What the NJ Lawsuit Adds to Out-of-State Telehealth, Licensure Debates

February 08, 2024 - With the rapid expansion of virtual care in recent years came regulatory flexibilities to enable healthcare delivery across state lines. But many of these flexibilities have expired, resulting in a tussle between providers and patients advocating for expanded telehealth access and state medical boards focused on safeguarding healthcare quality and patient safety.  

This tussle is embodied in a lawsuit against New Jersey, highlighting the multifaceted and ongoing debates around out-of-state telehealth access and licensure flexibilities.

LICENSURE DEBATES IMPACTING OUT-OF-STATE TELEHEALTH

The COVID-19 public health emergency (PHE) forced the federal and state governments to enact temporary licensure waivers to ensure healthcare access and continuity of care amid stringent restrictions on in-person care.  

“During the pandemic, it became very clear to people that the existing regulatory infrastructure was not allowing providers to maintain coordinated, continued relationships with their patients…and states acted swiftly, putting new flexibilities in place,” said Lisa Mazur, co-head of law firm McDermott Will & Emery LLP’s digital health practice, in an interview with mHealthIntelligence.

According to an American Medical Association (AMA) brief, some states entered interstate licensure compacts, which created expedited pathways to licensure for out-of-state physicians, while others implemented reciprocity waivers, allowing healthcare professionals with an active license in good standing in a state to practice in a different state without a license. During the pandemic, these flexibilities were extended to in-person and virtual care as healthcare facilities tackled rising COVID-19 cases.

Research shows that positive healthcare outcomes were associated with expanding out-of-state telehealth services. One study published in 2022 found that the expansion especially benefitted patients with cancer, rural residents, and those residing near state borders. Of 422,547 out-of-state telehealth visits studied, 57.2 percent involved patients who lived near a state border, 33.8 percent involved a rural resident, and 9.8 percent involved cancer care services.

As the pandemic progressed and public health emergency (PHE) declarations at the state and federal levels expired, several licensure flexibilities enabling out-of-state telehealth were eliminated.

This has created some confusion. According to Ateev Mehrotra, MD, a professor of healthcare policy at Harvard Medical School and an associate professor of medicine and hospitalist at Beth Israel Deaconess Medical Center, there is variation among physicians and their legal counsels about what care services can be delivered across state lines.

“I think where it gets more complicated…what if you're my patient, I see you typically in Massachusetts, but you're in D.C. for work, and you send me a message? Or you call me up and say, ‘Hey, I had a question on our appointment the other day,’” he explained in an interview with mHealthIntelligence. “In these cases, there's a lot of ambiguity in terms of is this telehealth across state lines?”

The current laws assume that clinicians who want to treat patients in other states will proactively seek a license in that state. But this is not the reality of modern medicine, Mehrotra added. More often, a clinician sees an out-of-state patient who sought them out and then returned to their home state but wants to continue consulting with the clinician.

“The reason I bring that up is that these regs and [the processes of] getting a telemedicine license, as well as a registration, they're very, very, very, very slow,” Mehrotra said. “In Massachusetts, in my state, it could take months and months and months of time for the state to approve this licensure. And so given the clinical context in which this occurs, anything that slows the process down, even a week or two, can be sometimes problematic.”

Also, when out-of-state telehealth is eliminated, studies show patients tend to forgo care entirely. One study published last November revealed patients with out-of-state relationships were less likely to have telehealth or in-person visits after waiver expiration.

States are currently considering numerous policies to allow continued cross-state telehealth access. Some have passed legislation to join the Interstate Medical Licensure Compact because they view compacts as a solution to the healthcare access problem, Mazur said.

However, state-level telehealth licensure exceptions and license requirements may hinder the potential benefits of joining compacts.

For example, Mazur noted that New Jersey joined the Interstate Medical Licensure Compact, but it does not have an existing patient or an established patient exception, which means New Jersey residents cannot continue to receive care virtually from healthcare professionals who treated them in another state when they return to New Jersey.

In fact, this forms the basis of the recent lawsuit against the state of New Jersey.

THE NEW JERSEY LAWSUIT

In December 2023, New Jersey was struck with a lawsuit challenging its out-of-state telehealth licensing law.

Plaintiffs Shannon MacDonald, MD, a radiation oncologist at Massachusetts General Hospital in Boston, and Paul Gardner, MD, neurosurgical director of the Center for Cranial Base Surgery at UPMC in Pittsburgh, and “J.A.,” a minor and MacDonald’s patient, filed the suit, arguing that the law violates the constitutional rights of residents seeking virtual care with healthcare providers across state lines.

J.A. was diagnosed with pineoblastoma, an aggressive brain tumor, at 18 months old. MacDonald, who practices in Boston, treated J.A., enabling him to beat his cancer. However, he must continue to undergo scans once a year for the rest of his life to monitor the cancer’s return.

The lawsuit states that J.A. and his family would not have been able to consult with all the specialists they needed without telehealth due to “financial and time constraints.” More recently, telehealth enabled J.A. to consult with MacDonald when an anomaly appeared on one of his scans.

Further, the lawsuit argues that the law violates the Constitution’s Dormant Commerce Clause.

This clause “restricts [the] state's ability to really affect interstate commerce by imposing severe restrictions,” explained Jordan T. Cohen, Partner in Akerman’s Healthcare Practice, in an interview with mHealthIntelligence. “I mean, states have leeway to regulate commerce coming through their state, but if it's overly restrictive, then they can implicate this Dormant Commerce Clause.”

Not only that, but the suit also argues that the law violates the First Amendment rights of physicians and patients by preventing them from communicating with each other and the 14th Amendment’s Due Process Clause, which bans the government from limiting the ability of parents to direct their children’s medical care.

“Plaintiffs, who are New Jersey citizens and out-of-state specialists with patients in New Jersey, seek to vindicate their constitutional rights — and ensure they can continue to provide and receive — lifesaving care,” the lawsuit states.

THE SUIT’S SIGNIFICANCE

The lawsuit underscores growing frustrations with barriers to out-of-state telehealth and the arbitrary nature of the laws governing this arena.

According to Mehrotra, some of the frustration comes from the fact that telehealth licensure laws could result in health inequities. For instance, there may be two patients who are both 100 miles away from a pulmonologist, and while one can easily see that clinician, the other patient cannot because of out-of-state telehealth restrictions.

“I think there is widespread frustration with the current system, both among patients and physicians, in particular, physicians who treat patients across many states,” said Mehrotra. “The lawsuit, I think, is one way of bringing attention to this major issue.”

The lawsuit also tests the validity of the argument that telehealth licensure restrictions violate Americans’ constitutional rights, Mazur added. The constitutional rights violation argument has been explored by other organizations in the past when thinking about licensure and licensure strategies, but this is the first time a district court has looked at the issue.

“It’s the first time that I think a district court is truly evaluating whether or not any of these protections should be extended to regulate an area that's largely under the oversight control of a state-appointed board,” she said. “So, I think it's really interesting from a legal perspective to see how the court will interpret that... And the medical board may appeal this to the court of appeals if they lose. And we will have to see how it plays out. It could be a New Jersey Supreme Court case.”

If the courts grant injunctive relief, Mazur believes we could see similar complaints filed in other states that don't have a telehealth-specific registration or licensure pathway or states that lack licensure flexibilities.

While the lawsuit could encourage other suits, it is mainly symbolic and likely will not result in any significant changes to licensure processes, according to Cohen.

“States have historically had nearly unfettered rights to regulate professionals furnishing services to residents in their state,” he said. “And so, removing that would be just an absolute sea change… But I think a court is going to be very wary of removing the ability of states to regulate professionals furnishing services to residents in their state, which — it’s their job to protect their residents.”

States remain concerned about bad actors who have committed malpractice or crimes and may gain access to their residents if they widen telehealth access across their borders, he added.

Mehrotra echoed Cohen, stating that states are afraid that allowing more flexibility will negatively impact their ability to do investigative and disciplinary work.

“Let us say that a patient from Massachusetts here has a doctor from Texas who, I don't know, shows very inappropriate behavior on a telemedicine call,” he explained. “Can that Massachusetts agency or state medical board do something to that clinician in Texas? Because they're not licensed in Massachusetts, they don't have direct oversight.”

Thus, states must work to balance patient safety and quality concerns with the demand for out-of-state telehealth access.

As states mull the next steps, including regulatory flexibilities like reciprocity waivers, established patient exceptions, and temporary licenses, debates and discussions around telehealth licensure and out-of-state healthcare will persist in 2024.

“Licensure is the No. 1 barrier to multi-state telehealth care,” Mazur said. “And until we come up with a system that has a consistent approach between states and that makes it relatively seamless for providers to secure multi-state licenses or registrations or leverage certain flexibilities built into the licensure rules, then we're going to continue to have patients who just can't access the care that they need.”