DOJ Enters Into Largest-Ever Civil Settlement with Hospital for Drug Diversion

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals

On May 16, 2018, the U.S. Attorney’s Office for the Southern District of Georgia announced that it had entered into the “largest hospital drug diversion civil penalty settlement in U.S. History” in the amount of $4.1 million dollars.  The settlement with a Georgia hospital resolves allegations that the hospital “failed to provide effective controls and procedures to guard against theft and loss of controlled substances” that resulted in tens of thousands of 30mg oxycodone tablets being unaccounted for and believed to have been diverted for illegal uses over a four year period.

The settlement resolves an investigation commenced by the Drug Enforcement Administration (DEA) in 2017 after it received reports of diversion at the hospital. In addition to alleging that the hospital failed to meet its obligations under the Controlled Substances Act (CSA) to securely maintain its controlled substances, DEA alleged that the hospital failed to notify DEA of the suspected diversion within the requisite time period. In connection with this settlement, the hospital agreed to enter into to a performance improvement plan with DEA to improve its handling of controlled substances, which will include quarterly internal accountability audits and requirements for tracking controlled substances within the hospital.

The announcement of this settlement references the recent creation by the Attorney General of the Department of Justice Prescription Interdiction & Litigation Task Force for combatting the prescription opioid crisis. The announcement also notes that the Department of Justice will use all available remedies under the CSA against providers, pharmacies, and others that violate federal drug laws. It therefore may be the case that this settlement portends heightened federal scrutiny of providers involved in the prescribing and dispensing of opioid drugs.

DOJ Intervenes in False Claims Act Case Against Insys Therapeutics

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals

The Department of Justice (DOJ), recently intervened in a civil False Claims Act (FCA) case filed against Insys Therapeutics, Inc. (Insys) in the Central District of California that alleges FCA violations arising from the payment of kickbacks in violation of the Anti-Kickback Statute (AKS) as well as other fraudulent activities. Insys is an embattled Arizona-based pharmaceutical manufacturer of a highly-addictive sublingual opioid spray known as Subsys, and is currently the subject of a number of criminal and civil suits ongoing across the country (certain of which were consolidated into this case in connection with DOJ’s intervention).  Continue Reading

OIG Advisory Opinion Allows Medical Device Supplier to Provide Sample Products to Patients

By Meaghan Mary Cooper on Posted in Medical Devices, Office of Inspector General

On May 7, 2018, the Health and Human Services Office of Inspector General (OIG) issued a  favorable Advisory Opinion in which it permitted a medical device company (Requestor) to provide free sample ostomy products and conduct follow-up customer satisfaction surveys (Arrangement). Continue Reading

US District Court Holds Medical Executive Committees Can Sue And Be Sued

By Nawa Lodin on Posted in Hospitals and Health Systems, Physicians and Allied Health Professionals

On April 27, 2018, the United States District Court for the District of New Jersey held that the Medical Executive Committee (“MEC”) of a hospital, which is comprised of doctors that decide who is given privileges within the hospital, can sue and be sued. Nahas v. Shore Med. Ctr., 2018 U.S. Dist. LEXIS 70785. Continue Reading

Providing Patient Written Plan of Care Eliminated from The Joint Commission’s Standards for Deemed Home Health Agencies

By Nawa Lodin on Posted in Accreditation, Home Health Agencies

The Joint Commission announced that it will eliminate a requirement of deemed home health organizations to provide the personalized written plan of care to patients. The announcement follows a communication from CMS that it will no longer require that the individualized written plan of care be given to the patients, as written in §484.60 of the Home Health Services Conditions of Participation.   Effective April  30, 2018, the Joint Commission will no longer score organizations on whether they fail to give their patients a written individualized plan of care. Continue Reading

DOJ Announces Criminal Conviction of Physician for HIPAA Violation

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Life Sciences, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals, Privacy and Security

On April 30, 2018 a Massachusetts physician was convicted of a criminal violation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as one count of obstruction of a criminal health care investigation, in a Massachusetts federal court. The convictions relate to the purported sharing of confidential patient information by the physician with pharmaceutical sales representatives that allowed the pharmaceutical company to target patients with specific conditions (and to correspondingly facilitate the receipt of prior authorizations for the company’s drugs from patients’ insurers). Continue Reading

OIG Reports That CMS Paid Practitioners For Telehealth Services That Failed To Meet Medicare Requirements

By Nathaniel Arden on Posted in Medicare and Medicaid, Office of Inspector General, Reimbursement

On April 5, 2018, the Office of the Inspector General (OIG) announced its findings that the Centers for Medicare and Medicaid Services (CMS) paid practitioners for telehealth services that did not meet Medicare requirements. Certain telehealth services are reimbursable by Medicare as Part B services. According to the OIG, it engaged in a review of telehealth services after finding that Medicare paid a total of $17.6 million in telehealth payments in 2015, compared to just $61,302 in 2001. Continue Reading

Supreme Court Order Indicates Interest in Reviewing Campie, the False Claims Act Outlier of the Ninth Circuit

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Life Sciences, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals, Reimbursement

In an order issued on April 16, 2018, the U.S. Supreme Court invited the Solicitor General to file a brief “expressing the views of the United States” concerning the 2017 decision of the U.S. Court of Appeals for the Ninth Circuit in the False Claims Act (FCA) case U.S. ex rel. Campie v. Gilead Sciences, Inc. (see our previous analysis of the case here). The Campie case is noteworthy because it created a split among the circuit courts as to the scope of the “government knowledge” defense to materiality under the FCA following the Supreme Court’s 2016 Escobar decision. In Escobar, the Supreme Court upheld the viability of the “implied false certification” theory of liability under the FCA in certain circumstances, and explained that for FCA liability to attach to a misrepresentation concerning compliance with a statutory, regulatory or contractual requirement, the misrepresentation must be material to the government’s payment decision. Continue Reading

Private Equity Firm Named as Defendant in False Claims Act Case Targeting A Portfolio Company

By Leslie Levinson and Erica Youngerman on Posted in Department of Justice, Fraud and Abuse, Government Enforcement, Home Health Agencies, Hospice, Long Term Care and Nursing Homes, Medicare and Medicaid, Physicians and Allied Health Professionals, Private Equity

A recent complaint filed by the United States Department of Justice against a private equity firms regarding an alleged kickback further illustrates new concerns private equity should be aware of in the healthcare arena and working with counsel to mitigate such concerns.  A February 23, 2018 press release from the DOJ regarding United States ex rel. Medrano and Lopez v. Diabetic Care Rx, LLC dba Patient Care America, et al., No. 15-CV-62617 (S.D. Fla.), available here, describes how the complaint was made against a pharmacy, several of its executives and the private equity firm, which manages the pharmacy and the private equity fund that owns the pharmacy.  The United States Attorney’s Office for the Southern District of Florida stated in the release that “We will hold pharmacies, and those companies that manage them, responsible for using kickbacks to line their pockets at the expense of taxpayers and federal health care beneficiaries.” Continue Reading

Fifth Circuit Reinstates Provider’s Collateral Challenge to the Medicare Appeal Process

By Nawa Lodin and Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospice, Long Term Care and Nursing Homes, Medicare and Medicaid, Reimbursement

On March 27, 2018, the United States Court of Appeals for the Fifth Circuit held that a health care provider can seek an injunction in federal court against recoupment by Medicare of alleged overpayments despite not exhausting its administrative appeal remedies, in part because the current delay in scheduling of hearings before an Administrative Law Judge could cause the provider to go out of business before it has an opportunity to exhaust its administrative challenge of the recoupment. This decision could provide a template for other providers facing significant Medicare recoupment demands amidst the “colossal backlog” in Medicare appeals to delay such recoupments until their appeals receive a hearing. Continue Reading

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