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On March 24, 2020, the Department of Justice (DOJ) and Federal Trade Commission (FTC) issued a joint statement on COVID-19-related antitrust enforcement highlighting ways “firms, including competitors, can engage in procompetitive collaboration that does not violate the antitrust laws” to protect public health and safety. The DOJ and FTC emphasized their commitment to facilitating antitrust compliance for businesses that are responding to the national emergency. In furtherance of this position, the agencies gave examples of collaborative activities designed to improve health and safety during the COVID-19 pandemic that are unlikely to run afoul of the antitrust laws, absent exceptions. These include:

  • Collaboration on research and development as “efficiency-enhancing integration of economic activity” which is typically procompetitive.
  • Sharing technical know-how – rather than company specific data about prices, wages, outputs, or costs – as necessary to achieve procompetitive benefits of collaboration.
  • The “development of suggested practice parameters – standards for patient management developed to assist providers in clinical decisionmaking” by providers will not be challenged except in extraordinary circumstances.
  • Joint purchasing arrangements among health care providers “designed to increase the efficiency of procurement and reduce transaction costs.”
  • “[P]rivate lobbying addressed to the use of federal emergency authority, including private industry meetings with the federal government to discuss strategies on responding to COVID-19, insofar as those activities comprise mere solicitation of governmental action with respect to the passage and enforcement of laws.”

Continue Reading DOJ and FTC Issue Joint Statement on Antitrust Enforcement and the COVID-19 Pandemic

On January 27, 2020, the Department of Justice (DOJ) announced a $145 million settlement with Practice Fusion Inc., an electronic health records (EHR) software company that resolves parallel criminal and civil investigations involving allegations of kickbacks, false claims, and non-compliance with federal EHR program requirements. We previously discussed a preliminary settlement in this case here, and in announcing the finalizing of that settlement the DOJ has shed more light on the allegedly improper conduct at issue. According to the DOJ, this is the first criminal action ever brought against an EHR company, and the “unique” deferred prosecution agreement (DPA) imposed by the DOJ against Practice Fusion that seeks “to ensure acceptance of responsibility and transparency as to” underlying conduct may reflect a new approach to settlements with corporate health care defendants.
Continue Reading DOJ Announces Settlement with EHR Company to Resolve Criminal and Civil Kickback Investigations Tied to Opioid Prescribing

On January 10, 2020, The Department of Justice (DOJ) and Federal Trade Commission (FTC) announced new draft vertical merger guidelines for public comment. Once finalized, the draft guidelines will replace the DOJ’s 1984 Non-Horizontal Merger Guidelines and describe how the FTC and the DOJ will analyze and enforce vertical mergers for compliance with the antitrust laws. Vertical mergers combine two or more companies operating at different levels of the same supply chain, e.g., a combination between a hospital and independent physician group, or a health system and a skilled nursing facility. The draft guidelines adopt common concepts from the Horizontal Merger Guidelines, such as the definition of a “market,” the framework for analyzing the sale of a failing business or its assets, and the purchase of partial ownership interests. Notably, and to the disappointment of many within the health care community, the draft guidelines provide little guidance on vertical mergers specific to the health care industry. Additionally, two FTC Commissioners abstained from voting on the draft guidelines and issued statements outlining their concerns that the guidelines are too lenient toward vertical mergers.
Continue Reading DOJ and FTC Announce Draft Vertical Merger Guidelines

On January 21, 2020, the Department of Justice (DOJ) announced a $3 million settlement with Patient Services, Inc. (PSI) to resolve allegations of False Claims Act (FCA) violations. The DOJ alleged that PSI enabled three pharmaceutical companies to pay kickbacks to patients by funneling money to patients taking drugs manufactured by those same pharmaceutical companies. In addition to the $3 million, PSI has entered into a three-year integrity agreement with Health and Human Services’s Office of the Inspector General. The settlement involved no determination of liability.
Continue Reading DOJ Reaches Settlement with Patient Assistance Foundation Resolving Allegations of FCA Violations

On November 26, 2019, the Department of Justice (DOJ) announced a $26.67 million settlement with a laboratory testing corporation, Boston Heart Diagnostics Corporation (Boston Heart). The settlement resolves allegations of False Claims Act (FCA) violations related to alleged payments for patient referrals in violation of the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (PSR Law) – commonly known as the Stark Law – and other improper billing.
Continue Reading DOJ Announces $26.67 Million Settlement with Laboratory to Resolve FCA Allegations

On November 15, 2019, the Department of Justice (DOJ) announced it had reached a settlement with Sutter Health (Sutter) and Sacramento Cardiovascular Surgeons Medical Group Inc. (Sac Cardio) to resolve alleged violations of the Physician Self-Referral Law (PSR Law), commonly known as the Stark Law. Sutter is a California-based health services provider; Sac Cardio is a Sacramento-based practice group of three cardiovascular surgeons. The total settlement in excess of $46 million includes $30.5 million from Sutter to resolve allegations of an improper financial relationship specific to compensation arrangements with Sac Cardio. Sac Cardio has agreed to pay $506,000 to resolve allegations of duplicative billing associated with one of these compensation arrangements. Separately, the settlement includes another $15,117,516 from Sutter to resolve self-disclosed conduct principally concerning the PSR Law.
Continue Reading DOJ Announces Physician Self-Referral (Stark) Law Settlement in Excess of $46 Million with California Health System and Surgical Group

“A mere difference of opinion between physicians, without more, is not enough to show falsity.”

In a 3-0 decision issued September 9, 2019, the U.S. Court of Appeals for the Eleventh Circuit affirmed a three-year-old district court ruling in United States v. AseraCare, Inc. that a Medicare claim for hospice services cannot be deemed false under the False Claims Act (FCA) based on a difference in clinical judgment. This decision – apparently the first circuit-level determination of the “standard for falsity [under the FCA] in the context of the Medicare hospice benefit” – will affect all hospice providers, as the Department of Justice (DOJ) and whistleblowers will not be able to rely on disagreements between physician opinions as the basis for establishing falsity under the FCA. Instead, the Eleventh Circuit instructs that a claim for hospice reimbursement “cannot be “false” – and thus cannot trigger FCA liability – if the underlying clinical judgment does not reflect an objective falsehood.” The Eleventh Circuit’s decision emphasizes that reasonable differences of opinion between physician reviewers of medical documentation are not sufficient to suggest that the judgments concerning a particular patient’s eligibility for Medicare’s hospice benefit, or any claims submitted based on such judgments, are false for purposes of the FCA.
Continue Reading Eleventh Circuit Endorses Objective Falsehood Standard for False Claims Cases Concerning Physician Judgment of Hospice Eligibility

In its second quarter Securities Exchange Commission (SEC) filing, Allscripts addressed its announced agreement in principle with the Department of Justice (DOJ) to resolve investigations into certain alleged practices of Practice Fusion, an electronic health records (EHR) vendor acquired by Allscripts in February 2018 for $100 million. Allscripts indicated the agreement is still subject to further negotiation and government approval, and would likely include additional non-monetary terms, including a deferred prosecution agreement, if a finalized settlement is reached.
Continue Reading Allscripts Announces $145 Million Preliminary Settlement with DOJ Related to an Investigation of Practice Fusion, a Recently Acquired EHR Company

In a unanimous decision issued on May 13, 2019, the U.S. Supreme Court sought to resolve lingering confusion over the statute of limitations under the False Claims Act (FCA) for qui tam suits in which the federal government declines to intervene. In Cochise Consultancy, Inc. v. United States Ex Rel. Hunt, the Court held that a relator’s claim may be brought within 3 years after the government was made aware of underlying material claims, even where the government did not intervene in the case, because 10 years had not passed since the actions giving rise to such claims occurred, applying the periods in 31 U.S.C. § 3731(b)(2) to the case. Cochise addresses confusion over applicability of 31 U.S.C. § 3731(b), which contains two separate limitations periods (along with a repose period) that can apply to an FCA suit. Under that law, an FCA action may be brought (1) 6 years from the date of the violation, or (2) 3 years from the date the U.S. official responsible for acting knew or should have known of the violation, but no later than 10 years from the date the violation occurred.

The FCA makes it unlawful for individuals or entities to knowingly submit or cause to be submitted false claims for government payment. FCA suits may be brought by the government, or by private citizens in qui tam actions in the name of the United States. In qui tam actions the relator must serve the complaint on the government, and the government then has an opportunity to intervene in the suit.Continue Reading U.S. Supreme Court Clarifies Scope of False Claims Act Statutes of Limitations

On May 7, 2019, the U.S. Department of Justice (DOJ) provided important new guidance addressing cooperation credit that may be available to defendants in False Claims Act (FCA) investigations (Guidance).  The Guidance – issued in the form of an update to DOJ’s Justice Manual – explains how defendants in an FCA investigation may be awarded credit by DOJ for certain disclosures, cooperation, and remedial activities.

The Guidance is intended to incentivize companies and individuals to (i) be forthcoming with the government upon discovery of potential FCA violations, (ii) aid ongoing FCA investigations, and (iii) undertake appropriate remedial actions in response to misconduct. The Guidance provides examples of actions that FCA defendants may be able to take to reduce potential penalties under the FCA. As discussed below, DOJ’s examples appear to re-emphasize DOJ’s focus on individual accountability for corporate wrongdoing.
Continue Reading Seeking to Incentivize Self-Disclosures, DOJ Issues Guidance on Credit for Cooperation with FCA Investigations