Appeals Court Reverses ADA Jury Verdict for Pharmacist with Fear of Needles

In Stevens v. Rite Aid Corp., No. 15-277 (March 21, 2017), the U.S. Court of Appeals for the Second Circuit reversed a jury award of almost $2 million that had been awarded in favor of a pharmacist who had a fear of needles and could not comply with Rite Aid’s new policy that required pharmacists to administer immunization injections to customers.

In 2011, in an effort to fill a vaccination void in the healthcare market, Rite Aid imposed a new requirement that all pharmacists must administer immunizations.  Rite Aid revised its job description, requiring pharmacists to obtain valid immunization certificates and establishing immunizations as a part of the pharmacist’s essential job functions.

The plaintiff had worked for Rite Aid for 34 years.  After receiving notice of the new requirement, he presented Rite Aid with a note from his treating physician stating that he suffered from trypanophobia, a fear of needles.  His condition caused him to become lightheaded, pale, and feeling that he might faint.  The physician stated that the plaintiff could not safely administer an injection since the likelihood that he would faint would be unsafe for both the patient and the plaintiff.  Due to his trypanophobia, the plaintiff requested that Rite Aid provide him with a reasonable accommodation under the Americans with Disabilities Act.  A short time later, Rite Aid terminated his employment. Continue Reading

NY AG Announces Settlements with 3 Mobile-Health App Developers Over Privacy, Marketing Concerns

On March 23, 2017, New York State Attorney General Eric T. Schneiderman announced settlements with three mobile health application (app) development companies aimed at curbing deceptive marketing practices and inadequate privacy disclosures to consumers. The settlements – reached with Cardiio, Inc., Matis Ltd., and Runtastic GmbH, respectively – target health measurement apps that “purport to measure vital signs or other indicators of health using only a smartphone’s camera and sensors, without any need for an external device.”

The Office of Attorney General (OAG) expressed concern that growing consumer reliance on health-related apps “can be harmful” if the apps provide inaccurate or misleading results because they could cause consumers to potentially forgo necessary medical treatment, or conversely incur unnecessary treatment, in reliance on false assurances of health provided by such apps. In the settlements the OAG highlighted apparent issues it had identified with each of the developers’ apps, including:

  • That both Cardiio and Runtastic created a “net impression” via claims made on their websites and in app store listings that their respective heart rate monitor apps would accurately measure and monitor a consumer’s heart rate “without providing sufficient evidence substantiating” their claims regarding the app’s accuracy; and
  • That Matis made unsubstantiated claims regarding its fetal heartbeat app’s ability to monitor and play the sound of a fetal heartbeat by placing a smartphone on a woman’s stomach.

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DOJ Increases Range of Per-Claim Penalties under False Claims Act for 2017

In a little-noticed development, on February 3, 2017, the Department of Justice (DOJ) increased the per-claim range of penalties under the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) for the second successive year, in accordance with a statutory requirement issued under the Bipartisan Budget Act of 2015. As a result, FCA defendants are now subject to monetary penalties ranging from $10,957 to $21,916 per claim submitted in violation of the FCA.

Section 701 of the Bipartisan Budget Act of 2015 revised federal requirements for determination of civil monetary penalties by federal agencies, including substituting a new statutory formula for calculating inflation adjustments annually. In response, on June 30, 2016, the DOJ issued an interim final rule with a request for comments to adjust civil monetary penalties assessed by DOJ for inflation. That interim final rule led to a significant increase in the range of per claim FCA penalties because the new formula tied the inflation adjustments to cost of living increases between 2015 and the year in which each civil penalty was established or adjusted by law.  Consequently, the DOJ used the FCA’s per claim penalty range of $5,000 to $10,000 established in 1986 as a baseline, which yielded a considerable increase to a new penalty range of $10,781 to $21,563 per claim in violation of the FCA as of August 1, 2016.On February 3, 2017, the DOJ finalized its interim final rule (and the formula for inflation adjustments), and also published its new range of per claim penalties for violations assessed on or after February 3, 2017 (that occurred on or after November 2, 2015).

The current minimum per claim penalty is now $10,957, and the current maximum per claim penalty is $21,916. These per claim amounts will now be adjusted annually, using a comparison of the cost of living adjustment for each of the two preceding Octobers, rounded to the nearest dollar.

Health care providers and other government contractors now need to anticipate annual increases in the FCA’s per claim penalties – which may be a daunting prospect after a thirty year period in which such penalties were only adjusted once – and to recognize that these adjustments further heighten the importance of FCA compliance.

OIG Applies The Access To Care Exception In Favorable Advisory Opinion For Hospital Meal And Lodging Assistance Program

The Office of the Inspector General (OIG) recently issued Advisory Opinion 17-01 to a health system (Requestor) for an arrangement to provide free and reduced-cost lodging and meals to financially disadvantaged patients (Proposed Arrangement). In issuing this positive opinion, the OIG applied the Access to Care exception to the prohibition on beneficiary inducements under the Civil Monetary Penalties (Beneficiary Inducement CMP).

One of the hospitals operated by the Requestor provides services to a rural and medically underserved patient population. Under the Proposed Arrangement, the Requestor would offer financially needy patients residing in rural or underserved areas free or reduced-cost lodging at a hotel near the hospital where rooms are approximately $70 per night. Requestor would also provide eligible patients free or reduced-cost meals at the hospital’s cafeteria, not exceeding $15 per overnight stay. The hospital would pay the hotel directly and would not provide cash or cash equivalents to patients.

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Fourth Circuit Upholds DOJ’s Absolute Veto Power but Declines to Address Validity of Statistical Sampling in FCA Case

The U.S. Court of Appeals for the Fourth Circuit recently declined to rule on the validity of statistical sampling as a method to establish liability and damages in a False Claims Act (FCA) whistleblower case that was closely watched within the FCA bar, U.S. ex rel. Michaels v. Agape Senior Community, Inc. et al. (Nos. 15-2145, 15-2147). In a victory for the government, however, the Court did hold that the FCA grants the Department of Justice (DOJ) an “unreviewable veto” over proposed settlements of FCA cases – even cases in which the DOJ declines to intervene.

The case was brought in 2012 by former employees of Agape Senior Community Inc. and its affiliated entities (collectively, Agape), who own and/or operate elder care facilities throughout South Carolina. The plaintiffs, who were qui tam relators, alleged violations of the federal Anti-Kickback Statute (42 U.S.C. 1320a-7b), the FCA (31 U.S.C. 3729-3733), and Health Care Fraud law (18 U.S.C. 1347) related to claims filed by Agape for services provided to ineligible individuals or for services not actually provided. Because the allegations implicated up to 50,000 claims involving over 10,000 patients, the relators (plaintiffs in FCA cases are known as “relators”) sought to establish damages via the use of statistical sampling in lieu of having to review every claim. The relators argued that a comprehensive review of each patient’s chart for evidence of fraud could cost over $30 million, potentially exceeding the actual damages in the case. In 2015, a federal district court in South Carolina rejected the relators’ argument and sided with Agape, finding that the use of statistical sampling in this case would be improper because the relevant patient medical records were available for the relators to review.

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FDA Delays Intended Use Regulations

The U.S. Food and Drug Administration (FDA) announced that it was delaying until March 19, 2018, a Final Rule that has been viewed as having a chilling effect on scientific speech in attempting to broaden FDA’s authority to find an “intended use” for an approved or cleared medical product.  FDA extended the effective date to allow additional public comments after a petition filed on behalf of various industry groups challenged the Final Rule (dockets FDA-2011-P-0512, FDA-2013-P-1079, FDA-2015-N-2002, and FDA-2016-N-1149).

In the Final Rule, FDA had amended the intended use regulations for drugs and devices at 21 C.F.R 201.128 (drugs) and 21 C.F.R. 801.4 (devices).  In announcing the delayed implementation, FDA attempted to clear up what it viewed as a misunderstanding about the Final Rule.  FDA emphasized that one of the revisions was meant to clarify that mere knowledge that the product was being prescribed or used by healthcare providers for an unapproved new use would not be sufficient on its own for FDA to find an unapproved new intended use for an approved or cleared drug or device.  In addition, the Final Rule was “intended to embody FDA’s longstanding position . . . that intended use can be based on ‘any relevant source of evidence,’ including a variety of direct and circumstantial evidence.”  The Final Rule used the phrase “the totality of the evidence” to accomplish this goal.

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West Virginia University Medicine University Healthcare Patients Victims of Identity Theft

West Virginia University Medicine University Healthcare (WVUM) has confirmed that it is sending notification letters to over 7,400 of its patients seen at Berkeley Medical Center as a result of an unauthorized access to their information. It further confirmed that 113 of its patients have become the victims of identity theft as a result of the theft of patient records by an employee of Berkeley Medical Center (Berkeley).

The Berkeley employee removed patient information from the premises of WVUM through writing information on a pad. The FBI identified the link through investigating another matter. The employee was authorized to access the patient records, but then used the information for criminal purposes. She was fired and is being prosecuted.

Berkeley is providing credit monitoring services to the affected patients.

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11th Circuit Invalidates Key Provisions in Florida Law Prohibiting Physician Inquiries About Patient Firearm Ownership

In Wollschlaeger v. Florida, No. 12-14009 (Feb. 16, 2017), the U.S. Court of Appeals for the Eleventh Circuit invalidated provisions of the Florida Firearms Owners’ Privacy Act that prohibited physicians from (i) asking patients if they (or their family members) own firearms or ammunition, (ii) documenting firearm ownership in patient medical records, and (iii) harassing patients about firearm ownership during examinations. The appellate court did not invalidate the Act’s antidiscrimination provision that prohibits physicians from discriminating against patients based solely on firearm ownership. Physicians who violated the Act were subject to disciplinary action by the Florida Board of Medicine, which promulgated regulations in 2014 and 2016 setting forth mandatory penalties for violations.

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US and EU Agreement Allows Mutual Recognition of GMP Inspections

On March 2, 2017, U.S. Food and Drug Administration (FDA) announced that the United States had reached an agreement with the European Union (EU) that will allow FDA and EU regulators to use each other’s good manufacturing practice (GMP) inspections of pharmaceutical manufacturing facilities.  The agreement, entered into after several years of joint collaboration and evaluation, should help to avoid duplication of drug inspections and lower inspection costs. The FDA’s authority to enter into the agreement is derived from the Food and Drug Administration Safety and Innovation Act, which allows the FDA to enter into agreements to recognize drug inspections conducted by foreign authorities if the FDA determines they are capable of conducting inspections that meet U.S. requirements.

Florida Supreme Court Rejects PSQIA Preemption of Florida Constitution

On January 31, 2017, the Florida Supreme Court held that adverse medical incident reports produced in accordance with Florida law cannot constitute confidential and privileged patient safety work product (PSWP) under the federal Patient Safety & Quality Improvement Act of 2005 (PSQIA). In Jean Charles, Jr. et al. v. Southern Baptist Hospital of Florida, Inc. (No. SC15-2180), the Court endorsed a broad right of access under the Florida Constitution for patients to obtain adverse medical incident reports from health care facilities, a right commonly exercised by plaintiffs in medical malpractice actions. Continue Reading