New Iowa Law Will Impact Healthcare Personnel Agencies and Contracts with Healthcare Entities | Dorsey & Whitney LLP

On March 17, 2022, Iowa Governor Kim Reynolds signed Dossier 2521 of the House Act, “Relating to Health Care Employment Agencies, and Provide Penalties,” which will have its headquarters in Chapter 135Q of the Iowa Code. In general, the law does three things. One, it requires healthcare employment agencies to register annually with the State Department of Inspections and Appeals (DIA) and pay a $ 500 registration fee. Second, it details record keeping and other employee-related requirements of the agency and prohibits the inclusion of certain terms in contracts with healthcare entities. Three, it imposes penalties for non-compliance.

The law in principle defines a “health placement agency” as “an agency that enters into a contract with a health care entity in this state to provide temporary workers for temporary, temporary, direct or other employment or employee placement.” Similarly, a “health care organization” is defined as “a licensed or certified facility, organization or agency operated to provide services and supports to meet the health or personal care needs of consumers.”

Under the new law, employment agencies in the health sector must do the following:

  • Register each health placement agency location on an annual basis with DIA and pay a $ 500 registration fee;
  • Ensure that agency workers comply with all applicable requirements relating to health requirements and qualifications of staff in health institution facilities (e.g., licensing, certification, training and health requirements and continuing education standards) and document that agency workers meet these requirements;
  • Maintain records for each agency worker and report, file or otherwise provide required documentation to external parties or regulators that would otherwise be the responsibility of the health agency if the agency worker worked directly for the health agency;
  • Maintain professional and general liability insurance coverage with a minimum coverage per event of $ 1 million and a combined coverage of $ 3 million to insure against loss, damage or incidental expenses due to a claim resulting from death or injury as a result of negligence or negligence on the part of the health care employment agency or temporary worker; And
  • Submit quarterly financial reports to the DIA regarding the amounts charged to health care entities.

As discussed earlier, the CMS interim final rule requiring vaccination of staff against COVID-19 extends to agency employees not directly employed by Medicare or Medicaid vendors and providers (“Covered Health Employers”). House dossier 2521 appears to codify this vaccination requirement by requiring health placement agencies to ensure that temporary workers comply with all applicable requirements relating to the health requirements of personnel in the health institution and documenting this compliance.

Even under the new law, employment agencies in the health sector are prohibited from imposing restrictions on “employment opportunities for a temporary worker by including a non-compete clause in any contract with a temporary worker or a health organization”. Furthermore, contracts between agencies and health agencies cannot “require payment of damages, labor taxes or other compensation if the temporary worker is subsequently hired as a permanent employee of the health institution”. In other words, health care employment agencies may not require their employees to sign non-compete agreements as a condition of employment, and health care employment agencies may not require health agencies to pay any type of “research commission” for the direct hiring of an employee agency. Any contracts that violate the new Iowa Code Chapter 135Q are inapplicable.

Several questions remained immediately after Governor Reynolds signed House file 2521, particularly regarding the scope of coverage. On May 24, 2022, the Iowa legislator attempted to address one of these questions in House File 2589 by clarifying that Chapter 135Q of the Iowa Code applies retroactively to any contracts stipulated starting from 1 January 2019. While Governor Reynolds is yet to sign House File 2589, he is expected to sign.

From a legal standpoint, we probably haven’t heard the last chapter 135Q of the Iowa code and house file 2589. The DIA is responsible for implementing the administrative rules to implement the new law and these rules may provide further clarification on the scope of coverage, grace terms for penalties and other clarifications.

For now, Iowa Code Chapter 135Q will go into effect on July 1, 2022. At that point, all contracts between health care employment agencies and health agencies, entered into on or after January 1, 2019, that contain a any of the prohibited provisions described above are inapplicable. From a practical point of view, this means that health agencies should renegotiate their contracts with employment agencies in the health sector. We recommend that, in addition to ensuring compliance with Iowa Code Chapter 135Q, health care entities should ensure that renegotiated contracts include the language that requires agency compliance with the CMS interim final rule that requires staff to be vaccinated against COVID-19. .

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