Since the beginning of 2019, federal and state authorities in Connecticut have announced a number of enforcement actions targeting alleged health care fraud in the state. These cases are a reminder to providers of heightened criminal and civil scrutiny of arrangements implicating health care fraud and abuse laws in the state, and also reflect the extensive federal-state cooperation between the Department of Justice (DOJ) and Office of the Attorney General (AG) in investigating fraud and abuse. That federal-state cooperation is part of Connecticut’s Interagency Fraud Task Force, an initiative started in 2013 to prosecute fraud that includes multiple Connecticut agencies, as well as DOJ and the Office of Inspector General (OIG) within the Department of Health & Human Services (HHS).
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Department of Justice
Group Practice to Pay $1.85 Million Settlement Tied to Allegations of Improper Unbundled Billing
On February 25, 2019, the U.S. Department of Justice (DOJ) announced a settlement with a urology group practice to settle allegations of False Claims Act (FCA) violations tied to the alleged submission of improperly unbundled Medicare claims. The pursuit and settlement of this FCA suit by the DOJ represents at least the second recent enforcement action targeting allegations of improper unbundled billing of services to Medicare, and may therefore indicate heightened governmental interest in those billing practices. See here for our analysis of the previous unbundled billing case.
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Department of Justice Intervenes in False Claims Act Suit, Adding Reimbursement Consultant Defendant
On February 19, 2019, the Department of Justice (DOJ) announced that it had intervened in a False Claims Act (FCA) whistleblower suit filed against Arriva Medical LLC (Arriva) and its parent that allegedly involves the submission of false claims for medically unnecessary glucometers, and alleged kickbacks to Medicare beneficiaries in the form of free glucometers and copayment waivers. This intervention is particularly noteworthy for the fact that in addition to joining the suit, DOJ announced that it was adding a reimbursement consultant used by Arriva as a defendant to the FCA suit.
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Department of Justice Announces Significant False Claims Act Settlements Tied to Electronic Health Records Arrangements
The Department of Justice (DOJ) recently announced two high-dollar False Claims Act (FCA) enforcement actions involving allegedly fraudulent arrangements tied to the implementation and use of electronic health record systems (EHRs). The respective settlements enable recovery by DOJ of over $100 million, and immediately precede the government’s recent proposal of new rules to promote the interoperability of EHRs. The settlements thus serve as an important reminder of the importance of adhering to federal fraud and abuse laws and regulations as hospitals and other health care providers continue to implement EHR technology.
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DOJ Enters Into $12.5 Million Settlement with For-Profit Health System and its CEO in Connection with Improper Unbundled Billing
On December 11, 2018, the U.S. Attorney’s Office for the Eastern District of Pennsylvania (DOJ) announced that it had entered into a $12.5 million dollar settlement with Pennsylvania-based health system Coordinated Health Holding Company, LLC and its Chief Executive Officer (CEO), to resolve allegations of improper billing for orthopedic procedures. Under the terms of the settlement, the CEO (who is also the founder and principal owner of the for-profit system) agreed to pay $1.25 million dollars personally, and the health system entered into a five-year Corporate Integrity Agreement with DOJ requiring regular monitoring of its billing practices.
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In Amicus Brief, Government Discourages Supreme Court Review of Pro-Relator Ninth Circuit FCA Decision, but Pledges to Seek Dismissal of Case Upon Remand
On November 30, 2018, the Solicitor General of the United States filed a long-awaited amicus brief in response to the U.S. Supreme Court’s request for the government’s view of the False Claims Act (FCA) case U.S. ex rel. Campie v. Gilead Sciences, Inc. (see here for previous analysis of the Ninth Circuit decision in the case, and here for discussion of the Supreme Court’s request).
In its brief, the Solicitor General states that the conclusion of the Ninth Circuit – that “the fact of continued government payments did not by itself require dismissal of [the relator’s FCA] claims at the pleading stage” – was “correct and consistent with decisions issued by other circuits in comparable circumstances” and as a result no further review is warranted. The Solicitor General’s brief appears to advocate for a more narrow reading of the Ninth Circuit decision than many commenters have undertaken, explaining that “the relevance of a governmental payment decision turns on whether the government had ‘actual knowledge’ of violations at the time of payment” but in this case it is disputed what the government knew about alleged violations and when it learned about such violations.
Continue Reading In Amicus Brief, Government Discourages Supreme Court Review of Pro-Relator Ninth Circuit FCA Decision, but Pledges to Seek Dismissal of Case Upon Remand
Ninth Circuit Issues Long-Awaited Interpretation of Escobar Two-Part Test
In late August, the U.S. Court of Appeals for the Ninth Circuit issued a long-awaited decision in U.S. ex rel. Rose v. Stephens Institute that interprets key aspects of the implied false certification theory of False Claims Act (FCA) liability under the Supreme Court’s 2016 Escobar decision. As the Ninth Circuit explains in its decision, Escobar “unsettled” Ninth Circuit law related to the standard for proving falsity and materiality in an FCA case. The Ninth Circuit therefore sought to reconcile its precedents with Escobar in Rose, which was before it on an interlocutory appeal from a denial of summary judgment sought by the defendant.
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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.”
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Recent Anti-Kickback Cases Emphasize Government Scrutiny of Speaker’s Bureaus and Lavish Meals Funded by Pharmaceutical and Device Manufacturers
The Department of Justice (DOJ) recently resolved two health care fraud cases – one criminal and one civil – that demonstrate the government’s continued scrutiny of lavish meals and “speaker’s bureaus” sponsored by pharmaceutical and device manufacturers as potential avenues for the payment of kickbacks to physicians for referrals of health care items and services. These cases indicate the criminal and civil risk that providing lavish meals or purported speaker’s bureau payment can pose, and the corresponding need to proactively assess the legitimacy of such programs and events.
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Seeking Dismissal of False Claims Qui Tam Actions – Seven Factors Clarify the Standard of Dismissal Used By the Department of Justice
The U.S. Department of Justice Civil Division (Department) issued a Memo dated January 10, 2018 (Granston Memo), directing Department of Justice attorneys to more seriously consider dismissing False Claims Act (FCA) cases filed by whistleblowers. The Granston Memo enumerated several factors that prosecutors should consider when evaluating dismissal of qui tam actions. As the number of qui tam actions filed under the False Claims Act has substantially increased, the Granston Memo is an important tool in response to the strained government resources needed to evaluate, participate, and/or monitor these cases.
Continue Reading Seeking Dismissal of False Claims Qui Tam Actions – Seven Factors Clarify the Standard of Dismissal Used By the Department of Justice