While working inside a jet fuel tank at the San Francisco International Airport, Eugene Bowen fell from a ladder and was injured. Bowen attributed his fall to the flexible metal floor at the bottom of the fuel tank and the sand on that floor. The floor was made of pieces of metal welded together. When walked on, the surface would “raise up and down like a waterbed,” “flex” and “pop and move.” There was sand on the floor of the tank, underneath the ladder. Bowen did not notice the sand before he decided to use the ladder.

At the time, Bowen was employed by sub-tier independent contractor Team Industrial Services, Inc.. He sued general contractor Burns & McDonnell Engineering Company Inc. and subcontractor HMT, LLC  who hired Team, alleging a premises liability cause of action based on defendants’ negligence and negligent supervision.

The operative first amended complaint alleged a single cause of action for premises liability. Bowen averred defendants negligently owned, maintained, and operated premises with dangerous conditions that caused his injuries, including a ladder that was not properly secured to the scaffolding, an unbalanced floor, and debris on the floor.

Bowen received workers’ compensation benefits through Team in connection with the incident.

The trial court granted defendants’ respective motions for summary judgment based on the Privette doctrine (Privette v. Superior Court (1993) 5 Cal.4th 689 (Privette)), which limits a hirer’s liability for on-the-job injuries sustained by an independent contractor or its workers unless an exception applies.

With respect to Burns, the court observed that it did not own, install, or tag the ladder or scaffolding, nor did it direct or control the means by which Team did its work. Relative to HMT, the court stated HMT demonstrated it had a contract with Team providing that Team would “furnish all material, equipment, and labor necessary to perform the work.” Additionally, HMT presented evidence that it installed the scaffolding and ladder for its own work. Bowen did not dispute these facts or introduce evidence that Burns or HMT directed Teams or Bowen or required them to use HMT’s equipment. The court therefore entered judgment for defendants.

The Court of Appeal affirmed the trial court in the published case of Bowen v. Burns & McDonnell Engineering Co., Inc. -A166793 (July 2024). (NOTE:The opinion in the above-entitled matter filed on June 17, 2024 was not certified for publication in the Official Reports.  For good cause, the request for publication by Association of Southern California Defense Counsel was granted.)

Under the Privette doctrine, “a hirer is typically not liable for injuries sustained by an independent contractor or its workers while on the job.” As originally articulated, the doctrine was grounded on the principle that it would be unfair for the hirer of an independent contractor to be held liable for injuries to a contractor’s employee when the contractor’s own liability would be capped by the limits of its workers’ compensation coverage.

However, an exception to the Privette doctrine may exist when a hirer fails to effectively delegate all responsibility for workplace safety to the independent contractor. For the retained control exception to apply, there must be some indication the hirer directed that the contractor perform its work in a certain way or interfered with the means and methods by which the work was to be accomplished

“Here, it is undisputed that the Privette doctrine applies, and Bowen bears the burden of raising a triable issue of fact as to the applicability of an exception to the doctrine.” Bowen asserts that HMT “failed to meet its burden on summary judgment to show that there was no triable issue of material fact” regarding HMT’s retention of control over safety conditions; he further contends HMT “effectively” retained control because it was contractually responsible for the safety of its subcontractors and negligently set up a ladder and scaffolding for Bowen to use.

“But these arguments erroneously place the burden on HMT to demonstrate the lack of a triable issue of material fact when it is Bowen’s burden to raise a triable issue of fact as to an exception to the Privette doctrine once defendants demonstrate the applicability of that doctrine.”

“Bowen has presented no evidence HMT directed his work or told him to use the scaffold it left in place for its own employees. In fact, the evidence indicates that HMT was completely unaware Bowen would use its ladder and scaffold.”

Truck Insurance Exchange is the primary insurer for companies that manufactured and sold products containing asbestos. Two of those companies, Kaiser Gypsum Co. and Hanson Permanente Cement (Debtors), filed for Chapter 11 bankruptcy after facing thousands of asbestos-related lawsuits.

As part of the bankruptcy process, the Debtors filed a proposed reorganization plan. That Plan creates an Asbestos Personal Injury Trust under 11 U. S. C. §524(g), a provision that allows Chapter 11 debtors with substantial asbestos-related liability to fund a trust and channel all present and future asbestos-related claims into that trust.

Truck is contractually obligated to defend each covered asbestos personal injury claim and to indemnify the Debtors for up to $500,000 per claim. For their part, the Debtors must pay a $5,000 deductible per claim, and assist and cooperate with Truck in defending the claims.

The Plan treats insured and uninsured claims differently, requiring insured claims to be filed in the tort system for the benefit of the insurance coverage, while uninsured claims are submitted directly to the Trust for resolution.

Truck sought to oppose the Plan under §1109(b) of the Bankruptcy Code, which permits any “party in interest” to “raise” and “be heard on any issue” in a Chapter 11 bankruptcy. Among other things, Truck argues that the Plan exposes it to millions of dollars in fraudulent claims because the Plan does not require the same disclosures and authorizations for insured and uninsured claims. Truck also asserts that the Plan impermissibly alters its rights under its insurance policies.

The District Court confirmed the Plan. It concluded, among other things, that Truck had limited standing to object to the Plan because the Plan was “insurance neutral,” i.e., it did not increase Truck’s pre-petition obligations or impair its contractual rights under its insurance policies.

The Fourth Circuit affirmed, agreeing that Truck was not a “party in interest” under §1109(b) because the plan was “insurance neutral.”

The United States Supreme Court Reversed in the case of Truck Insurance Exchange v. Kaiser Gypsum Company, Inc. No. 22-1079 (June 2024)

An insurer with financial responsibility for bankruptcy claims is a “party in interest” under §1109(b) that “may raise and may appear and be heard on any issue” in a Chapter 11 case. Section 1109(b)’s text, context, and history confirm that an insurer such as Truck with financial responsibility for a bankruptcy claim is a “party in interest” because it may be directly and adversely affected by the reorganization plan.

“Section 1109(b)’s text is capacious. To start, it provides an illustrative but not exhaustive list of parties in interest, all of which are directly affected by a reorganization plan either because they have a financial interest in the estate’s assets or because they represent parties that do. This Court has observed that Congress uses the phrase “party in interest” in bankruptcy provisions when it intends the provision to apply “broadly.”Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U. S. 1, 7.”

“This understanding aligns with the ordinary meaning of the terms “party” and “interest,” which together refer to entities that are potentially concerned with, or affected by, a proceeding. The historical context and purpose of §1109(b) also support this interpretation. Congress consistently has acted to promotegreater participation in reorganization proceedings. That expansion of participatory rights continued with the enactment of §1109(b).Broad participation promotes a fair and equitable reorganization process.”

“Applying these principles, insurers such as Truck are parties in interest. An insurer with financial responsibility for bankruptcy claims can be directly and adversely affected by the reorganization proceedings in myriad ways.”

Physicians are facing a 2.8% cut in pay under the proposed 2025 Medicare physician payment schedule published this month. According to the American Medical Association the “proposal from the Centers for Medicare & Medicaid Services (CMS) reinforces the clear need for systemic changes and follows a 1.69% Medicare pay cut in 2024 and 2% drop in 2023.”

“With CMS estimating a fifth consecutive year of Medicare payment reductions – this time by 2.8% – it’s evident that Congress must solve this problem,” said AMA President Bruce A. Scott, MD. “In addition to the cut, CMS predicts that the Medicare Economic Index [MEI] – the measure of practice-cost inflation – will increase by 3.6%. Facing this widening gap between what Medicare pays physicians and the cost of delivering quality care to patients, physicians are urging Congress to pass a reform package that would permanently strengthen Medicare.”

The AMA is leading the charge to reform the Medicare payment system, which is the AMA’s top advocacy priority.

“Physician practices cannot continue to absorb rising costs while their payment rates dwindle,” Dr. Scott said. “The death by a thousand cuts continues. Rural physicians and those treating underserved populations see this CMS warning as another reminder of the painful challenges they face in keeping their practices open and providing care. It’s crucial that we ensure both continue.”

Medicare physician payment effectively declined 29% from 2001 to 2024, even before accounting for the newly proposed cut.

It’s widely acknowledged by the experts that chronically inadequate Medicare payment rates will eventually take a toll on older adults’ access to high-quality care.

Among them is the Medicare Payment Advisory Commission (MedPAC), which recognized in its report to Congress earlier this year an unsustainable combination within Medicare physician payment: an inadequate baseline and a lack of an inflation-based update.

Meanwhile, Medicare’s trustees have warned that the physician payment system has failed to keep up with the cost of practicing medicine and that failure could hinder older adults’ access to health care.

“Absent a change in the delivery system or level of update by subsequent legislation, the trustees expect access to Medicare-participating physicians to become a significant issue in the long term,” the trustees said in their most recent report.

The report notes that the Medicare program faces “challenges” as physician payments – which are not based on underlying economic conditions – don’t keep up with inflation or the cost of practicing medicine.

The trustees predicted that, because of the gap between rising costs and falling payments, the “quality of health care received by Medicare beneficiaries would, under current law, fall over time compared to that received by those with private health insurance.”

Many members of Congress from both parties have seen the need for systemic change, and they introduced the bipartisan Strengthening Medicare for Patients and Providers Act, H.R. 2474. That legislation would give physicians an annual, permanent inflationary payment update in Medicare tied to the Medicare Economic Index.

The AMA supports the legislation, and the AMA also put forward a proposal to make the Medicare Merit-based Incentive Payment System (MIPS) “more relevant to patients and supports pending legislation to improve the budget-neutrality process to better reflect actual Medicare costs,” Dr. Scott said.

“The consecutive years of Medicare cuts demand a comprehensive legislative solution,” he added. “Previous quick fixes have been insufficient. This situation requires a bold, substantial approach. A Band-Aid goes only so far when the patient is in dire need.”

The Federal Trade Commission sharply criticized pharmacy benefit managers, saying in a scathing 71-page report on the prescription drug middleman industry that underscores the impact pharmacy benefit managers (PBMs) have on the accessibility and affordability of prescription drugs.

The interim staff report, which is part of an ongoing inquiry launched in 2022 by the FTC, details how increasing vertical integration and concentration has enabled the six largest PBMs to manage nearly 95 percent of all prescriptions filled in the United States.

This vertically integrated and concentrated market structure has allowed PBMs to profit at the expense of patients and independent pharmacists, the report details.

The report finds that PBMs wield enormous power over patients’ ability to access and afford their prescription drugs, allowing PBMs to significantly influence what drugs are available and at what price. This can have dire consequences, with nearly 30 percent of Americans surveyed reporting rationing or even skipping doses of their prescribed medicines due to high costs, the report states.

The interim report also finds that PBMs hold substantial influence over independent pharmacies by imposing unfair, arbitrary, and harmful contractual terms that can impact independent pharmacies’ ability to stay in business and serve their communities.

The Commission’s interim report stems from special orders the FTC issued in 2022, under Section 6(b) of the FTC Act, to the six largest PBMs – Caremark Rx, LLC; Express Scripts, Inc.; OptumRx, Inc.; Humana Pharmacy Solutions, Inc.; Prime Therapeutics LLC; and MedImpact Healthcare Systems, Inc. In 2023, the FTC issued additional orders to Zinc Health Services, LLC, Ascent Health Services, LLC, and Emisar Pharma Services LLC, which are each rebate aggregating entities, also known as “group purchasing organizations,” that negotiate drug rebates on behalf of PBMs.

PBMs are part of complex vertically integrated​ health care conglomerates, and the PBM industry is highly concentrated. As shown in the below image, this concentration and integration gives them significant power over the pharmaceutical supply chain. The percentages reflect the amount of prescriptions filled in the United States.  ​

The interim report highlights several key insights gathered from documents and data obtained from the FTC’s orders, as well as from publicly available information:

    Concentration and vertical integration: The market for pharmacy benefit management services has become highly concentrated, and the largest PBMs are now also vertically integrated with the nation’s largest health insurers and specialty and retail pharmacies.
        – –  The top three PBMs processed nearly 80 percent of the approximately 6.6 billion prescriptions dispensed by U.S. pharmacies in 2023, while the top six PBMs processed more than 90 percent.
        – –  Pharmacies affiliated with the three largest PBMs now account for nearly 70 percent of all specialty drug revenue.
    Significant power and influence: As a result of this high degree of consolidation and vertical integration, the leading PBMs now exercise significant power over Americans’ ability to access and afford their prescription drugs.
        – –  The largest PBMs often exercise significant control over what drugs are available and at what price, and which pharmacies patients can use to access their prescribed medications.
        – –  PBMs oversee these critical decisions about access to and affordability of life-saving medications, without transparency or accountability to the public.
    Self-preferencing: Vertically integrated PBMs appear to have the ability and incentive to prefer their own affiliated businesses, creating conflicts of interest that can disadvantage unaffiliated pharmacies and increase prescription drug costs.
        – –  PBMs may be steering patients to their affiliated pharmacies and away from smaller, independent pharmacies.
        – –  These practices have allowed pharmacies affiliated with the three largest PBMs to retain high levels of dispensing revenue in excess of their estimated drug acquisition costs, including nearly $1.6 billion in excess revenue on just two cancer drugs in under three years.
    Unfair contract terms: Evidence suggests that increased concentration gives the leading PBMs leverage to enter contractual relationships that disadvantage smaller, unaffiliated pharmacies.
        – –  The rates in PBM contracts with independent pharmacies often do not clearly reflect the ultimate total payment amounts, making it difficult or impossible for pharmacists to ascertain how much they will be compensated.
    Efforts to limit access to low-cost competitors: PBMs and brand drug manufacturers negotiate prescription drug rebates some of which are expressly conditioned on limiting access to potentially lower-cost generic and biosimilar competitors.
        – –  Evidence suggests that PBMs and brand pharmaceutical manufacturers sometimes enter agreements to exclude lower-cost competitor drugs from the PBM’s formulary in exchange for increased rebates from manufacturers.

The report notes that several of the PBMs that were issued orders have not been forthcoming and timely in their responses, and they still have not completed their required submissions, which has hindered the Commission’s ability to perform its statutory mission. FTC staff have demanded that the companies finalize their productions required by the 6(b) orders promptly. If, however, any of the companies fail to fully comply with the 6(b) orders or engage in further delay tactics, the FTC can take them to district court to compel compliance.

The Commission voted 4-1 to allow staff to issue the interim report, with Commissioner Melissa Holyoak voting no. Chair Lina M. Khan issued a statement joined by Commissioners Rebecca Kelly Slaughter and Alvaro Bedoya. Commissioners Andrew N. Ferguson and Melissa Holyoak each issued separate statements.