to banks, brokers and dealers in securities, mutual funds and futures commission merchants which focuses on the collection of beneficial ownership information about account holders

Consumer Financial Protection Bureau proposes two-page credit card agreement
USA | 06 January 2012

The Consumer Financial Protection Bureau recently announced a new Know Before You Owe project. The stated goal of the project is to simplify credit card agreements to enhance consumer understanding of the prices, risks and terms of credit cards. The centrepiece of the project is a prototype two-page credit card agreement, which is intended to convey the key terms of a credit card to a consumer.

FinCEN releases FAQs on pre-paid access rule
USA | 16 December 2011

The Financial Crimes Enforcement Network (FinCEN) recently released a set of frequently asked questions (FAQs) to assist providers and sellers of pre-paid access in understanding certain aspects of the final pre-paid access rule that FinCEN issued earlier in 2011. FinCEN makes clear that the FAQs provide interpretive guidance only, and do not supersede any aspect of the pre-paid access rule.

Proposed regulations implementing the Volcker Rule
USA | 28 October 2011

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have issued a proposed rule implementing the requirements of new Section 13 of the Bank Holding Company Act of 1956, known as the 'Volcker Rule'. The rule imposes various prohibitions on banking entities.

FDIC approves rules regarding resolution plans
USA | 30 September 2011

The Board of the Federal Deposit Insurance Corporation recently approved the Dodd-Frank Act Resolution Plan Rule and the Insured Depository Institutions Resolution Plan Rule. The first relates to the submission by certain entities of a 'living will', while the second relates to the submission by certain depository institutions of a plan for their resolution in the event of failure.

FinCEN releases final rule on application of Bank Secrecy Act Regulations
USA | 26 August 2011

The Financial Crimes Enforcement Network recently published a final rule that revises the Bank Secrecy Act requirements currently applicable to money services businesses with regard to stored value products and services. The final rule renames 'stored value' as 'pre-paid access' and creates two new categories of money services business – providers of prepaid access and sellers of pre-paid access.

FDIC issues final rule on Orderly Liquidation Authority of Dodd-Frank
USA | 05 August 2011

The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a final rule addressing certain provisions of the Orderly Liquidation Authority (OLA) contained in the Dodd-Frank Act. Under the OLA, failing financial companies can be taken out of the bankruptcy regime that would normally apply to them and be resolved instead under the OLA, with the FDIC acting as receiver.

CFPB seeks comment on non-bank companies to be supervised under Dodd-Frank
USA | 15 July 2011

The Consumer Financial Protection Bureau (CFPB) recently issued a notice and request for comment on defining the non-bank entities that will be subject to its supervision under the Dodd-Frank Act. Financial service providers that are not banks should consider whether, under the notice, they might be subject to supervision by the CFPB as a larger participant in designated markets for other consumer financial services or products.

Federal Reserve board proposes rules governing remittances
USA | 10 June 2011

Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act amended the Electronic Fund Transfer Act to establish a disclosure and error resolution regime for consumers who use 'remittance transfer providers' to send remittances to recipients located in a foreign country. The Board of Governors of the Federal Reserve System has now issued proposed rules to implement these provisions.

Frequently asked questions and answers on overdraft payment programmes
USA | 06 May 2011

The Federal Deposit Insurance Corporation (FDIC) recently issued frequently asked questions (FAQs) and answers in response to questions from FDIC-supervised institutions and third-party vendors about the FDIC's Overdraft Payment Supervisory Guidance. The FAQs provide further explanation of the FDIC's supervisory expectations regarding overdraft payment programmes.

Federal Reserve and FTC issue guidance on new credit score disclosures
USA | 18 March 2011

The Federal Reserve has issued a proposal to provide guidance on implementing the new requirements for advance action notices, and the Federal Reserve and the Federal Trade Commission jointly issued proposed regulations addressing risk-based pricing notices.

FDIC releases interim rule on orderly liquidation of covered financial companies
USA | 18 February 2011

The Federal Deposit Insurance Corporation has approved an interim final rule, with request for comments, to implement certain provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title II provides for the orderly liquidation under a special resolution regime of a financial company whose failure would have serious adverse effects on the financial stability of the United States.

Federal Reserve Board proposes rule on debit card interchange fees and routing
USA | 21 January 2011

The Board of Governors of the Federal Reserve System has released for comment a proposed regulation to implement the debit interchange fee and network exclusivity and routing provisions of the Durbin Amendment. The amendment added a new Section 920 to the Electronic Fund Transfer Act regarding debit interchange transaction fees and rules for debit card transactions.

Proposed FDIC rulemaking on orderly liquidation of covered financial companies
USA | 29 October 2010

The Federal Deposit Insurance Corporation has proposed regulations to implement certain provisions of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Title II provides for the orderly liquidation under a special resolution regime of a financial company whose failure would have serious adverse effects on the financial stability of the United States.

New FinCEN regulations for cross-border electronic funds transmittal reporting
USA | 15 October 2010

The Financial Crimes Enforcement Network (FinCEN) recently proposed new regulations which would require some US financial institutions to submit reports on certain cross-border electronic transmittal of funds. They would also require all banks to file annually with FinCEN a list of account numbers and US taxpayer identification numbers of account holders which transmitted or received a cross-border electronic fund transmittal.

President signs Dodd-Frank Act into force
USA | 06 August 2010

President Obama has signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. Many provisions of the act require rulemaking by the applicable regulator before they become effective, but others become effective after the date of enactment of the act.

FinCEN proposes new application of Bank Secrecy Act
USA | 23 July 2010

The Financial Crimes Enforcement Network has released a proposed rule that would revise the Bank Secrecy Act requirements for money services businesses with regard to stored value products and services. The rule is intended to address "regulatory gaps that have resulted from the proliferation of prepaid innovations over the last ten years and their increasing use as an accepted payment method".

Conference Committee Report on Dodd-Frank Act is approved
USA | 09 July 2010

By separate votes along strict party lines of 20 to 11 and seven to five, House of Representatives and Senate conferees have approved the Conference Committee Report on the Dodd-Frank Wall Street Reform and Consumer Protection Act. This update summarizes the key provisions that will have an impact on the banking sector.

Federal Reserve proposes limits on credit card penalties and review of rate increases
USA | 26 March 2010

The Federal Reserve System has issued proposed regulations regarding limitations on credit card penalty fees and credit card issuers' duty to review periodically all rate increases. The proposal would limit penalty fees, such as late fees, overlimit fees and returned cheque fees that credit card issuers charge. It would also require issuers to review accounts for which rates have been increased and reduce rates as required.

Federal Reserve and Federal Trade Commission issue risk-based pricing notice rule
USA | 22 January 2010

The Board of Governors of the Federal Reserve System and the Federal Trade Commission have jointly issued a final rule to implement the requirements of Section 615(h) of the federal Fair Credit Reporting Act. Section 615(h) was added by the Fair and Accurate Credit Transactions Act and provides for so-called 'risk-based pricing' notices.

Federal Reserve releases overdraft rule
USA | 27 November 2009

The Board of Governors of the Federal Reserve System has released its final rule regarding overdraft services. The rule creates an opt-in rule under which financial institutions may not charge overdraft fees to consumers in connection with automated teller machine transactions and one-off debit card transactions, unless the consumer has affirmatively consented to such fees.

Federal Reserve Issues Regulations to Implement Credit CARD Act of 2009
USA | 30 October 2009

The Board of Governors of the Federal Reserve System has issued a proposed amendment to Regulation Z to implement the Credit Card Accountability Responsibility and Disclosure Act of 2009. The act enacted substantial new limitations and requirements for credit card issuers. The proposal provides much-needed detail on how those new limitations and requirements will apply to the industry.

FDIC Issues Final Guidance on Private Equity Investments in Failed Banks
USA | 11 September 2009

The Federal Deposit Insurance Corporation (FDIC) has adopted its final Statement of Policy on the Acquisition of Failed Bank Depository Institutions. While the FDIC has relaxed some of the originally proposed restrictions, the statement still stands as a significant impediment to private equity financing of the resolution of failed institutions.

Federal Reserve Issues Implementing Rules for Key Provisions of Credit CARD Act
USA | 07 August 2009

The Federal Reserve has released implementing regulations for two key provisions of the Credit Card Accountability Responsibility and Disclosure Act of 2009. The provisions require creditors to deliver periodic statements at least 21 days before a due date and to provide notice of changes relating to credit card accounts at least 45 days in advance of the effective date.

Furnisher Obligations under FACT Act: Final Rule Released
USA | 26 June 2009

The Fair and Accurate Credit Transactions Act amended the Fair Credit Reporting Act to require the federal banking agencies and the Federal Trade Commission to issue guidelines for use by furnishers of information to consumer reporting agencies. The accuracy and integrity rule requires furnishers to evaluate their current policies and procedures and revise them as necessary based on specific guidelines.

President Issues Memorandum Regarding Pre-emption
USA | 19 June 2009

The president has released a presidential memorandum setting out the administration's general policy with regard to federal pre-emption of state law by executive departments and agencies of the federal government. In the last 10 years the federal banking agencies have taken several regulatory actions, including the adoption of final rules, that construe the extent to which federal law pre-empts state law.

Significant Changes to Regulation of Credit Cards and Stored Value Products
USA | 12 June 2009

The House of Representatives and the Senate have both passed the Credit Card Accountability Responsibility and Disclosure Act of 2009. One of the most significant provisions of the act is a provision that may be used to limit certain credit card charges substantively. Another key provision relates to issuers' apparent obligations to reduce annual percentage rates in some circumstances.

FinCEN Proposes Rule Relating to Money Services Businesses
USA | 05 June 2009

The Department of the Treasury's Financial Crimes Enforcement Network has released a proposed rule to revise its regulations regarding money services businesses under the Bank Secrecy Act. It intends to revise the existing definitions to clarify the scope of entities subject to regulation as money services businesses, but in so doing raises significant issues for the delineation of entities subject to the rule.

Healthcare & Life Sciences

DOJ defends Medicare Advantage upcoding claims against Sutter
USA | 09 October 2019

The US government recently filed a brief in opposition to Sutter Health's motion to dismiss the Department of Justice's (DOJ's) complaint in intervention in a False Claims Act suit alleging that Sutter had knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage organisation patients in order to inflate Medicare reimbursement. The brief reinforces the DOJ's increasingly aggressive enforcement of the Medicare Advantage space under the False Claims Act.

Government will allow broader use of co-pay accumulator programmes for 2020
USA | 18 September 2019

The Department of Health and Human Services (HHS), the Department of Labour and the Treasury have jointly announced that they will not enforce the HHS's recently finalised policy that limits private health plans' use of accumulator programmes to prescription brand drugs for which a medically appropriate generic equivalent is available. Stakeholders should remain alert to any changes in state enforcement policies and consider opportunities to engage with the administration on future revisions.

Medicare Advantage providers pay $5 million to settle False Claims Act allegations
USA | 11 September 2019

Beaver Medical Group LP and an affiliated physician recently agreed to pay a combined total of $5 million to resolve allegations that providers had knowingly submitted diagnosis codes that were not supported by medical records in order to inflate reimbursements from Medicare. The settlement reflects the Department of Justice's continuing efforts to use its enforcement power to pursue fraud in the Medicare Advantage space despite recent setbacks.

Sutter Health files motion to dismiss, criticising DOJ's outdated False Claims Act theories in Medicare Advantage case
USA | 24 July 2019

Sutter Health recently filed a motion to dismiss the Department of Justice's (DOJ's) complaint in intervention in a False Claims Act suit which alleged that Sutter had knowingly submitted and caused the submission of unsupported diagnoses codes for Medicare Advantage patients in order to inflate Medicare reimbursements. Sutter's motion reflects the industry's continued resistance to the DOJ's enforcement under the False Claims Act on the basis of potentially unsupported diagnoses codes for Medicare Advantage beneficiaries, without more evidence.

Lethal injection opinion from DOJ OLC threatens FDA's claims-based interpretation of 'intended use'
USA | 10 July 2019

In a recent opinion, the Office of Legal Counsel (OLC) in the US Department of Justice concluded that an article intended to effectuate capital punishment by a state or the federal government is not subject to regulation by the Food and Drug Administration (FDA) under the Federal Food, Drug and Cosmetic Act. The OLC's opinion appears to have been issued as a result of litigation involving the FDA's obligation to block the entry of misbranded and unapproved drugs used under state lethal injection protocols.

Rule 9(b)'s particularity requirement and constitutionality of False Claims Act qui tam provisions
USA | 22 May 2019

In a recent decision, the Tenth Circuit reversed a district court's dismissal of qui tam claims, reasoning that the relator's allegations had satisfied Rule 9(b) of the Federal Rules of Civil Procedure. Among other things, the defendant contended that the court's intervention is necessary to resolve a deep circuit split on whether Rule 9(b)'s particularity requirement can be relaxed where a defendant exclusively holds the information necessary to state a claim.

Supreme Court appears poised to extend False Claims Act statute of limitations
USA | 01 May 2019

The Supreme Court recently heard an oral argument in a case that appears likely to resolve a circuit split on a question of critical importance: in non-intervened False Claims Act cases, are relators entitled to invoke the act's alternative 10-year statute of limitations? Clarification of the circuit split on the availability of the 10-year statute of limitations will have a significant impact on False Claims Act cases throughout the United States.

Third Circuit finds individual ownership interest in corporation not required for False Claims Act liability
USA | 24 April 2019

The Third Circuit recently affirmed and vacated in part a district court ruling granting the United States' motion for summary judgment. The case raised, among other things, the issue of whether an individual without any ownership interests in a company can face False Claims Act liability for the company's failure to perform a required act to qualify for reimbursement and whether an unsworn statement is sufficient to create a material issue of fact when weighed against facts admitted during a plea colloquy.

DOJ files complaint in intervention in Medicare Advantage case against Sutter Health
USA | 17 April 2019

The Department of Justice recently filed a complaint in intervention against Sutter Health and its affiliate Palo Alto Medical Foundation (PAMF) in a False Claims Act suit, alleging that the defendants had knowingly submitted and caused the submission of unsupported diagnosis codes for Medicare Advantage patients in order to increase reimbursements from Medicare. Among other things, Sutter and PAMF allegedly failed to provide any meaningful training to affiliated physicians.

Court dismisses DOJ's complaint against pharmacy and private equity fund but permits re-pleading
USA | 10 April 2019

The Department of Justice (DOJ) is pursuing a compounding pharmacy and its private equity fund owner, alleging that the pharmacy filed claims with Tricare that were rendered false by alleged kickbacks. However, a magistrate judge has filed an opinion recommending that the False Claims Act claims be dismissed due to the DOJ's failure to adequately plead its claims on either an implied or express certification theory of liability.

Eighth Circuit tightens False Claims Act pleading requirements
USA | 20 March 2019

A recent US Court of Appeals for the Eighth Circuit decision follows a growing trend among courts in tightening False Claims Act pleading requirements. The court affirmed the dismissal of a qui tam action brought against a non-profit hospital because the relators had failed to meet the particularity standard set out under Rule 9(b) of the Federal Rules of Civil Procedure.

DOJ announces more than $2.5 billion in FY 2018 False Claims Act recoveries from healthcare industry
USA | 20 February 2019

The Department of Justice (DOJ) recently announced that it had recovered more than $2.8 billion from False Claims Act (FCA) cases in the 2018 fiscal year. Although this number continues a multi-year downtrend in overall FCA recoveries, healthcare fraud remains a major DOJ focus. Of the $2.8 billion, $2.5 billion was extracted from various segments of the healthcare industry, including through major settlements with pharmaceutical and medical device manufacturers.

Preliminary considerations for healthcare industry for 116th Congress
USA | 13 February 2019

Health policy issues are high on the agenda of the new Congress. The stated priorities for the new House majority include reducing drug prices, defending the Affordable Care Act, addressing the opioid abuse crisis and investigating the pharmaceutical industry. Given the potential for at least some bipartisan cooperation on each of these priorities, stakeholders in the healthcare industry should be prepared for legislative and regulatory opportunities and challenges.

Flexing its Granston muscle: DOJ seeks dismissal of patient support services in False Claims Act litigation
USA | 06 February 2019

The Department of Justice (DOJ) recently stepped in to seek the dismissal of high-profile False Claims Act litigation being pursued by relators after the government initially declined to intervene. The DOJ's recent action, which pertains to approximately a dozen lawsuits involving pharmaceutical manufacturers and third-party service providers, is further evidence that the Granston Memo, in which the DOJ articulated clearer standards for seeking dismissal of non-intervened cases, has real teeth.

DOJ intervenes in Medicare Advantage False Claims Act suit against provider
USA | 30 January 2019

The Department of Justice (DOJ) recently announced that it had intervened in a False Claims Act suit against Sutter Health and its affiliate Palo Alto Medical Foundation. This intervention is the latest example of the DOJ's aggressive enforcement under the False Claims Act in the Medicare Advantage space.

Court provides insight into when funds may be held responsible for portfolio company conduct
USA | 19 December 2018

The government has intervened in a qui tam suit against a compounding pharmacy and its private equity fund owner in which it is alleged that the pharmacy filed claims with Tricare that were rendered false by kickbacks. The opinion provides further guidance as to the circumstances under which a private equity fund investor may incur False Claims Act liability as a result of its active involvement in a portfolio healthcare company that submits allegedly false claims.

District court invalidates relators' pre-filing releases on public policy grounds
USA | 21 November 2018

Former Bayada Home Health Care employees recently alleged that the company had falsely billed Medicare for patients that it had known were not "homebound". Bayada moved to dismiss the suit on the ground that each employee had signed a separation agreement releasing Bayada from "any and all claims" prior to filing the False Claims Act lawsuit. With no binding Third Circuit precedent, the district court looked for guidance among other circuits that pre-filing releases can bar False Claims Act claims.

Private equity funds face increasing risk of False Claims Act liability
USA | 14 November 2018

Evidence is mounting that the Department of Justice (DOJ) is willing to pursue private equity funds in False Claims Act cases, particularly ones based on alleged violations of healthcare fraud and abuse laws. Earlier in 2018, the DOJ intervened for the first time in one such False Claims Act case against a private equity sponsor, the fund's portfolio pharmacy and two pharmacy employees.

Court vacates Medicare Advantage overpayment rule and curtails DOJ's pursuit of False Claims Act damages
USA | 03 October 2018

The US District Court for the District of Columbia recently vacated CMS's 2014 final overpayment rule, applicable to the Medicare Advantage programme, granting summary judgment to UnitedHealthcare that the final rule violated the Medicare statute, was inconsistent with the Affordable Care Act and the False Claims Act and violated the Administrative Procedures Act. Because the decision vacates the overpayment rule entirely, further rulemaking may be necessary.

Sixth Circuit's split decision highlights questions about pleading standard for materiality after Escobar
USA | 04 July 2018

The Sixth Circuit recently resurrected the relator's case in United States ex rel Prather v Brookdale Senior Living Communities, Inc. In a two-to-one decision, the majority held that the relator's materiality and scienter allegations sufficed under Universal Health Services, Inc v United States ex rel Escobar. The gulf between the majority and the vigorous dissent by the judge reflects persistent questions about how Escobar applies at the pleading stage.

DOJ defends use of statistical sampling to prove False Claims Act liability
USA | 30 May 2018

The Department of Justice has stepped in to defend a relator's attempt to use statistical sampling to prove False Claims Act liability, contending that if the government cannot utilise sampling in False Claims Act cases, "then defendants would be incentivized to commit fraud on a large scale". The resolution of this issue will have significant implications on the scope of False Claims Act claims going forward, particularly those based on lack of medical necessity.

Department of Justice pursues private equity firm for portfolio company False Claims Act violations
USA | 21 March 2018

The US Department of Justice (DOJ) recently filed a complaint in intervention against a compounding pharmacy, alleging that it had violated the False Claims Act by paying illegal kickbacks to induce prescriptions for drugs reimbursed by TRICARE, the federal healthcare programme for active duty military personnel, retirees and their families. Notably, the DOJ was also pursuing claims against a private equity firm that had a substantial ownership stake in the pharmacy.

Second Circuit finds government's continued payment in face of fraud allegations undercuts materiality
USA | 31 January 2018

In its recent decision, the Second Circuit held that the relator's failure to plead sufficiently that the allegedly defrauded agency had changed its reimbursement practices after becoming aware of information supposedly withheld by the defendant doomed the complaint on materiality grounds. The decision underscores the significance of the materiality requirement at the motion to dismiss stage.

Court corrects ruling requiring laboratories to verify medical necessity independently
USA | 17 January 2018

Clinical laboratories are in a difficult position: although laboratory tests must be medically necessary to be reimbursable by federal healthcare programmes, laboratories often do not directly engage with patients in a way that would permit them to assess medical necessity. A district court recently corrected its ruling regarding the extent to which laboratories can be held liable under the False Claims Act when the tests for which they submit claims are not medically necessary.

California passes sweeping prescription drug price transparency law and co-pay coupon ban
USA | 06 December 2017

California recently passed two bills with significant implications for pharmaceutical manufacturers: one imposing prescription drug price transparency requirements and another prohibiting certain types of co-pay coupon and other prescription drug discounting programmes that lower patient cost-sharing amounts for prescription drugs.

Fifth Circuit rules for pharmaceutical manufacturer based on relators' failure to establish causation
USA | 04 October 2017

The Fifth Circuit recently affirmed summary judgment for a pharmaceuticals manufacturer on allegations that the company had violated the False Claims Act as a result of off-label marketing efforts and kickbacks to physicians. In its decision, the court emphasised the relators' failure to demonstrate a causal link between the alleged improper conduct and any false claims.

District court dismisses False Claims Act claims based on no evidence of falsity
USA | 27 September 2017

The US District Court for the Northern District of Illinois recently dismissed the False Claims Act claims brought by the federal government and two state governments based on allegations that Par Pharmaceuticals had orchestrated an unlawful prescription-switching scheme. While the judge acknowledged that Par may have conspired to increase its own profits, it rejected the federal and state governments' claims due to their failure to allege the submission of any claims that actually were false.

Bipartisan group of senators reintroduces CHRONIC Care Act
USA | 07 June 2017

A bipartisan group of senators recently introduced Section 870 of the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act, which reflects proposals to extend home healthcare, expand benefits for chronically ill Medicare beneficiaries and direct the Government Accountability Office to issue reports, among other things.

House narrowly passes American Health Care Act
USA | 24 May 2017

The House of Representatives recently passed the American Health Care Act seven years after Republicans pledged to repeal the Affordable Care Act. Amendments to the legislation would allow states to seek waivers from the Affordable Care Act's essential health benefit requirement, age rating requirement and community rating rules for individuals who fail to maintain continuous coverage.

Court issues important decision for dietary supplement industry
USA | 17 May 2017

Judge Vasquez recently granted summary judgment to Bayer in a consumer class action over its probiotic dietary supplement. This decision should help to rein in the onslaught of lawsuits that improperly target dietary supplements. First, it reinforces that dietary supplements are not regulated as drugs and structure/function claims need not be supported by randomised controlled clinical trials. Second, it makes clear that private consumer class actions cannot be premised on a 'lack of substantiation' theory.

What clinical laboratories should expect in 2017
USA | 03 May 2017

With draft Affordable Care Act repeal and replace legislation under consideration by Congress, the clinical laboratory community should prepare for significant disruptions in the healthcare marketplace, even as it continues to grapple with major policy shifts set in motion in the final years of former President Barack Obama's administration.

Sanders introduces drug importation bill
USA | 19 April 2017

Senator Bernie Sanders recently introduced the Affordable and Safe Prescription Drug Importation Act, which would amend the Federal Food, Drug and Cosmetic Act to allow the importation of drugs from Canada and possibly other countries. The bill directs the Department of Health and Human Services secretary to promulgate regulations permitting the importation of prescription drugs by individuals, wholesalers and pharmacies within 180 days of its enactment.

Senate approves HHS secretary by party-line vote of 52 to 47
USA | 08 March 2017

The Senate recently approved Republican Tom Price (R-GA) to be secretary of the Department of Health and Human Services by a party-line vote of 52 to 47. During the nearly 30-hour debate that preceded the vote, a number of Republican senators voiced their strong support for Price. In contrast, Democrats expressed opposition to his nomination and reiterated their concerns about his stockholdings in certain healthcare companies and his views regarding the Affordable Care Act, Medicaid and Medicare.

FDA proposes regulatory framework for laboratory-developed tests
USA | 22 February 2017

In an unusual move, the Food and Drug Administration (FDA) recently published a discussion paper which proposes a new regulatory framework for laboratory-developed tests. The discussion paper describes a risk-based approach that differs significantly from the FDA's initial proposal in a draft guidance document issued in 2014 and reflects a lighter touch for most laboratory-developed tests.

New Republican Study Committee legislation to repeal and replace Affordable Care Act
USA | 15 February 2017

The Republican Study Committee recently released the American Healthcare Reform Act of 2017, which would repeal and replace the Affordable Care Act of 2010. Although the act has not (to date) been formally introduced, it is expected to garner support from conservative members of the House of Representatives and serve as a basis for negotiation with other key lawmakers.

HHS significantly expands permissive exclusion authority
USA | 08 February 2017

The US Department of Health and Human Services Office of Inspector General (OIG) recently published a final rule that provides guidance on its new and expanded bases for permissive exclusion from federal healthcare programmes. The preamble to the final rule addressing the OIG's enlarged exclusion authority suggests that the agency views its enforcement oversight as mirroring the reach of the False Claims Act.

FDA's flurry of food and cosmetic activities continues unabated
USA | 01 February 2017

As the Obama administration drew to a close, the Food and Drug Administration's Centre for Food Safety and Applied Nutrition (CFSAN) continued to release multiple final or interim final rules and guidance documents pertaining to food safety, nutrition labelling and cosmetic safety. The CFSAN also began posting adverse event reports for foods and cosmetics and extended its comment period for 'healthy' claims in food labelling.

Affordable Care Act in 115th Congress: 'repeal and replace' strategy faces hurdles
USA | 25 January 2017

A priority of Republicans in Congress and President Trump is to 'repeal and replace' the Affordable Care Act; however, this is replete with challenges. Among other procedural and political hurdles, the budget reconciliation process limits the types of provision that the legislation can include to those that affect the federal budget, and it remains to be seen which provisions Republicans will seek to repeal and which they will seek to keep.

OIG finalises long-awaited rules on civil monetary penalties and new Anti-kickback Statute safe harbours
USA | 18 January 2017

The US Office of Inspector General recently finalised two key proposed rules. The first relates to the civil monetary penalties and exclusion statutes, and the second amends the safe harbours to the Anti-kickback Statute and the definition of 'remuneration' under the beneficiary inducements civil monetary penalty.

Advocate Health to pay largest-ever HIPAA settlement
USA | 31 August 2016

Advocate Health Care Center has agreed to pay $5.55 million to settle multiple violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). This is the largest HIPAA settlement to date against a single entity and is reportedly due to the severity of the HIPAA violations and the length of time that they were allowed to persist.

New genetically engineered foods disclosure law enacted
USA | 10 August 2016

President Obama recently signed into law S764, which mandates the establishment of federal disclosure standards applicable to "bioengineered" foods. The enactment of S764 moves the United States one step closer to a coherent disclosure regime for certain foods that have been genetically engineered (GE) or that contain components of genetic engineering. Although S764 is a significant achievement, the debate over the role of GE foods is expected to continue.

CMS issues FAQs on Medicaid Drug Rebate Programme final rule
USA | 27 July 2016

The Centres for Medicare and Medicaid Services (CMS) recently issued frequently asked questions (FAQs) regarding the Covered Outpatient Drug Final Rule and a state Medicaid director letter. The FAQs address topics such as calculating the average manufacturer price, determining the best price, the treatment of line extensions and the setting of state reimbursement rates.

Securities class actions in the life sciences sector: key trends
USA | 29 June 2016

Recent securities class actions brought against life sciences companies offer valuable insight into developments in this field. At the most basic level, the cases analysed share a common feature. In each, a life sciences company suffered a setback that, when publicised, was followed first by a stock price decline and then by litigation initiated by shareholders seeking to recover investment losses.

FDA's final medical foods guidance maintains restrictions on category
USA | 08 June 2016

The Food and Drug Administration recently finalised its August 2013 draft guidance entitled "Frequently Asked Questions About Medical Foods; Second Edition". Although the draft guidance was issued nearly three years ago and was the subject of numerous comments from stakeholders, the final guidance reflects few changes and ignores the legal and science-based comments from the industry.

Draft guidance on additive manufactured devices issued
USA | 01 June 2016

The Food and Drug Administration recently issued draft guidance, providing its initial thoughts on regulatory requirements for devices manufactured using additive manufacturing (AM), a category that includes three-dimensionally printed medical devices. AM enables companies to design and create devices with complex or delicate internal structures more easily.

POM Wonderful litigation bears fruit for claims distinctions
USA | 25 May 2016

The US Supreme Court recently denied POM Wonderful's final bid to overturn a Federal Trade Commission decision that the company deceptively advertised its pomegranate-based products. This refusal highlights an important distinction to be made between disease claims and structure/function claims.

Significant VA changes to country-of-origin requirements for pharmaceutical FSS contracts
USA | 18 May 2016

The Department of Veterans Affairs (VA) recently published a significant change of policy with respect to VA federal supply schedule contracts, which could have an immediate effect on pharmaceutical manufacturers. The announcement broadens mandatory VA Schedule 65 I B coverage to drugs that were previously excluded from that schedule because of their non-compliance with the country-of-origin requirements of the Trade Agreements Act.

FTC issues guidance for mHealth app developers
USA | 27 April 2016

The Federal Trade Commission – in coordination with the Food and Drug Administration, the Department of Health and Human Services' Office for Civil Rights and the Office of the National Coordinator for Health Information Technology – has developed an interactive web-based tool to help mobile health app developers to understand what federal laws and regulations might apply to their apps.

FDA draft biologics guidance would rescind innovator exclusivities
USA | 13 April 2016

The Food and Drug Administration recently released a draft guidance regarding the implementation of the 'deemed to be a licence' provision of the Biologics Price Competition and Innovation Act. The guidance takes the surprising step of limiting innovator exclusivities as part of 'deeming' products to be licensed as biologics under Section 351 of the Public Health Service Act.

Foreign Corrupt Practices Act enforcement refocuses on life sciences
USA | 06 April 2016

Life sciences companies should prepare for renewed Foreign Corrupt Practices Act enforcement by US authorities. This focus may be felt particularly acutely by mid-market and emerging companies with nascent compliance programmes. Likewise, the globalisation of healthcare is increasing the enforcement risks for companies outside of the pharmaceutical and medical device manufacturing space, including clinical research organisations, hospitals and providers.

OCR civil monetary penalty upheld
USA | 09 March 2016

The Department of Health and Human Services Office for Civil Rights (OCR) recently announced that an administrative law judge had ordered a home health provider to pay $239,800 in civil monetary penalties for violating the Health Insurance Portability and Accountability Act of 1996 Privacy Rule. This marks only the second time that the OCR has imposed civil monetary penalties for Health Insurance Portability and Accountability Act violations.

Medicaid drug reimbursement and rebates: final rule with comment period
USA | 10 February 2016

The Centres for Medicare and Medicaid Services recently released an advance-print copy of the long-awaited final rule on the Medicaid Drug Rebate Programme. The final rule implements various statutory amendments, revises the calculation of average manufacturer price, changes the determination of best price and addresses other issues relating to Medicaid price reporting and reimbursement.

FDA continues scrutiny of direct-to-consumer genetic testing
USA | 13 January 2016

The Food and Drug Administration (FDA) recently released three untitled letters from the Office of In Vitro Diagnostics and Radiological Health to clinical laboratories offering direct-to-consumer genetic tests, and a report of case studies purporting to provide public health evidence for FDA oversight of all laboratory-developed tests. These developments signal that the FDA remains focused on direct-to-consumer tests and willing to assert authority over them.

Proposed rule to reform Medicare reimbursement for clinical diagnostic laboratory tests
USA | 11 November 2015

The Centres for Medicare and Medicaid Services recently published a proposed rule to implement provisions of the Protecting Access to Medicare Act that require major changes in the reimbursement methodology for clinical laboratory tests. As part of these payment reforms, applicable clinical laboratories will be required to report private payer reimbursement rates and volume data for laboratory tests.

DOJ's new focus on individual accountability: implications for life sciences
USA | 28 October 2015

The Department of Justice's new emphasis on identifying the individuals who drive corporate misconduct promises to alter how it executes corporate investigations. Life sciences companies will now face additional challenges, including heavier reliance by prosecutors on the Park doctrine and more government efforts to obtain damages from individuals under the False Claims Act.

FDA loses Amarin litigation; court grants preliminary relief
USA | 16 September 2015

In a widely anticipated recent ruling in the ongoing Amarin litigation against the US Food and Drug Administration (FDA), the judge granted Amarin's general and specific requests for relief. This ruling is of major significance for FDA-regulated manufacturers as it addresses and rejects the FDA's frequently articulated rationale that it must be allowed to regulate truthful, non-misleading off-label speech.

OIG issues advisory opinion addressing clinical study patient subsidies
USA | 01 July 2015

The Office of Inspector General has issued an advisory opinion offering several new points of guidance for medical device manufacturers in the process of designing patient subsidies for clinical research studies. Clinical studies involving subsidies paid to patient participants are less likely to violate the federal Anti-kickback Statute or the federal prohibition on beneficiary inducements if certain criteria are fulfilled.

Updated guide to privacy and security of electronic health information
USA | 03 June 2015

The Office of the National Coordinator for Health Information Technology and the Office for Civil Rights recently published new guidance on the privacy and security of electronic health information. Although the guide was drafted primarily for the benefit of smaller healthcare providers, it provides information on privacy and security issues that is potentially valuable to providers of all sizes.

Opportunities for participation in new Precision Medicine Initiative
USA | 01 April 2015

The new Precision Medicine Initiative is intended to "revolutionize how we improve health and treat disease" through better prevention, diagnostics and treatment. Interested entities such as academic medical centres, researchers and foundations should take advantage of this opportunity to help to shape law and policy as it develops to ensure that their interests in the future of healthcare are protected in the short and long term.

Antitrust enforcement in the medical devices sector
USA | 25 March 2015

Enforcement agencies and courts have long dealt with high-profile antitrust cases in the pharmaceutical sector. However, until recently, major antitrust or merger cases in the medical device sector were relatively rare. This has changed significantly in the past few years; indeed, the sector looks set to be a focus of enforcement and litigation activity throughout 2015 and beyond.

Updates on clinical laboratory reimbursement and enforcement
USA | 14 January 2015

In recent weeks the Centres for Medicare and Medicaid Services released several significant updates affecting reimbursement for clinical laboratory tests in 2015 and beyond. In addition, the Department of Health and Human Services Office of Inspector General announced that it will increase its scrutiny of laboratory billing in 2015 and pursue enforcement actions against laboratories showing unusual claims.

Notice of proposed rulemaking on clinical trial registration and results submission
USA | 07 January 2015

The National Institutes of Health (NIH) has published a proposed rule that would expand the clinicaltrials.gov registration and results-reporting provisions first created by the Food and Drug Administration Amendments Act in 2007. The NIH would require posting of results for clinical trials of unapproved and uncleared products.

DOJ files FCA suit against PODs and physician-investors
USA | 19 November 2014

The Department of Justice recently (DOJ) filed a False Claims Act suit against Reliance Medical Systems, LLC. The medical device industry should follow Reliance closely as it might either signal the start of an enforcement trend against physician-owned distributors (PODs) or simply reflect an action targeting a network of PODs that allegedly paid particularly lucrative profits to physicians.

OIG issues report and advisory bulletin on manufacturer-sponsored coupons
USA | 22 October 2014

The US Department of Health and Human Services' Office of Inspector General (OIG) recently issued a controversial report entitled "Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs", along with a companion special advisory bulletin. The report and the advisory bulletin reflect the OIG's efforts to use transparency as a way to reduce what it considers to be a source of fraud and abuse.

OIG issues alert regarding laboratory relationships with physicians
USA | 10 September 2014

The Department of Health and Human Services' Office of Inspector General has released a special fraud alert addressing two increasingly common relationships between clinical laboratories and physicians that may raise fraud and abuse concerns – payments to referring physicians for specimen collection and data submission/review for laboratory registries.

New MDDS guidance reduces regulatory hurdles for developers
USA | 09 July 2014

The Food and Drug Administration has issued draft guidance announcing that it does not intend to enforce compliance with the regulatory controls that apply to software medical device data systems, medical image storage devices or medical image communications devices, due to the low risk they pose to patients and the importance they play in advancing digital health.

OCR levies nearly $2 million in fines for stolen unencrypted laptops
USA | 07 May 2014

The Department of Health and Human Services Office for Civil Rights recently announced that Concentra Health Services Inc and QCA Health Plan Inc have agreed to pay a total of $1,975,220, collectively, to resolve potential violations of the Health Insurance Portability and Accountability Act Privacy and Security Rules stemming from the theft of unencrypted laptops.

Sunshine Act data submission delayed
USA | 12 March 2014

The Centres for Medicare and Medicaid Services announced that Physician Payments Sunshine Act registration and data submission for applicable manufacturers and group purchasing organisations will be executed in two phases. Detailed payment information covering August to December 2013 will be due no earlier than May 2014.

Greater patient access to laboratory test reports
USA | 05 March 2014

The US Department of Health and Human Services has released a final rule that amends the Clinical Laboratory Improvement Amendments of 1988 regulations and the Health Insurance Portability and Accountability Act of 1996 privacy regulations to permit patients and their personal representatives to access laboratory test reports.

President signs Drug Quality and Security Act into law
USA | 22 January 2014

The president recently signed the Drug Quality and Security Act into law. It is designed to clarify the Food and Drug Administration's oversight authority over drug compounding and to modernise the federal drug tracking and tracing system. The new act comes just over a year after a deadly meningitis outbreak was traced to the New England Compounding Centre and, on the same day, another compounding recall was announced.

Reimbursement woes continue for diagnostic clinical laboratories
USA | 06 November 2013

The Centres for Medicare and Medicaid Services recently released the long-awaited final regional gap-fill reimbursement rates and the 2014 National Limitation Amounts for several of the Tier 1 Molecular Pathology Current Procedural Terminology codes on the Medicare Clinical Laboratory Fee Schedule. Once effective, the payment rates are essentially permanent because Clinical Laboratory Fee Schedule prices are not adjusted annually.

FDA updates guidance on medical foods
USA | 25 September 2013

The US Food and Drug Administration recently issued an updated version of its Guidance for Industry: Frequently Asked Questions About Medical Foods. This second edition of the guidance provides further information on the definition, labelling and availability of medical foods, as well as answers to new questions that have arisen since its first publication in May 2007.

FDA issues draft guidance on medical device reporting
USA | 14 August 2013

The Food and Drug Administration recently announced the availability of draft guidance, Medical Device Reporting for Manufacturers, which, when final, will supersede the 1997 version. The draft addresses specific questions about the reporting and record-keeping requirements for device-related adverse events.

Health Insurance Portability and Accountability Act enforcement continues
USA | 24 July 2013

The Department of Health and Human Services recently announced that Shasta Regional Medical Centre (SRMC) had agreed to pay $275,000 and enter into a one-year corrective action plan to settle potential violations of the Health Insurance Portability and Accountability Act Privacy Rule. The settlement relates to allegations that SRMC disclosed a patient's protected health information to media sources and its entire workforce.

Final regulations clarify rules for wellness programmes
USA | 17 July 2013

Three departments recently published final regulations setting out the criteria that group health plans with wellness programmes must satisfy in order to be considered non-discriminatory within the meaning of the Health Insurance Portability and Accountability Act 1996. Such plans must not discriminate against individuals regarding plan eligibility, benefits or premiums based on a health factor.

OIG updates special advisory bulletin on exclusion
USA | 12 June 2013

The Department of Health and Human Services' Office of Inspector General recently released the Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programmes, which replaces and supersedes a 1999 bulletin on the same topic. The bulletin describes the scope and effect of the legal prohibition on federal healthcare programme payment to excluded persons.

Essential health benefits offered in individual and small-group markets
USA | 24 April 2013

The Department of Health and Human Services has published final regulations for health insurance issuers offering non-grandfathered coverage in the individual or small-group markets to ensure that it includes an essential health benefit package. As there are no annual limits on these for plan years beginning on and after January 1 2014, it is important for all employers to know what benefits are considered essential.

A new era of federal privacy regulation
USA | 06 March 2013

The Office for Civil Rights of the Department of Health and Human Services has released a highly anticipated final rule which makes sweeping changes to the privacy, security and enforcement regulations promulgated under the Health Insurance Portability and Accountability Act, with the aim of building patient confidence in the security of electronic health records.

Affordable Care Act: proposed regulations on employer 'shared responsibility'
USA | 13 February 2013

The Treasury Department recently published proposed excise tax regulations under Section 4980H of the Internal Revenue Code of 1986, which was added to the code by the Affordable Care Act. These excise taxes are among the more controversial aspects of the Affordable Care Act, perhaps surpassed only by the mandate that practically every individual lawfully in the United States obtain adequate health coverage or pay a penalty.

New rules on physician fee schedule and outpatient prospective payment system
USA | 06 February 2013

The Centres for Medicare and Medicaid Services (CMS) recently released both the Medicare physician fee schedule and hospital outpatient prospective payment system final rules with comment period. The final rules generally took effect on January 1 2013. In the final rules, CMS commented on and/or finalised a number of significant proposals relating to pharmaceutical and biological products.

OCR issues new guidance on methods to de-identify protected health information
USA | 16 January 2013

The Office for Civil Rights (OCR) has issued important new guidance regarding the two existing methods by which covered entities may de-identify protected health information in accordance with the privacy rule promulgated under the Health Insurance Portability and Accountability Act. The guidance may signal that the OCR will make proper de-identification of protected health information an enforcement priority.

Second Circuit rejects regulation of off-label promotion as misbranding
USA | 19 December 2012

In a widely anticipated ruling the US Court of Appeals for the Second Circuit recently reversed the conviction of pharmaceutical sales representative Alfred Caronia for misbranding under the Federal Food, Drug and Cosmetic Act, based on alleged off-label promotion. The court agreed with Caronia that the government's prosecution had been based solely on speech promoting off-label uses.