One-Two Punch: On Consecutive Days, DOJ Announces High Dollar Fraud and Abuse Settlements with Hospitals

The Department of Justice (DOJ) announced two significant False Claims Act (FCA) settlements in recent days that signal continued close government scrutiny of billing, coding and referral practices at hospitals.

On August 2, DOJ announced an $84.5 million dollar settlement with Michigan-based health system William Beaumont Hospital. The settlement resolves allegations of non-compliance with the Anti-Kickback Statute (AKS) and Stark Law arising from “improper relationships with eight referring physicians” that led to the submission of false claims to government health care programs.

DOJ alleged that the defendant provided compensation substantially in excess of fair market value (FMV) to the referring physicians in the form of free or below-FMV office space, as well as the use of hospital employees to support the physicians’ practices, in order to secure referrals from the physicians. DOJ further alleged that claims submitted by the hospital for services provided to illegally-referred patients violated the FCA. Interestingly, the allegations resolved by this settlement arose from four separate whistleblower suits, and pertain to alleged conduct from 2004 to 2012. That timeframe indicates that health care providers can continue to be exposed to significant potential liability for non-compliant conduct long after the underlying conduct may have taken place.  In addition to the monetary payment, the defendant agreed to enter into a five year Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG).

The following day, on August 3, Prime Healthcare Services, Inc., two of its subsidiaries and fourteen of its hospitals (Prime), along with Prime’s Chief Executive Officer, entered into a $65 million dollar settlement with DOJ to resolve allegations of improper coding and billing practices at the hospitals. According to DOJ allegations, the hospitals knowingly violated the FCA by admitting patients to inpatient status who only required less costly outpatient care (such as observation care), and “up-coded” bills by coding more expensive diagnoses than patients actually had. DOJ claimed that this non-compliance was the product of a “corporate-driven scheme” to increase inpatient admissions of Medicare beneficiaries at certain Prime hospitals between 2006 and 2013. In addition to the monetary payment, Prime agreed to enter into a five year CIA with the OIG, which includes a requirement for independent review of claims for services provided to Medicare beneficiaries.

CMS issues Request for Information on the burdens the Stark Law may Impose on Care Coordination

The Centers for Medicare and Medicaid Services (CMS) issued a Request for Information (RFI) seeking input from the public on the burden the Stark Law may impose on patient care and recommendations on how to address any undue impact, specifically on care coordination.

The Stark Law, also known as the physician self-referral law, prohibits a physician from making referrals of a Medicare of Medicaid patient to an entity providing designated health services with which he or she (or an immediate family member) has a financial interest.

CMS Administrator Seema Verma stated that in its current form, the Stark Law may hinder “truly value-based, patient centered health care system(s).” CMS is working in coordination with Department of Health and Human Services (HHS) to maintain the integrity of the Medicare program, while working to reduce costs and improve outcomes.

CMS is requesting public input on several areas, including: how the Stark Law is impacting commercial alternative payment models and novel financial arrangements, additional exceptions to the Stark Law, what barriers exist to qualifying as a “group practice,” thoughts on compliance costs for regulated entities, and if and how CMS should measure the effectiveness of the Stark Law in preventing unnecessary utilization.

Public comments can be submitted until August 24, 2018.

 

Connecticut Enacts Law Revising Various Department of Public Health Statutes

On June 13, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-168 “An Act Concerning the Department of Public Health’s Recommendations Regarding Various Revisions to the Public Health Statutes” (PA 18-168). This legislation makes a number of changes to state laws concerning public health and the responsibilities of the Department of Public Health (DPH), including laws affecting advanced practice registered nurses (APRNs), advance directives, the scope of practice for podiatry, respiratory care, reportable events at nursing homes, and the supervision of physician assistants. Below is a summary of certain key provisions within the law, along with their respective effective dates, but please note that PA 18-168 contains a number of additional changes not described in this article that affect entities and individuals regulated by DPH. Continue Reading

FDA Approves Marijuana-Derived, CBD-Containing Drug Epidiolex to Treat Certain Epilepsy-Associated Seizures

On June 25, 2018, the U.S. Food and Drug Administration approved Epidiolex, an orally administered drug derived from the marijuana plant, Cannabis sativa. The drug is approved for use for patients two years and older, for the treatment of seizures associated with Lennox-Gastaut syndrome and Dravet syndrome, both of which are rare and severe forms of epilepsy. It is the first drug that FDA has approved for Dravet patients. Continue Reading

Connecticut Expands Consumer Protections Against Identity Theft and Data Breaches

On June 4, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-90 “An Act Concerning Security Freezes on Credit Reports, Identity Theft Prevention Services and Regulations of Credit Rating Agencies” (P.A. 18-90).  This bill makes several revisions to Connecticut laws concerning identity theft, most notably by newly prohibiting credit reporting agencies from charging fees for consumers to place or remove security freezes. This law takes effect on October 1, 2018. Continue Reading

New Connecticut Legislation Updates Laws Concerning Urgent Care Centers, Hospital-Based Facility Fees and Freestanding Hospital Emergency Departments

On June 12, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-149 “An Act Concerning Outpatient Clinics, Urgent Care Centers and Freestanding Emergency Departments” (PA 18-149). This legislation makes several changes to Connecticut laws concerning urgent care centers, facility fees charged at off-site hospital-based facilities, and freestanding emergency departments. PA 18-149 is effective as of October 1, 2018. Continue Reading

Connecticut Legislature Again Addresses Opioid Crisis

On June 14, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-166 “An Act Concerning the Prevention and Treatment of Opioid Dependency and Opioid Overdoses in the State” (PA 18-166).

This legislation seeks to address the ongoing opioid crisis in Connecticut in part by: (i) implementing a new opioid overdose reporting requirement for hospitals and emergency medical services (EMS) personnel, (ii) establishing a statutory framework under which health care practitioners and pharmacists may partner with law enforcement or other government agencies, EMS providers, or community health organizations to expand distribution and availability of naloxone and similar drugs, (iii) enacting statutory limitations on the circumstances in which providers may prescribe controlled substances for family members or themselves, and (iv) commissioning a study of the feasibility of opioid intervention courts. This legislation has varying effective dates, which are noted below. Continue Reading

Recent Joint Commission Guidance Recommends Steps for Health Care Organizations to Reduce Workplace Violence

Workplace violence is a risk at any health care workplace. Whether from patients, residents, clients, or employees. The Occupational Safety and Health Administration (“OSHA”) estimates that three quarters of all workplace assaults reported annually – approximately 19,000 – occurred in health care and social service settings.

While OSHA does not have any specific regulations addressing violence in the workplace, OSHA’s General Duty Clause applies to covered employers and requires they provide their employees with a place of employment that is “free from recognized hazards that are causing or are likely to cause death or serious harm.” It is OSHA’s position that the General Duty Clause imposes a legal obligation upon an employer to provide a workplace free of conditions or activities “that either the employer or industry recognizes as hazardous and that cause, or are likely to cause, death or serious physical harm to employees when there is a feasible method to abate the hazard.”

In recent years, OSHA has published guidelines to the health care community – Guidelines for Preventing Workplace Violence for Healthcare and Social Service Workers – with specific recommendations to prevent violence in health care workplaces. OSHA also has a webpage dedicated to workplace violence, which provides helpful guidance and training materials.

In an effort to further assist health care organizations better prevent and address violence in their workplaces, in April the Joint Commission released a Sentinel Event Alert addressing physical and verbal violence against health care workers. The Joint Commission accredits and certifies health care organizations and programs in the United States.

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Massachusetts Files Suit Against Connecticut-Based Purdue Pharma for Opioid Related Harms

On June 13, 2018, Attorney General Maura Healey filed a complaint in Massachusetts Superior Court on behalf of the Commonwealth against Purdue Pharma Inc. and Purdue Pharma L.P., Connecticut-based drug companies that manufacture and market OxyContin.  The lawsuit also names sixteen individual defendants, including current and former CEOs and certain members of the board of Purdue Pharma Inc. This is not the first time a Purdue Pharma company has been accused of wrongdoing with respect to the marketing of opioids. In 2007, Purdue Frederick Company (an affiliate of Purdue Pharma L.P.) paid nearly $700 million dollars in fines and plead guilty to criminal charges, admitting that, with the intent to defraud or mislead, it marketed and promoted  its drugs as less addictive and less subject to abuse. Continue Reading

Connecticut Enacts Legislation to Address Hospital-Insurer Network Conflicts

On June 6, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-115 “An Act Concerning Disputes Between Health Carriers and Participating Providers That Are Hospitals” (PA 18-115). This legislation updates state laws concerning the departure or removal of a hospital from an insurance carrier’s provider network. PA 18-115 takes effect July 1, 2018. Continue Reading

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