10/16/2025
OSMA Legal & Regulatory Update: Rural Health Funding & the Lyon Case
Two major issues are taking shape this fall that could impact physicians and patients across Ohio—one tied to new federal funding for rural health care, and another involving how Ohio courts handle damages in medical malpractice cases.
Here’s what you need to know...
Rural Health Transformation Program: Federal Support for Rural Care
What It Is and Why it Matters
Congress recently created the Rural Health Transformation Program (RHTP) through the One Big Beautiful Bill Act (HR 1), passed in July 2025. The law directs $50 billion to the Centers for Medicare and Medicaid Services (CMS) to strengthen rural health care nationwide from fiscal years 2026 through 2030.
Congress recently created the Rural Health Transformation Program (RHTP) through the One Big Beautiful Bill Act (HR 1), passed in July 2025. The law directs $50 billion to the Centers for Medicare and Medicaid Services (CMS) to strengthen rural health care nationwide from fiscal years 2026 through 2030.
Half of the total funding will be shared evenly among approved states, and the other half will be distributed based on federal analysis of each state’s rural population, health care infrastructure, and proposed strategies.
The Process
Each state may submit a single application to CMS outlining how it plans to use the funds to improve rural care. CMS opened the application period in mid-September, and states must submit their applications by November 2025. Federal decisions are expected by the end of December 2025.
Each state may submit a single application to CMS outlining how it plans to use the funds to improve rural care. CMS opened the application period in mid-September, and states must submit their applications by November 2025. Federal decisions are expected by the end of December 2025.
Ohio’s application is being prepared by the Ohio Department of Health (ODH). To inform that application, OSMA submitted feedback at the state’s request, summarizing the priorities and needs voiced by Ohio physicians.
OSMA’s Comments to ODH
In its submission to ODH, OSMA emphasized six key priorities for improving access and sustainability in rural health care:
In its submission to ODH, OSMA emphasized six key priorities for improving access and sustainability in rural health care:
- Expanding broadband and cellular networks to make telehealth and remote monitoring reliable for rural patients.
- Supporting mobile clinics and tele-specialty services in psychiatry, obstetrics, and complex chronic care.
- Building workforce pipelines through rural training rotations, community-based medical education, and additional residency positions in rural hospitals.
- Promoting payment stability so rural practices and hospitals can remain financially viable.
- Ensuring fair reimbursement for local diagnostic testing to reduce the need for long-distance travel.
- Simplifying administrative processes, including prior authorization, to reduce burdens on small practices.
These recommendations reflect input gathered from OSMA members across Ohio and align with the broad goals that CMS and ODH have outlined for improving access, outcomes, and sustainability in rural health systems.
Once Ohio submits its application, and notably once CMS issues state scores on submitted applications, OSMA staff will have a better understanding of eligible funding priorities for Ohio rural medicine.
Lyon v. Riverside Methodist Hospital:
Challenge to Ohio’s Med. Mal. Damages Caps
Importance of Lyon to Ohio’s Physician Community
Ohio law limits “non-economic” damages—such as pain and suffering—in medical malpractice cases. Under Ohio Revised Code 2323.43, those damages are capped at $250,000 or three times the economic loss, up to $350,000 per person (and $500,000 per occurrence). For “catastrophic” injuries—such as permanent and substantial deformity, loss of a bodily organ system, or permanent loss of self-care—the higher cap is $500,000 per person (and $1 million per occurrence). Economic damages (like medical bills and lost wages) are not capped.
Ohio law limits “non-economic” damages—such as pain and suffering—in medical malpractice cases. Under Ohio Revised Code 2323.43, those damages are capped at $250,000 or three times the economic loss, up to $350,000 per person (and $500,000 per occurrence). For “catastrophic” injuries—such as permanent and substantial deformity, loss of a bodily organ system, or permanent loss of self-care—the higher cap is $500,000 per person (and $1 million per occurrence). Economic damages (like medical bills and lost wages) are not capped.
What Happened in Lyon
In Lyon, the plaintiff suffered a severe neurological injury after alleged failures in diagnosis and treatment. In April 2023, a jury awarded $20 million in non-economic damages. The trial court ruled that applying Ohio’s damages cap was unconstitutional as applied to this case, and the Tenth District Court of Appeals upheld that ruling on August 21, 2025.
In Lyon, the plaintiff suffered a severe neurological injury after alleged failures in diagnosis and treatment. In April 2023, a jury awarded $20 million in non-economic damages. The trial court ruled that applying Ohio’s damages cap was unconstitutional as applied to this case, and the Tenth District Court of Appeals upheld that ruling on August 21, 2025.
Connection to Other Cases
Earlier this year, the Ohio Eighth District Court of Appeals reached a similar conclusion in Paganini v. Cataract Eye Center of Cleveland, a case involving the loss of an eye. Both Paganini and Lyon held that in certain catastrophic injury cases, enforcing the cap could violate constitutional protections. Together, the two decisions have created uncertainty about how Ohio’s damages cap applies statewide, and how it will be handled going forward.
Earlier this year, the Ohio Eighth District Court of Appeals reached a similar conclusion in Paganini v. Cataract Eye Center of Cleveland, a case involving the loss of an eye. Both Paganini and Lyon held that in certain catastrophic injury cases, enforcing the cap could violate constitutional protections. Together, the two decisions have created uncertainty about how Ohio’s damages cap applies statewide, and how it will be handled going forward.
Current Status
The defendants in Lyon have asked the Supreme Court of Ohio to review the case. On October 7, 2025, OSMA filed an amicus (friends of the court) brief urging the Court to take up the case and clarify when Ohio’s damages cap may be applied in catastrophic injury cases.
The defendants in Lyon have asked the Supreme Court of Ohio to review the case. On October 7, 2025, OSMA filed an amicus (friends of the court) brief urging the Court to take up the case and clarify when Ohio’s damages cap may be applied in catastrophic injury cases.
Ohio’s current law was designed to provide predictability and fairness in medical liability awards while still allowing patients to recover full economic losses. With these recent appellate rulings, the statewide application of that law is now uncertain. The Ohio Supreme Court’s decision could determine how medical liability exposure is handled going forward.
OSMA staff will continue to monitor these and other legal and regulatory issues, pursuing opportunities to advance organized medicine and promote better care for Ohio patients.