Where Do We Go From Here?

SERGIO RUDIN AND ELI FLUSHMAN In the recently decided case, Where Do We Go Berkeley et al. v. California Department of Transportation, the Ninth Circuit weighed in on how a public entity, Caltrans, may clear homeless encampments on its property, and what is required by the Americans with Disabilities Act (“ADA”) when “critical safety concerns” are present (9th Circuit No. 21-16790, April 27, 2022). The Ninth Circuit determined that Caltrans’ acts to remove homeless encampments from highway rights-ofways was a “program” subject to the ADA. The Ninth Circuit then vacated the district court’s preliminary injunction, which would have delayed Caltrans from clearing encampments located near a highway exit ramp for six months, finding the delay was not a “reasonable modification” of Caltrans’ “program.” The Ninth Circuit also held that the district court abused its discretion in evaluating the harm to Caltrans and public safety and erred in balancing the equities. In this case, Caltrans sought to clear its property of an encampment. Based on its own policies, Caltrans triaged removal of encampments based on the risks posed. Under Caltrans’ policies for clearing encampments, the encampment at issue was categorized as a Level 1 encampment because it presented “a critical safety concern” based on its location adjacent to a highway exit ramp. Level 1 encampments required urgent relocation when compared with other kinds of encampments—which allowed more time for relocation or required no relocation at all. Before clearing a Level 1 encampment, Caltrans

generally provides 72-hour notice to vacate and no notice for immediate health or safety hazards, and then clears encampments in coordination with shelter providers. On June 8, 2021, Caltrans provided 72-hour notice of its intention to clear the encampment. The following day, plaintiffs sued Caltrans, claiming clearing of the encampment violated the ADA. They sought a preliminary injunction, which was granted in part, preventing Caltrans from clearing the encampment for six months. Caltrans appealed. To state a claim for a violation of Title II of the ADA, plaintiffs were required to show that: (1) they are qualified individuals with disabilities; (2) they were either excluded from participation in or denied the benefits of a public entity's services, programs, or activities, or were otherwise discriminated against by the public entity; and (3) such exclusion, denial of benefits, or discrimination was by reason of their disabilities. The Ninth Circuit first focused on the nature of Caltrans’ “program” under the ADA. It found that Caltrans' “program” was limited to the goals set out in its policy and that Caltrans had no specific duty to provide shelter as part of its program. Caltrans’ “program” for Level 1 encampments was to provide, when possible, 72-hour notice before clearing, and coordinate with local partners (including shelters), but not to provide relocation or shelter services. Next, the Ninth Circuit considered whether the district court’s requirements imposed a

“reasonable modification” of Caltrans’ program or a “fundamental alteration” that could not be required under the ADA. It found the six-month delay imposed by the district court was a “fundamental alteration” of the program and the fundamental alteration had deprived Caltrans of the “expedient” clearing of Level 1 encampments. It also found that forcing Caltrans to provide alternate housing as part of its program would require Caltrans to provide previously un-provided services, with no regard to the safety risks posed by Level 1 encampments. Because Caltrans does not provide housing as part of its “program,” the Ninth Circuit held that the district court could not make clearing Level 1 encampments dependent on timing of relocation. The Ninth Circuit also found error with the district court’s entry of a preliminary injunction based on the district court’s determination that plaintiffs had articulated a merely “plausible” claim of discrimination under Title II’s second clause. Issuance of preliminary injunctions is normally considered under a “sliding scale” approach, and the district court found the balance of hardships tipped sharply in plaintiffs’ favor, that there was a likelihood of irreparable injury, and the injunction was in the public interest; as such, the district court found that plaintiffs need only show a “serious question” on the merits. However, the Ninth Circuit stated that the entry of a preliminary injunction was not appropriate absent an examination on the merits, and further found that the district court

had failed to properly analyze precedent that had established that Title II’s second clause regarding discrimination is meant to prohibit intentional discrimination in a public entity’s programs, which was not sufficiently alleged, rendering plaintiffs’ claims of discrimination implausible. Finally, the Ninth Circuit also found fault with the district court’s consideration of the ability of Caltrans to reopen previously closed encampments to the plaintiffs in the balancing of equities. The district court had indicated that Caltrans could avoid the preliminary injunction if it would relocate campers to a different Caltrans property—which itself had previously been cleared. The Ninth Circuit held that the district court improperly factored in the ability of Caltrans to provide relocation, which the district court could not impose as a requirement since that would go beyond preserving the status quo. In summary, the ruling provides guidance as to what public agencies' obligations are under the ADA and is the first case to find that clearing public properties of encampments is a “program” under the ADA. In addition, the ruling provides public agencies further assurance that 72-hour notice is reasonable notice before clearing encampments presenting a “critical safety concern,” and immediate removal without notice can be warranted. The decision will stand as a case where the court has limited the rights of the unsheltered where critical competing safety concerns exist.

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Mr. Rudin and Mr. Flushman are partners at Burke, Williams, & Sorensen, LLP, and members of the firm’s Public Law Practice Group. Mr. Rudin provides city attorney and general counsel services to cities and special districts throughout California, with practice areas encompassing all aspects of municipal law, including land use and zoning, public finance, real property transactions, public utilities, telecommunications, and water. Mr. Flushman has spent the past 10 years representing public agencies throughout the Bay Area. Mr. Flushman’s primary practice areas are municipal law, land use and zoning, and code enforcement, including public nuisance litigation, and receiverships. WEBSITE

Three Key Issues in Digital Health Contracts

MORVAREED SALEHPOUR Digital health is a growing and rapidly changing sector of the technology industry. It consists of a variety of technology applications such as telehealth, personalized medicine, health tracking, health information technology, software, and software as a service solutions (“SaaS”) intended to help with patient care, and wearables. Offerings in the digital health space often involve use of emerging technologies like artificial intelligence and machine learning to assist healthcare providers in better diagnosing and treating disease. The objective is to provide more efficient care, assist patients and consumers to better manage and track their own health and wellness, and create a more interconnected healthcare system. Pandemic-related challenges have increased the adoption of such innovative technologies by hospital systems, patients, and consumers alike. Adoption of these technologies is accompanied by digital health contracts, which can take many forms depending on the parties involved and the particular offering at issue. In this article, we explore three of the key issues with SaaS offerings in the digital health space: (1) intellectual property rights and ownership; (2) data use and rights; and (3) cybersecurity.

First off, these contracts often take the form of a subscription agreement between a SaaS digital health vendor and a hospital system, sometimes called a Master Subscription Agreement. Typically, the subscription agreements include a Service Level Agreement, Support Policy, and Business Associate Agreement, as applicable. It can take months to negotiate as digital health vendors are working with hospital systems that have slow moving procedures and processes for vendor onboarding, as well as in-house attorneys who may not understand the vendor technology and technology-related legal issues raised.

Intellectual Property Rights and Ownership

Which form is used can be an issue. Hospital system customers may push to use their form as the starting point for negotiations. Vendors may consent in an attempt to close the deal, but should be aware of problems with doing so. Customers’ standard vendor agreements are usually poor fits for SaaS solutions. They are often set up to for performance of services and, as a result, include provisions assigning ownership of intellectual property to the customer, which are inappropriate in this case as the vendor is not providing software development services to the customer and is instead providing the customer with only a right to access and use the vendor’s SaaS solution. As a result, the vendor will need to undertake substantial revision of the customer’s vendor agreement to include provisions to, among other things, establish the subscription model for their solution, preserve intellectual property rights and retain ownership to their solution, and to ensure the customer is subject to appropriate restrictions on their access and use of the solution such as prohibitions on reverse engineering and creation of derivative works.

Data Use and Rights

These days it is not uncommon for vendors to use artificial intelligence/machine learning in their offerings. Use of this technology creates its own unique issues around data, including the need for the vendor to use customer data for product improvement. However, customers often will try to prevent vendors from using customer data for product improvement, particularly as there is personal health information (“PHI”) involved that triggers issues arising from the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”). When faced with this issue, vendors using artificial intelligence in their SaaS solution should consider pushing back; artificial intelligence requires training on data in order to be adaptive and better perform for customers. This self-improving functionality is often a key reason customers are purchasing a subscription to an offering with artificial intelligence. To reach a resolution between customers and vendors over such data issues, vendors can agree to not monetize such data and/or limit the data used for artificial intelligence training purposes to deidentified data. Vendors also need to be cognizant of the fact that data use and rights are addressed not only in the SaaS Agreement/ Master Subscription Agreement, but also in

the Business Associate Agreement between the parties. Terms in the Business Associate Agreement often conflict with the underlying SaaS Agreement/Master Subscription Agreement so vendors should take care to review both documents together to ensure appropriate rights for access, use, and retention of de-identified data.

Cybersecurity

Vendors engaging in activities that involve creating, receiving, maintaining, or transmitting PHI from or on behalf of customers are subject to privacy and security considerations stemming from HIPAA and other applicable laws. Given the highly sensitive nature of PHI and the legal exposures under these laws, customers will often push vendors for unlimited liabilities and indemnities for items such as breach of confidentiality, breach of the Business Associate Agreement, data breach, and breach of privacy/security. Vendors need to consider the value of the deal and their own insurance coverage. Offering higher secondary caps for such expanded liabilities and indemnities rather than uncapped labilities are options to consider. Customers also may push to have vendors adopt detailed security policies and procedures and to reserve security audit rights. Such provisions are overly burdensome on vendors and allow customers to exert too much control on the vendor’s business operations. As a result, vendors should consider compromise offerings like becoming SOC2-compliant and offering SOC2 reports to customers. Additionally, customers will generally require vendors to have cybersecurity insurance. Vendors should make sure that they have appropriate coverage in place as an initial matter to avoid unnecessary delays in deal negotiations. The three issues discussed above offer only a flavor of some of the key issues that digital health vendors face. Savvy vendors will realize digital health contract negotiations are chockfull of legal and commercial pitfalls that require counsel experienced in the digital health space to help navigate the negotiations in a manner that appropriately protects proprietary intellectual property, limits liabilities, and maximizes revenue generation. View this article at Marinbar.org

Ms. Salehpour is the Managing Attorney at Salehpour Legal, a law firm specialized in working with SaaS, software, and digital health companies. EMAIL | WEBSITE