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
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
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
CMS Updates Medicare Advantage and Part D (Prescription Drug Benefit)
On April 2, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a Final Rule, updating Medicare Advantage (MA) and the prescription drug benefit program (Part D). The Final Rule includes, among other provisions:
- Preclusion List Requirements for Prescribers in Part D and Individuals and Entities in Medicare Advantage, Cost Plans, and PACE: The Final Rule eliminates the MA and Part D prescriber and provider enrollment requirement. Instead, CMS is compiling a “Preclusion List” of prescribers, individuals, and entities that: (1) are currently revoked from Medicare, under an active reenrollment bar, or have engaged in behavior for which CMS could have revoked enrollment in Medicare and (2) in addition, CMS determines their underlying conduct to be detrimental to the best interests of the Medicare program. The Preclusion List will be made available to MA plans and Part D prescription drug plans, which must deny payment for claims submitted by, or associated with prescriptions written by prescribers and providers on the list.
- Eliminating “Meaningful Difference” Requirements: Beginning with CY 2019 bid submissions, CMS has eliminated the requirement that MA plans offered by the same organization in the same county comply with the “meaningful difference” requirements, which limit the variety of plans an MA organization can offer in the same county. The Final Rule eliminates the “meaningful difference” requirement for PDP Enhanced Alternative (EA) benefit designs offered by the same organization in the same region, but does not change this requirement between PDP Basic and EA prescription drug plan offerings.
- Medicare Advantage Uniformity Requirements Flexibility: As an option for all MA plans, the Final Rule allows the plans to reduce cost sharing for certain covered benefits, offer specific tailored supplemental benefits, and offer different deductibles for beneficiaries that meet specific medical criteria.
FDA Provides Guidance on Postmarketing Safety Reporting for Combination Products
On March 21, 2018, the Food and Drug Administration (FDA) published two guidance documents addressing postmarketing safety reporting requirements (PMSR) for combination products. The FDA had previously issued a Final Rule on PMSR for combination products on December 20, 2016 (PMSR Final Rule).
By way of background, combination products are therapeutic and diagnostic products that combine drugs, devices, and/or biological products. Because PMSR regulations for medical products in different categories are individualized (for example, PMSR are different for drugs than they are for medical devices and biological products), the two new guidance documents clarify the PMSR requirements that apply when a product is comprised of multiple medical categories. According to the FDA, these documents were issued in an effort to further interpret the Final Rule by ensuring consistent and complete reporting while simultaneously avoiding duplication in reports. Continue Reading
Government and Microsoft In Agreement that Pending Case Mooted by CLOUD Act
On March 30, 2018, Solicitor General Noel J. Francisco filed a motion with the U.S. Supreme Court in United States v. Microsoft Corporation that seeks to vacate the judgment of the U.S. Court of Appeals for the Second Circuit in the case (which held in favor of Microsoft) and to remand the case with directions to dismiss it as moot. The motion was submitted in response to the passage of the CLOUD Act on March 23, 2018, and the Solicitor General’s subsequent letter to the Court on that same date prefacing its intent to submit a supplementary filing to address the effect of the CLOUD Act on the Court’s disposition of the Microsoft case (see previous discussion here).
In its motion, the government “respectfully submits that this case is now moot” because the CLOUD Act “resolves the question presented” by amending the Stored Communications Act (SCA), in part, to state that service providers subject to a court order issued under the SCA are obligated to produce information within their “possession, custody, or control” without regard to whether the information is stored within or outside of the United States. The government further discloses that following enactment of the CLOUD Act, the government actually obtained a new warrant thereunder, and consequently Microsoft’s objection that the prior warrant issued under the SCA impermissibly sought to compel extraterritorial action is no longer applicable. Continue Reading
Congress Enacts CLOUD Act within Omnibus Spending Bill to Address Overseas Storage of Electronic Data, Potentially Mooting Supreme Court’s Pending Microsoft Case
On March 23, 2018, the President signed into law the Consolidated Appropriations Act of 2018 (H.R. 1625), an omnibus spending bill that includes the Clarifying Lawful Overseas Use of Data Act (the CLOUD Act). Among other provisions, the CLOUD Act amends the Stored Communications Act of 1986 (18 U.S.C. §§ 2701-2712, hereinafter the SCA) by adding a new § 2713 which states as follows: Continue Reading
State Enforcement Actions Demonstrate Continued Scrutiny of Health Care Fraud
A series of criminal and civil enforcement actions announced in recent weeks demonstrate the continued attention that state regulators throughout the Northeast are placing on health care fraud. These actions, and the significant sanctions imposed by courts and the government, can serve as a reminder that violators of health care fraud laws are subject to scrutiny at both the federal and state levels (often simultaneously), and that such violations can create exposure to significant civil and criminal penalties. Continue Reading
FDA’s New Draft Guidance on Bulk Drug Substances in Compounding
This week, the U.S. Food & Drug Administration (FDA) published draft guidance, describing FDA’s policy and process for evaluating bulk drug substances used in compounding by outsourcing facilities that are registered under Section 503B of the Federal Food, Drug, and Cosmetic Act (FD&C Act). Continue Reading
CMS Issues National Coverage Determination On Next Generation Sequencing For Advanced Cancer
On March 16, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a Decision Memo for Next Generation Sequencing (NGS) for Medicare beneficiaries with advanced cancer (CAG-00450N). In the memo, CMS concluded that NGS as a diagnostic laboratory test is reasonable, necessary and covered nationally when performed in a CLIA-certified laboratory, ordered by a treating physician, and certain additional patient-status and testing requirements are met. The memo outlines these requirements and specifies the criteria that Medicare Administrative Contractors (MACs) must use to determine coverage for NGS as a diagnostic laboratory test.
