Category: HealthLaw Blog

By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section
martin@martinmerritt.com

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

 

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Where do I get my ideas? The number one question asked by the nearly 200,000 people who have been reading my blogs, is “where do you come up with ideas?” That’s easy, I can’t stop them. I find stories, mysteries and puzzles absolutely everywhere I go.

And once they appear, they won’t go away until I work the problem out in my head and write about it. And then it’s not longer in my head. I’ll show you what I mean.

The trouble with dating Apps. I was having lunch a few weeks ago with a fellow trial lawyer, who had just settled a case for tens of millions of dollars. She’s young, she’s single, she’s successful and she’s gorgeous. She said, wearily, when it comes to dating, she’s “ready for the Asteroid.” “Dating apps,” she said, “are just the worst thing ever invented.”

I looked at her quizzically, through a lens that has walked this earth with me since the early 1960’s and said, “the question isn’t what you do about the asteroid coming . . . it’s what do you do every day that it doesn’t.” The sun is still gonna rise tomorrow and every Gosh darned day thereafter (I cleaned up the language a bit.)

This thought that has haunted me for weeks. Honestly, if she is having trouble, humanity is totally screwed. So, I went and did some digging on YouTube. And sure enough, 30 percent of young people 18-30 report that they have had no “relations” in the last year. And they have no plan to start. People are just not getting together. Which means “no babies.” And they all say “dating Apps” are to blame.

The Good Old Days. When I was young, women usually did the choosing, while men usually had to go through some ritual to win her. So, we waited for Friday night, when the dance halls opened, and after drinking just enough liquid courage from a can of Pabst Blue Ribbon, we got up the nerve to go ask a girl we liked to dance. Then, we prayed she (and the rum and coke she was drinking) would say “yes.” We figured, that’s the way God intended. Eventually, if everything checked out, we got around to “what is your name.”

Let me slow this scene down, like I am replaying the “back and to the left” Zapruder tape in Oliver Stone’s 1991 film JFK. There is a point I want to make.

It is supposed to be hard. The old way of meeting our wives and husbands had self-regulating aspects that aren’t immediately obvious: (1) The window of opportunity was limited, we had to wait for the weekend, and then only a few hours were active each of two days, there was “scarcity” here (2) It was scary as hell for both men and women. Alcohol has the nearly the same pharmacological effect on anxiety as Xanax. And we needed it. Getting “shot down,” or “passed over,” was particularly swift and immediate, public punishment. Which meant that we had an incentive to choose more deliberately (3) There were consequences to the ordeal. The word “Pub” is short for “Public House,” (which is what bars were called in England until we shortened the word.) This meant for men and women, “mistakes” were very public. Whether you got shot down, or left with somebody, everybody knew it.

A Man-Made Catastrophe. But it seems to me, with dating Apps, all of these self-regulating aspects disappear. It isn’t that dating Apps don’t work, they work too well: (1) The window never closes, you are walking around with a “Meat Market” in your pocket 24/7. (2) There is no “barrier to entry” nor public “punishment” for failure. Men will “swipe right” on hundreds of women, no matter how far out his league she might be. According to YouTube videos I watched, there might be 700 men for every woman. But women find only about 4 percent of the men who message them on apps to be “acceptable,” (3) Because the “window” is always open, “mistakes,” are harder to avoid, but easier to replace.

The Perry Mason problem. Women only approve of 4 percent of men, from what I can tell, is because all they usually have to work with is a picture. It is like being a casting agent. All you have is hundreds of headshots. There are no other important social cues. This is not necessarily contrary to human nature.

If you have ever watched Perry Mason, the 1960’s television legal drama, you can always tell who the “innocent” client will be, just by looking at the faces of the actors. The “good” person, will have “neotenous” features, which means they have the “cuteness” of young creatures (like puppies, or kittens. Smaller noses and faces and larger eyes.) That’s why puppies are adorable. But always, the Perry Mason actors who are up to “no good,” have something that doesn’t “look right,” slightly sharper features, shifty eyes, and a hundred other defects IYKYN.

Strangely, however, we extrapolate or project “good” from limited information, like cute neotenous features. (Until the cute little puppy enters your life and tears up your house.) Which brings me to my next thought.

You should never meet your idols. An “idol,” is an “ideal” in tangible form, which you should also never meet. In dating apps, Mr. or Ms. McDreamy in the photo, usually will not live up to the ideal. Underneath the “cute,” there is something terribly wrong. Even American Idol’s 2005 winner Carrie Underwood’s agreed in the song, “The More Boys I Meet, the More I Love My Dog.”

Relationships are hard, while dating apps are easy. You won’t get three pages into the Bible, in Genesis 3:16, to find that we knew 3500 years ago that men and women don’t really get along so well. One of the things that made it all work for all these millennia, that apps have eliminated, was that it was and ordeal to find your person, and difficult to discard one, knowing how hard it would be to replace the one you chose.

If humanity has one thing going for it, it is that each succeeding generation, considers anything done by the preceding generation “lame.” And if there is a just and loving God, this will include dating apps.

Meanwhile, rather than wait for an asteroid that isn’t coming, get the hell out of the house and “touch grass.” Dating apps show you can’t pick people like you are picking a puppy. You gotta get back to the real world, and get to know people, where you have more than just a picture to evaluate.

By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse”

As you can tell, I love talking about health law issues, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.

If you run into an a**hole in the morning, it means you just ran into an a**hole. If you run into an a**hole all day, you’re the a**hole.” – Rayland Givens, Justified

You know, I sometimes wonder if people have needed therapy because they met me once. Lawyers get paid to be a**holes. But in reality, I don’t think many of us want to do it in our spare time. It ruins everybody’s day. And honestly, the things an intelligent lawyer can come up with, might be the stuff of nightmares that can live in a person’s head for weeks.

I am guilty, but I am doing my best, as a public service, to stop being such an a**hole. But, in the off chance there are those of you out there who want to improve you’re a**hole skills, I can certainly teach you how I did it.

Tip 1: Surround yourself with a**holes. Nietzsche said, “Whoever fights monsters should see to it that in the process he does not become a monster.” This also works with A**holes. These a**holes can be found at work, or in “pity parties” you attend in your spare time. In fact, there is a funny Sigmund Freud meme, “You could be clinically depressed, or you could, in fact, just be surrounded by a**holes.”

I posted the meme on Facebook and got a strike, telling me that “Freud never said that.”

“Of course he didn’t say it!,” I yelled at the screen. “It’s absurd! That’s why it’s funny!” Which leads me to my next tip.

Tip 2: Always expect everything to go as planned. Psychiatrists will tell you that a great deal of what comes out as “angry outbursts,” is actually caused by being surprised. It is related to the primal part of the brain that wires us to yell at others, when there is real danger. . . as in, “tiger,” or “fire.”

So, if you want to be a real jerk, always remain wickedly optimistic that that keys will never get lost, no waiter could ever make a mistake on your order, every legal or medical assistant always gets right what you want them to do every time, and that no other driver on the road will operate in a manner that displeases you. That way you can be surprised, when they turn out to be human, which is the root to being a righteous a**hole.

Tip 3: Always act like people are trying to screw with you. There is a very cool heuristic maxim, called “Hanlon’s Razor.” Which is essentially, “Never attribute to malice that which can be adequately explained by incompetence.”

But, if you want to be an A**hole, always assume people are disappointing you on purpose. I have two wonderful college kids who are “ride or die,” the people who love me best. And they p*ss me off all the time. It doesn’t mean they are doing it on purpose. It’s just what they do. If you want to be a real jerk, don’t take this into account.

Tip 4: Never let anything “go.” There are a number of passages in the Bible about “turning the other cheek,” or “going the extra mile.” The later comes from Roman times when soldiers would make farmers carry their packs at least until the next farm.

The idea here, is that if you get mad at an insult, the other person gets to live in your head rent free. If there is an insult, and you don’t want to feel better, never “let it go.” There is no telling how many peoples’ days you can ruin with this one tip alone. But you must be careful of the final tip.

Tip 5: Never get addicted to “being nice.” Maya Angelou famously said, “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

Being nice to people is addictive. It releases dopamine. The sneaky “feel good” hormone. In fact, you could get addicted to the dopamine “hit” of just going out for the sole purpose of making everyone you meet feel good. Christ, if you did that, it might cure your depression, your loneliness, your introversion, or self-pity, all sorts of things a**holes love. And then where would you be?

Always remember what Raylon Givens said in the TV show Justified, “if you aren’t running into A**holes all the time, you’re doing it wrong.” (Or correctly, depending on your goal.)

By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse”

As you can tell, I love talking about health law issues, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.

My DEA Visit. Yesterday morning, as usual, I was lost in thought, watching the sun rise out the 49th floor window of Chase Tower. The planes were taking off and landing at Love Field. And I wondered where all those people were going.

But then, a rustling and “ahem” to my right, brought my attention back to the two United States Department of Justice DEA agents, who were sitting with me. (They were not happy.)

I should own up to it, on Saturday, three days earlier, I did go to “Disco Night” at the Stoneleigh Hotel, (because it was the 21st of September), as in the Earth Wind and Fire Song, “Do you remember, the 21st of September. . .”

While I admit my disco dancing was appalling, and possibly “offensive,” as far as I know, it was not a federal offense.

So, I asked the DEA agents, “how can I help you?”

And while I cannot talk about an active case, I can generally talk about the law, “the problem” and how physicians need to be more careful with prescriptive authority agreements and collaborative agreements when it comes to telehealth, med spas, and other forms of cash-only cosmetic clinics.

What’s a “Collaborative” and “Prescriptive Authority Agreement?” Time was, only doctors could establish a physician-patient relationship and, after a good faith exam, then physicians could write orders for drugs, devices or other care. Everyone else who worked at the facility, more or less, followed doctors’ orders.

Then, it was decided that persons with advanced education and training, could be licensed as what are called “Mid-Level Practitioners.” Most of the time, but not always, these are PAs and NPs.

In some states, these Mid-Level Practitioners (MLPs) can practice completely independently of physician supervision. In other states like Texas, MLPs can practice “semi-autonomously.”

What this usually means, is that because it is cheaper to hire a Mid-Level to do the work, we want more of them doing work, but the government wants a physician to blame, if anything goes wrong.

This also means, if you haven’t figured it out, that the physician doesn’t need to work in the same place as the Mid-Level. The supervision is often a “retrospective” review of a certain number of charts at a regular meeting, once a month. The physician otherwise, just stands by the mailbox, waiting for a check to arrive for handling the supervision.

In Texas, the term is a “collaborative agreement,” which is a legal contract between the physician and the Mid-Level Practitioner, filed with the Texas Medical Board. (Emphasis on “legally binding contract”.) The physician is contracting to do a job. This isn’t just “mailbox” money.

The physician and Mid-Level Practitioner can also enter into a “Prescriptive Authority Agreement” which can contractually allow the Mid-Level Practitioner to prescribe some medications.

But there are limits. In Texas, physicians can only have a total of 7 prescriptive authority agreements with a Mid-Level Practitioner. What drugs can be prescribed is determined by state law which is informed by the FDA and DEA list of controlled substances.

Drugs are classified as either “over the counter,” “dangerous” (meaning “prescription required,”) and “controlled,” the latter of which are covered by the DEA Schedules at Level I, II, III, IV or V. Level I has no medical use, like street heroin. Level II is prescription pain killer narcotics, like Oxycontin. Level III and higher are for things which have a lower likelihood of abuse, like valium or codeine in cough syrup.

What drugs a Mid-Level can prescribe varies by state (just Google, “Mid-Level Practitioners Authorization by State”) and a wonderful DOJ DEA Diversion Control chart will pop up, that tells you everything you ever wanted to know about MLPs and “who can prescribe what” in each state under 21 CFR 1300.01 et seq.

So, what’s the problem? People who run med spas, telehealth programs, and other cosmetic clinics are sometimes “knuckleheads.”

The collaborative agreement with prescriptive authority spells out the duties of the physician, in supervising people who are sometimes legally classifiable as “idiots.” And if anything goes wrong, the physician can be in very big trouble.

So the message is, “Physicians, read your contracts and do what the contracts call for.”

By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section
martin@martinmerritt.com

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

As you can tell, I love talking about health law issues, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.

“It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so. –Mark Twain

At least once a week, I have a client who isn’t a doctor, who has begun setting up an aesthetic medical clinic (weight loss, Botox & Fillers, or an IV Drip Bar). Often, they have attended a seminar where they were told, “all you need is to pay $1,500” and using special “smoke and mirrors,” they will be delivered their own bouncing baby “MedSpa, LLC.”

What could possibly go wrong? It takes a special kind of idiot to try to answer in a 600-word blog, what’s wrong with this? (including tax advice) Or, “which federal agency with three letters on a blue blazer is going to get to them first,” but here we go: (1) why does an LLC need to be a PLLC? (2) why do we elect a Subchapter S-Corp when forming a company like a MedSpa? (3) what happens if we screw this up?

Sole Proprietors, C-Corp’s, Partnerships and LLC’s. If you open a lemonade stand, you are the sole proprietor, or if you get a friend to go in with you, you are a partnership. If anyone chokes on a pip, you and your partner are both personally liable for the claim. There is no limit to your liability. This is how 23 million companies in America operate.

However, if you don’t want to be “stupid for a living,” you can limit your liability as do the 21.6 million people who have formed LLC’s and 1.7 million who operate as C-Corporations.

The formation of a “limited” liability company creates a separate legal entity from the owners. The “limited” part in a name like “Fred & Sons, Ltd.,” doesn’t mean “fancy.” It is a warning: If you do business with them, the owners of Fred & Sons, aren’t liable to pay the debts of the LLC. The reason for this is to encourage people to take risks. You get to follow your dreams, but if the business fails, the dream dies, not the dreamer. Otherwise, no one would try. This creates jobs, at a risk to creditors. Hence, the warning: “Ltd.”

Why do we elect a Subchapter S? When you form an LLC, which limits liability for debts, you still have taxes to deal with. If you don’t elect to be taxed as a Subchapter S, the LLC owner pays income tax plus FICA 15.3% payroll taxes on all of an LLC’s net income up to a maximum limit. You make $100,000, all of it is taxed with FICA.

A Subchapter S election allows the owner to split income into (1) a reasonable wage for active work by the owner, which is subject to income tax and the FICA 15.3% tax, and (2) distributions, which are subject to income tax but not subject to the 15.3% FICA tax. The idea here is that not all of an LLC’s income is due to the active labor of the owner. It is only right that you pay the FICA on your reasonable salary for active involvement but not on the part that is passive income from your investment.

Why do we put the “P” in front of “PLLC”. There is a difference between operating a lemonade stand and practicing a profession. If the company performs a professional service, in states like Texas owners are required to form a “PLLC.” If you click the wrong box and put it on your website, at a minimum, you announce to the world, “you don’t know what you are doing.” Regulators might want to take a look.

How big a screw up this is, depends. It is a “tiny no, no” if the correct type of professionals clicked the wrong “LLC” box when they should have clicked “PLLC.” At worst, they need to correct it.

A middle-sized screw up arises where the “wrong type of person” has gotten it into their heads that they can own a medical practice. In Texas (and some other states), the corporate practice of medicine doctrine (CPoM) forbids anyone who is not a doctor (or mid-level N.P.s or P.A.s) from owning a medical clinic.

If ownership is wrong, everything you do from that point forward is illegal. But, if you do everything else right, hire the correct medical personnel and haven’t killed anyone yet, the medical board doesn’t really have jurisdiction over a license a layperson owner doesn’t posses. Instead, you will likely get a “cease and desist” letter followed up by an injunctive lawsuit by the AG. Any doctor (who got paid to be a Medical director) that talked you into owning your own business named “I Can’t Believe It’s a Med Spa,” does have a license that the TMB can have fun with. And they will!

The “Unauthorized Practice of Medicine” is a big, big screw up because it is a felony. This is where nobody with a proper license evaluated the patient and ordered treatment. First, understand, “what precisely is the practice of medicine” is determined by “what goes on” inside a business, not by “what you call it.” This sometimes gets tricky, as can be seen in the United States” Supreme Court case over “teeth whitening,” in North Carolina Board of Dental Examiners v. FTC. 574 U.S. 494 (2015).

Almost all MedSpa’s (including weight loss clinics, Botox centers and injectable filler spas) would qualify as “practicing medicine.” Even though you can train a monkey to use a syringe, that’s not where the problem is. It is in the “medical judgment” that must happen before the needle goes in—in determining whether the patient is healthy enough to receive an injection of a prescription drug–that requires a medical evaluation by a doctor or at least a mid-level N.P or P.A. In this case, it is a felony both for the injector to treat a patient without a medical exam and the person “aiding and abetting” the unauthorized practice of medicine.

A set of laws somewhat “observed in the breach.” It isn’t until something goes wrong, or a complaint is filed by a competitor, disgruntled employee, (or patient who was trying to get freebie extra treatment she felt she was owed), that the Medical Board gets involved. The first sign you are doing it wrong, which is a beacon to a competitor trolling for complaints, is the “LLC” structure when it should be a PLLC. You are just asking for it. But understand, it doesn’t matter that the motive of the complaining party might be, if you get any of this wrong, you will still be just as screwed.

By: Martin Merritt, esq.
Past President, Texas Health Lawyers Association
Past Chair, DBA Health Law Section
martin@martinmerritt.com

“Please Tell Me you Didn’t. . . How to Keep Clients Out of the Jailhouse, Poorhouse and Lawyers Out of the Nuthouse” -Blog

On September 11, 2001, eighty percent of police and firefighters who died in the attack did not have a will or estate planning documents, such as a “living will” or “directive to physicians.” Bradley and Bank of America recruited volunteer Dallas Bar Association attorneys who provided these much needed basic estate planning documents to Dallas Police Officers in a pro bono event held yesterday, on the anniversary of 9/11.

As you can tell, I love talking about health law issues, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.

FedEx charged me $250 last month, in a scheme to defraud passport applicants (in my opinion) into thinking that FedEx can deliver applications to the US Passport Office (they can’t). So, I decided to do the only thing I know how to do, put pen to paper and tell you about it and see if I am wrong.

Highway Robbery. In the pioneer days of this country, farmers in the mid-west harvested their crops and then built rafts to float their produce down the Mississippi River to market in New Orleans. Then, they walked back, up the Natchez Trace, sometimes all the way to Illinois.

The term “Highway” originated with the Romans, who would pile dirt from ditches to make roads high enough to remain dry and easily passible. The term eventually came to mean any pathway that was the best way to get from one place to another. Which is what the Natchez Trace was, in my home state of Mississippi.

It didn’t take long for thieves along the Natchez Trace, called “highwaymen,” to figure out that people with money would be walking right past them on a predictable path. All these thieves had to do was hide and wait. And this is where we get the term, “highway robbery.”

FedEx Passport “Smart Service.” Highway robbery also refers to any excess profit earned at the expense of unwitting customers. Here is what happened when it came time to renew my passport. I asked my office manager to help me. She said FedEx can do it for about $250 plus the official fee charged by the US State Department.

I asked, “why do we need to pay FedEx $250?” And she responded, “they give you shipping labels to send your old passport and the application to the Passport Office.” So we paid the fee and we got our shipping labels, but used the wrong form.

When I got to the FedEx office, the lady at the counter informed me we had the wrong form, and would need to go back to the “smart service” website and do it all over again. I told her, “I also have the correct application I got from the US Passport website (just to be safe, I always try to anticipate problems). “So, you can just ship it from here?”

She replied, “No, the U.S. passport office address is a P.O. Box and FedEx can’t ship to a P.O. Box.” “Okay,” I asked (in a tone I am not proud of), “why am I paying FedEx $250 to ship someplace you cannot deliver?”

So I then looked closely at the address of the U.S. Passport Office on my application and the address on the FedEx Labels. And I looked back at the lady. The Passport Office is in Irving, Texas—15 miles from my front door. The FedEx shipping labels were for some company in Florida that FedEx calls a “partner.”

Near as I can tell, the $250 FedEx “smart service” pays to ship my old passport 1,312.4 miles in the wrong direction to a company in Florida, who would then (I presume to cover up the fact that FedEx can’t deliver passport applications), goes to the post office in Florida to mail my passport application 1,312.4 back to a Texas address, which is 15 miles from me.

I took my application to the post office in Dallas, where it cost me $9 to send a Priority Mail envelope to Irving. Which I share with you now, as a public service warning. That “Smart Service” seems to be anything but “smart.”

I worry about this country. Sure, we don’t have to float our produce down the Mississippi on rafts, but there certainly seem be highwaymen waiting on the path wherever we need to go, who have so little fear from consumer protection laws, that they don’t even need to “hide.”

Martin Merritt, J.D., Ole Miss Law ’86. Martin tried over 500 healthcare law cases to jury verdict, judgment or ALJ administrative law decision. He has been selected to the 2024 D Magazine “Best Lawyers in Dallas” List, Texas Monthly’s “Texas Super Lawyers” and U.S. News and World Reports “Best Lawyers in America,” is Past President of the Texas Health Lawyers Association, Past Chair of the Dallas Bar Health Law Section and State Bar of Texas award-winning author, has published books from the ABA, and published hundreds of articles on matters related to health law and legal ethics in the Federal Lawyer, the Texas Bar Journal and many trade publications. If you have a question or need to make a referral, Martin can be contacted at his office in Dallas, Texas. Email at Martin@MartinMerritt.com

As you can tell, I love talking about health law issues, if you have any health law questions or better yet, need to refer a case, just call or drop me an email and I will happily talk.

U.S. District Judge Ada Brown of the Northern District of Texas set aside the FTC’s ban on non-competes and held that it shall not be enforced or otherwise take effect nationwide as to all employers, not simply the parties.

Global tax services giant, Ryan LLC, filed suit within hours of the FTC announcing a Rule banning non-competes which was to take effect September 4, 2024 in Ryan LLC, et al., v. Federal Trade Commission.

It is Ryan’s story, so I will let them tell it:

• “Today we prevail in protecting the very foundation of innovation that drives our economy from the overreach of the FTC in its misguided mission to invalidate millions of employment contracts,” said Ryan Chairman and CEO G. Brint Ryan. “Non-competes serve as a cornerstone of mutual trust between employer and employee. As a champion for our clients and business owners nationwide, Ryan stands proud in the role we’ve played to protect businesses’ intellectual property and ongoing investment in employee training and skill development.”
• Ryan’s lawsuit, filed within the hour after the FTC promulgated its ban on non-competes, challenged the FTC’s authority to issue such a rule, which imposes an extraordinary burden on business owners seeking to protect their IP and to retain talent within the professional services industry. The U.S. Chamber of Commerce, Business Round Table, Texas Association of Business, and Longview Chamber of Commerce joined the case shortly after it was filed, along with a vast array of organizations that filed briefs supporting Ryan’s position.
• In her ruling, Judge Brown concluded that “the text and the structure of the FTC Act reveal the FTC lacks substantive rulemaking authority with respect to unfair methods of competition” and that “the Rule is arbitrary and capricious because it is unreasonably overbroad without a reasonable explanation.” She emphasized “the role of an administrative agency is to do as told by Congress, not to do what the agency think[s] it should do.”
• “Judge Brown’s ruling preserves the economic freedom of businesses and their employees to enter into non-compete agreements,” said John Smith, Ryan Chief Legal Officer and General Counsel. “They play a vital role in safeguarding intellectual property and innovation, building trust within businesses, and investing in training their people.”

Judge Brown rejected the FTC’s argument that the court ruling should only apply to the parties, holding that the ban applies nationwide to all employers. Meaning, employers can ignore the FTC rule (for now).

(You can cut and paste their press release address at https://ryan.com/about-ryan/press-room/2024/ryan-lawsuit-succeeds-in-striking-down-ftc-ban-on-non-compete-agreements/).

Martin Merritt, J.D., Ole Miss Law ’86. Martin tried over 500 healthcare law cases to jury verdict, judgment or ALJ administrative law decision. He has been selected to the 2024 D Magazine “Best Lawyers in Dallas” List, Texas Monthly’s “Texas Super Lawyers” and U.S. News and World Reports “Best Lawyers in America,” is Past President of the Texas Health Lawyers Association, Past Chair of the Dallas Bar Health Law Section and State Bar of Texas award-winning author, has published books from the ABA, and published hundreds of articles on matters related to health law and legal ethics in the Federal Lawyer, the Texas Bar Journal and many trade publications. If you have a question or need to make a referral, Martin can be contacted at his office in Dallas, Texas. Email at Martin@MartinMerritt.com

Will the “Peasants” Revolt Against the FDA?

As you can tell, I love talking about health law issues, if you have any health law questions or better yet, need to refer a case, just drop me an email and I will answer it.

“Its a wonderful life.” In a 1946 Frank Capra Christmas movie, an angel must earn his wings by helping Jimmy Stewart’s character realize his life has value, after rich and greedy business interests have bankrupted him and ruined his life, when all he wanted to do was help people.

The movie ended happily, “every time a bell rings, an angel gets his wings.” This jingle has a very dark history, which is why I bring it up in reference to weight loss drugs like Ozempic and Mounjaro.

Martin Luther & The Efficacy of Indulgences. In 1517, a Catholic monk and professor of theology named Martin Luther, nailed his Ninety-Five Theses, or Disputation on the Power and Efficacy of Indulgences to the door of a cathedral in Wittenberg, Germany. What had disturbed Martin Luther, was the Church’s corrupt practice of selling “indulgences” to the faithful.

The church collectors claimed that the souls of loved ones needed to be “purged” of sins, before they would be permitted to enter heaven (hence the word, “Purgatory”):

“As soon as a coin in the coffer rings, the soul from purgatory springs.”

This angered Martin Luther, who knew something the peasants didn’t. The Bible, written in Latin (which Germans didn’t speak, as Voltaire observed in 1756, “the Holy Roman Empire was neither holy, Roman, nor an empire”), contained no mention of a “Purgatory.” A secret the Church kept by prohibiting the Bible from being published in a language Germans understood.

Luther’s 95 Theses were not the first challenge to the Church, but were aided by the invention of the printing press. When the peasants found out they had been defrauded, they revolted and things got ugly. (See, The Protestant Reformation, Henry the Eighth, The Spanish Inquisition, Northern Ireland, etc.).

How the FDA similarly works to keep the public in the dark, isn’t a secret, but will require explanation. I will use two of my own case files, which were a lot of fun.

Tilton vs. Richardson, 6 F.3d 683 (10th Cir. 1993.) The Rev. Robert Tilton was a Dallas televangelist who used sent out little squares of material he called “prayer cloths.” He claimed these magical bullshit cloths were the secret to God’s healing the sick. If the faithful rubbed the cloth on a sick loved one, sent in a donation along with a prayer request, then Tilton would touch the cloth and pray. God just might intervene with a miracle, for a price.

I got involved as a defense lawyer when several plaintiff’s lawyers sued Tilton for fraud, after NBC news ran a story showing that the prayer cloths were thrown in the trash after the money was removed at a bank. Tilton never touched them. He then sued my clients in a precursor to an Anti-SLAPP suit (Tilton claimed the Plaintiff’s lawyers were conspiring under 42 USC §1985 to infringe on Tilton’s 1st Amendment rights).

The 10th Circuit ruled that §1985, known as the “Ku Klux Klan Act,” was not meant to protect white preachers and threw out Tilton’s case. However, in the original case, the Texas Supreme Court in Tilton v. Marshall, 925 S.W.2d 672 (Tex.1996), ruled that the Plaintiffs could not sue Tilton for damages, because the faithful could not prove the element of “causation” (that God would have answered their prayers, had Tilton actually prayed as promised.)

State v. Valerie Saxion, Inc., 450 S.W.3rd 602 (Tex.App—Ft. Worth 2014). Although Robert Tilton’s “magical bullshit prayer cloths” might arguably have been considered a “medical device” requiring FDA approval, it wasn’t until Valerie Saxion started selling healing vitamins, that the FDA and The Texas Attorney General got involved.

Valerie Saxion was a bubbly television host on the world’s largest Christian Television network, TBN’s Alternative Health program. She began telling listeners that Selenium, which is a mineral next to Sulphur on the Periodic Table, helps prevent prostate cancer and that’s why God made it. She just happened to sell a line of vitamins containing Selenium. (She had also never heard of the FDA.)

The Consumer Protection Division of the Texas Attorney General’s office sued to silence her under the FD&C Act. There is another old saying:

When the law is against you, pound the facts.
When the facts are against you, pound the law.
When both are against you, pound the table.

Which is what I did when I argued Valerie Saxion’s case before the 2nd Court of Appeals in Fort Worth. There was no question she violated the FD&C Act. So, I countersued Gov. Greg Abbott, who was the AG at the time, for a declaratory judgment that the State of Texas can’t censor Valerie Saxion’s teaching about God’s plan when he created Selenium. (We lost.)

The FDA. Unlike Robert Tilton’s “magical bullshit cloths,” Valerie Saxion sold something the FDA did regulate. Her vitamins became “drugs” the minute she mentioned the word “cancer.” The FDA regulates drugs, for safety and “efficacy” (meaning “effective,” the word used by Martin Luther’s 95 Theses about “indulgences” 1512). Sellers of vitamins can sell Selenium with a label “Supports Prostate Health,” but will be put out of business if the seller mentions any disease, like “cancer.”

The uninitiated might think the FDA only exists to protect the public. It would be too simplistic to say they don’t care at all. However, like the Church in 1512, the FDA cares about saving people for a price.

The FDA is funded by taxpayers but is influenced, if not corrupted, by fees paid by big pharma, under a system the public doesn’t understand. When big pharma plays by FDA rules, it receives a governmental monopoly in exchange for paying the $1 billion price tag to get a drug through the patent and FDA approval process. In turn the FDA becomes the attack dog for its paymasters.

Weight loss drugs. One exception, which happened recently with weight loss drugs, occurs when the FDA approved manufacturer can’t keep up with demand. Because the manufacturer can’t lose profits on drugs it can’t make, the FDA allows generic copies to be compounded, as long as a drug is listed on the FDA drug shortage list.

What this also means is that there can be an unlimited, inexpensive supply of an FDA approved life-saving weight loss drug, that no one is allowed to sell. At least not inexpensively. This is true, even though the public suffers:

“Every time big pharma’s coffers ring, another soul from weight-loss purgatory springs.”

South Park did a masterful job lampooning this absurd state of FDA affairs in “The End of Obesity,” where Eric Cartman explained why he couldn’t get a prescription for Ozempic, “Rich people get Ozempic, and poor people get a prescription for listening to ‘Lizzo’ body positivity records.”

Martin Merritt, J.D., Ole Miss Law ’86. Martin tried over 500 healthcare law cases to jury verdict, judgment or ALJ administrative law decision. He has been selected to the 2024 D Magazine “Best Lawyers in Dallas” List, Texas Monthly’s “Texas Super Lawyers” and U.S. News and World Reports “Best Lawyers in America,” is Past President of the Texas Health Lawyers Association, Past Chair of the Dallas Bar Health Law Section and State Bar of Texas award-winning author, has published books from the ABA, and published hundreds of articles on matters related to health law and legal ethics in the Federal Lawyer, the Texas Bar Journal and many trade publications. If you have a question or need to make a referral, Martin can be contacted at his office in Dallas, Texas. Email at Martin@MartinMerritt.com

I took a deposition last week in a Trade Secrets case involving physicians, compounding pharmacies and the weight loss drug, Mounjaro®. As the corporate representative paused to think up an answer, I started watching the planes take off and land at Love Field from my 49th floor window. I began to think about the story of Albert Einstein’s “E=MC2.

I have seen a big jump in trade secrets cases, as non-competes are set to become illegal September 4. These claims really are all over the place, in part, because people don’t know what a trade secret is.

Part of the problem is people get confused– just because something (like a formula) “formula”) is on a statutory list of things that “might” be a trade secret, it doesn’t mean that the formula “is” a trade secret, if it doesn’t fit the rest of the definitions. Namely, it must be have some economic value because it is a “secret.” Unlike a patent, trademark, or an FDA approved drug, nobody in the government examines and preapproves a “trade secret” as valid IP claim.

Worse, trade secret litigation is often framed less by logic, and more by anger on the part of the litigant who yells the loudest or has the biggest “stick.” (See, also “arguing through vehemence,” or “argumentum ad baculum)”.

Which leads to some fun depositions like last week. Particularly in areas like MedSpas, Weight Loss and Botox Centers; which were once were the sole province of doctors, but are now rife with amateur neo-entrepreneurs:

“Q: So. . . do you think the practice of medicine is a trade secret?”

“Q: Are you saying that how doctors prescribe an FDA approved drug is your trade secret?”

And so, that’s how I came to be staring out the window watching the airplanes take off and land.

What Does “E=MC2” have to do with Patents, FDA Drugs and Trade Secrets? Admittedly, I know as much about the science of patents and the FDA approval process, as a horse knows about a road map. But like any good horse, with a little prodding I know enough to eventually get where I need to go.

Albert Einstein developed his “E=MC2” theories of relativity while working in a Swiss patent office in 1902 examining clock patents. Patents are how inventors keep others from copying their ideas. Clocks weren’t new in 1902, but trains which go fast (and the need to catch one on schedule) were.

While it was simple in the early days of trains to determine how much time it would take for a train to go from New York to another town, it was anybody’s guess what “local time” might be for passengers waiting at the station when the train arrived.

The problem lies in how the sun works. Noon occurs, and for that matter, any time ante meridiem or post meridiem, at different times in every town, as we travel east or west. Solar noon in New York happens earlier than solar noon in Cleveland. Which is a problem for making efficient train schedules people can count on. Anyone who figured out the answer could get rich from the patent.

And that’s what Einstein was doing in the patent office in Switzerland. People were trying to get official recognition or a “patent” on their ideas to synchronize distant clocks. Einstein had a little extra brain bandwidth than your average patent examiner, and used it to imagine what would happen to the speed of light, if it came from one of those moving trains. Would it go faster? If not, why not? Any physicist can fill a chalkboard with calculations, but it takes true genius to make all of it fit on your thumbnail, like “E=MC2”.

The train schedule problem was eventually solved when somebody got the more practical idea of using time zones, “why don’t we just ‘ballpark’ it?” And that’s how the planes at Love Field takeoff and land on time. We use time “zones” instead of precise solar time, which is a great idea, but also worth nothing.

The idea of “time zones” wouldn’t be a trade secret however, because it only has economic value, by not being a “secret.” It’s like the “Heimlich” maneuver— a good idea that only works, because everybody knows about it.

A Few other observations about patents, FDA approval and trade secrets:

(1) Patents are not a “secret.” The word “patent” as a noun, means the right to exclude others from copying the design, which shares the same root as the adverb “patently” (meaning “open, obvious.”) A patent application is a “claim,” to an invention of something “new and useful.” The formula or process is published. “What’s in it” or “how it works,” is not a secret.

(2) Patents are easier to get, harder to enforce. The government doesn’t enforce patents simply because a patent is granted. The government usually will raid warehouses to enforce an IP law only if there is some other intellectual property law involved, like the Lanham Act (trademark, “fake Rolexes”) or offending the FDA (“misbranding” or labelling violation.)

(3) Patenting a drug is just the first step to market. While the FDA could approve a drug without a patent, it costs too much for a seller to obtain FDA approval for a drug or device without a patent. Someone else could just copy it. Usually only patented drugs are worth the trouble. Then, the FDA takes over to determine if drug is also safe and effective, what instructions and warnings must come with the drug. But once approval is granted, the FDA will enforce exclusivity, including compounding generic versions.

(4) Compounding or off label prescribing. The FDA does not regulate doctors. If a doctor in his medical judgement, decides an FDA approved drug is safe and effective for another illness, he can prescribe the drug “off-label.” (Think, “Ivermectin” for COVID). The doctor is answerable to the medical board which may consider this a form of “Complimentary Alternative Medicine,” for which there must be written patient “informed consent,” after proper disclosures and warnings.

(5) Things get out of hand sometimes, even when everybody follows the rules. I handled dozens of Ivermectin Texas Medical Board complaints last year, after doctors were bombarded by patients who demanded Ivermectin as a prophylactic against COVID. While Ivermectin worked (it won a noble prize for medicine because it saved lives as an anti-parasitic in poor countries), it wasn’t covered by insurance unless the patient actually had parasites, which was the FDA approved use.

Doctors were legally able to prescribe Ivermectin for off-label use, but when the patient went to the drug store, the pharmacy billed insurance, who paid the claims, thinking the doctor had prescribed the drugs for rare parasite infections. Insurance paid and paid, until so many claims began piling up, that insurance began to wonder “how is it that everybody suddenly has this rare parasitic infection?”

The natural conclusion was that the doctors must be committing “fraud,” so Insurance filed complaints with the medical board against the doctors for healthcare fraud. Turns out, the doctors had no idea how insurance was billed by Walgreens or CVS. Even where the doctors told the patients not to claim the drug on insurance, they did it anyway.

As you can tell, I love talking about this, if you have any health law questions or better yet, need to refer a case, just drop me an email and I will answer it.

Next week, I will conclude the topic, with a discussion how the FDA works with states attorneys general Consumer Protection Divisions to protect the interests of big pharma.

If I were stranded on a desert island and given one set of books, I would take Will and Ariel Durant’s The Story of Civilization. In 11 volumes, the father daughter team interpret 2000 years of human behavior in a way that provides living context, “why we do what we do,” in a way readers can hold in their minds decades after reading.

The first volume brilliantly distills in one phrase, what must have been like for mankind to transition from hunter gatherers to farmers and merchants– “fear did not enter the heart of man, until he began to plan for the future.”

This phrase, explains why I love the Durants’ work, and why some people are more comfortable spending every penny they earn, accumulating no wealth at all; while those who do are often more miserable. If we don’t accumulate wealth, we don’t have to worry about keeping it.

Deus ex machina— Jesus “in a syringe.” A little over two years ago, Ozempic®, Mounjaro® and Zepbound® burst onto the scene, as a redeemer of sins, salvation could be had for a price (just a little “pinprick,” and there would be no more “ahhhhhh . . .”)

(Yes. I know, I have had too much coffee on a Saturday morning, when I use Latin and Pink Floyd’s The Wall in the same sentence.)

What’s the problem? When a drug manufacturer like Eli Lilly either invents a new drug (or buys the license from someone who did), it can gain “exclusivity” for its stockholders (the people who saved money, rather than spent it all and want to protect it).

If “Eli Lilly” sounds like a Civil War character, interestingly, he was. The company was founded by a real life pharmacist and colonel in the Union Army who was captured and imprisoned by Confederates during the Civil War.

One way to gain exclusivity for stock holders, is to patent the drug, which Eli Lilly did to gain exclusivity for Mounjaro® and Zepbound®. Patents can last for up to several decades, but there are shenanigans that can extend the patent. (See, “The Mounjaro Patent Thicket,” at Greyb.com)

The other way to protect shareholder’s is to gain FDA “exclusivity” which can be granted, even to generic drugs, but usually for a shorter period of time. (See, “Exclusivity and Generic Drugs: What does it Mean? FDA.gov/GenericDrugs.)

While a US Patent is only enforceable by the patent holder, the FDA enforces compounding restrictions under Section 503A of the FD&C Act. (See, “Compounded Drug Products That Are Essentially Copies of a Commercially Available Drug Product Under Section 503A of the Food Drug and Cosmetic Act, Guidance for Industry at FDA.gov.”) Often the FDA will pay states Attorneys General to do the enforcing through Consumer Protection Divisions.

FDA Shortage list. There was only one problem, while Eli Lilly patented salvation in a syringe, it couldn’t make enough of the stuff to keep it in stock. In such a case, the FDA publishes a “drug shortage” list. (Just Google it.) Eli Lilly’s Tirzeptide had been on the list for obvious reasons, but on August 2, Lilly announced that it had plenty in stock, and to protect shareholders, you can imagine what happened next.

Kirkland Ellis to weight loss centers: “Cease and Desist.” And so it came to pass that my client, a Nurse Practitioner operating a weight loss clinic in an “itty-bitty” East Texas town (pop. of 1,239) eceived a “cease and desist” letter from Kirkland Ellis (an international law firm with more offices than we can count on our fingers and toes).

The letter was a simple “Cease and Desist” on the basis of the FDA Drug Shortage list, and not made on the basis of a Patent violation, could be, because it sounds scarier to invoke the FDA as protector of big businesses like Lilly. (Don’t know.)

It is a story for another day (meaning I need to make a “Part II”), how the FDA and US Patent Office work with State Attorneys General Consumer Protection Divisions to protect massive profits for Eli Lilly, over consumers. So many stories to tell. (More to come!)