Following the D.C. Circuit’s 2010 ruling in favor of K&S client Catholic Health Initiatives, CMS has removed a provision in the Provider Reimbursement Manual (§ 2162.2.A.4) governing reimbursement for malpractice and other liability insurance premiums paid to an offshore captive insurer. The former manual provision restricted the investments in equity securities by these foreign captives to ten percent of their assets and imposed additional limitations on how that ten percent may be invested. On August 13, 2010, the D.C. Circuit Court of Appeals ruled that the Manual’s investment restrictions are invalid. See Catholic Health Initiatives v. Sebelius, 617 F.3d 490 (D.C. Cir. 2010). K&S lawyers Chris Keough, Paul Clement and Harry Richards represented the hospitals in that case.

The August 16, 2010, Health Headlines reporting on the underlying case is available here. The CMS transmittal is available by clicking here, and a copy of the Court’s opinion is available by clicking here.