Archives: Fraud and Abuse

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OIG Issues Advisory Opinion to Pharmacy

On September 7, 2017, the HHS Office of Inspector General (OIG) issued an Advisory Opinion to the owner of a retail pharmacy chain (Pharmacy) that would allow Federal health care program beneficiaries to participate in a paid membership program (Program).  The Program would include discounts and rebates on certain prescriptions and, where offered, on selected clinic services.

The Program was being offered previously to customers who satisfied certain eligibility criteria and paid an annual fee to join, but Federal program beneficiaries had not been permitted to enroll. In seeking the …

House Bipartisan Act Would Amend Stark Law and Medicare Part B

On July 25, 2017, the U.S. House of Representatives passed by voice vote a bipartisan bill which is now in the Senate’s hands for consideration, the Medicare Part B Improvement Act of 2017. The bill would amend the Stark Law (Section 1877(h)(1) of the Social Security Act) and impact other provisions governing Medicare Part B.

The bill would amend the Stark Law:

  • to provide that the writing requirement for certain compensation arrangements may be satisfied by means determined by the HHS Secretary, including “a collection of documents, including contemporaneous

Ninth Circuit Relies on Escobar to Revive False Claims Act Suit Against Pharmaceutical Manufacturer

On July 7, 2017, the U.S. Court of Appeals for the Ninth Circuit reversed a federal district court’s dismissal of a False Claims Act (FCA) whistleblower suit in United States ex rel. Campie v. Gilead Sciences, explaining that the district court did not have “the benefit of” the Supreme Court’s 2016 decision in Escobar at the time the suit was dismissed for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).…

New OIG Advisory Opinion Allows Waiver of Cost Sharing in Research Studies

The Office of Inspector General (OIG) recently issued Advisory Opinion 17-02, allowing waivers or reductions of cost-sharing amounts owed by financially needy Medicare beneficiaries in connection with certain clinical research studies conducted at a non-profit medical center.  In the advisory opinion, the OIG reiterated its longstanding concern about routine waivers of Medicare beneficiary cost-sharing amounts in the absence of financial hardship, and noted this can lead to liability under the anti-kickback statute (AKS).  The research studies were conducted utilizing protocols under the Medicare Coverage with Evidence Development (CED) framework …

Connecticut Enacts Legislation Intended to Curb Opioid Drug Abuse

On June 30, 2017, Connecticut Governor Dannel P. Malloy signed into law An Act Preventing Prescription Opioid Diversion and Abuse (Public Act No. 17-131). This legislation addresses opioid drug abuse in Connecticut by revising current laws related to controlled substance prescribing and disposal and enacting new laws regarding opioid abuse prevention and treatment.

We recently covered PA 17-131 in our Health Law Pulse, it can be accessed here.…

Third Circuit Recognizes Escobar “Heightened Materiality Standard” in Dismissal of False Claims Act Case Tied to Avastin

In May 2017, the U.S. Court of Appeals for the Third Circuit relied on the “heightened materiality standard” endorsed by the U.S. Supreme Court in its 2016 Escobar decision in dismissing a False Claims Act (FCA) whistleblower suit filed against pharmaceutical giant Genentech related to its billion dollar cancer drug Avastin. In Escobar, the Supreme Court upheld the validity—“at least in some circumstances”—of the “implied false certification” theory of FCA liability, and provided that this theory can attach where at least two conditions are met: a defendant must (1) …

EHR Vendor Settles False Claims Act Suit for $155 Million

Electronic health record (EHR) vendor eClinicalWorks (eCW) recently entered into a settlement with the US Department of Justice (DOJ) and the Department of Health and Human Services’ Office of Inspector General (OIG) to resolve allegations under the federal False Claims Act (FCA) that eCW misrepresented its software and paid customers kickbacks to promote its products. The settlement imposes joint and several liability for payment on the EHR Vendor and three of its founders for $154.92 million, and liability for settlement payments individually by a developer ($50,000) and two project managers …

DOJ Settles Allegations of Fraudulent Loan Program Between Hospital System and FQHC

The U.S. Department of Justice (DOJ) recently announced a settlement with a hospital operated by Indiana University Health, Inc. and a federally qualified health center operated by HealthNet, Inc. to resolve claims that the parties violated the Anti-Kickback Statute, the Federal Claims Act and Indiana law. Each of the parties will pay over $5 million to the United States and approximately $3.9 million to the State of Indiana. The lawsuit was originally brought by a qui tam relator, a physician and former employee of the hospital and HealthNet, and later …

Federal Court Holds Online Medical Products Auction Contract Violates the AKS

The U.S. District Court for the District of Connecticut granted a motion for summary judgment in favor of Becton, Dickinson & Co. (BDC), a medical products provider, on the grounds that its contracts with MedPricer.com, Inc. (MedPricer), a company operating an online auction platform, violated the federal Anti-Kickback Statute (AKS), and were therefore unenforceable under Connecticut state law. MedPricer.com, Inc. v. Becton, Dickinson & Co., 2017 U.S. Dist. LEXIS 30854 (Memorandum opinion).

As described in the opinion, MedPricer enters into service agreements with hospitals and other health care providers to …

CMS Revises Process for Reporting Stark Law Violations and Posts New SRDP Forms

On March 28, the Centers for Medicare & Medicaid Services (CMS) revised the procedures and posted new forms for its Voluntary Self-Referral Disclosure Protocol (SRDP).  The SRDP is a mechanism established pursuant to the Affordable Care Act for health care providers and suppliers to facilitate settlement of violations of the physician self-referral law (Stark Law).

Under the Stark Law, physicians (or their immediate family members) who have a financial relationship with an entity are prohibited from making referrals to that entity for certain designated health services (DHS) that are payable …

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 …

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 …

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 …

DOJ Announces $23 Million in Settlements Related to Implantation of ICD Cardiac Devices

On February 17, 2017, the U.S. Department of Justice (DOJ) announced settlements with 51 hospitals related to implantable cardioverter defibrillators (ICD), totaling over $23 million.  Combined with previously announced settlements, the DOJ has now reached agreements with more than 500 hospitals totaling more than $280 million relating to ICDs.   According to the DOJ, most of the 51 settling defendants were named in a False Claims Act qui tam lawsuit filed by a health care reimbursement consultant and a cardiac nurse.  U.S. ex rel. Ford et al. v. Abbott Northwestern

New Anti-Kickback Safe Harbors and Exceptions to CMP Law

On December 7, 2016, the Department of Health and Human Services Office of Inspector General (OIG) issued a long-awaited final rule establishing new Anti-Kickback Statute (AKS) safe harbor protections and codifying regulatory exceptions to the Civil Monetary Penalties Law (CMP).

Local Transportation Safe Harbor

This safe harbor protects local transportation made available by an “Eligible Entity” as long as the following conditions are met.  An “Eligible Entity” is any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health

OIG Issues Favorable Advisory Opinion for Cost-sharing Waivers and Stipends in a Clinical Research Study

On December 13, 2016, the Office of Inspector General (OIG) issued a favorable Advisory Opinion to a university health system (the Requestor) for two arrangements relating to a federally-funded clinical research study designed by a physician-employee (the Study):

  1. a proposal to waive the cost-sharing obligations of Study participants (Participants) for medically necessary health care services received under the Study protocol (the Proposed Arrangement), and
  2. payment of a stipend to Participants for the time and effort required to participate (the Current Arrangement).

OIG Increases Nominal Value for Gifts to Beneficiaries

In a Policy Statement by the Office of Inspector General (OIG), Health & Human Services released December 7, 2016, the OIG updated its long-standing interpretation of the term “nominal value” with regard to gifts to federal health care program beneficiaries that do not comprise “remuneration” under section 1128A(a)(5) of the Social Security Act. The OIG now interprets nominal value as having a retail value of no more than $15 per item and $75 in the aggregate per patient annually, as long as the items are not cash or cash equivalents. …

FY2105 Saw an Increase in Medicaid-Related Convictions and Decrease in Civil Settlements

On September 13, 2016, the Department of Health and Human Services (HHS) published its Medicaid Fraud Control Units Fiscal Year 2015 Annual Report (Report).  Medicaid Fraud Control Units (MFCUs) operate in 49 states and the District of Columbia. Typically part of the state-level Attorney General’s offices, the MFCUs investigate and prosecute Medicaid provider fraud as well as patient abuse and neglect. The Report found that in FY 2015, there were 1,553 reported convictions, seventy-one percent of which involved fraud. In addition, 731 civil settlements were entered into.…

Significant Changes to The Stark Law in the 2016 Physician Fee Schedule

In the 2016 Medicare Physician Fee Schedule (PFS), the Centers for Medicare & Medicaid Services (CMS) made several important and provider-friendly revisions and additions to the physician self-referral law (Stark Law). The PFS created two new Stark exceptions—one for the recruitment of non-physician practitioners (NPPs) and one for timeshare arrangements. The PFS also made several clarifications and additional revisions to the Stark Law regulations.

NPP Recruitment Exception

The NPP recruitment exception allows hospitals, federally qualified health centers and rural health clinics to pay physicians to help them employ NPPs (includes …

Fraud And Abuse Waivers For ACOs

On October 29, 2015, the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG), Health & Human Services issued a final rule (Final Rule) regarding waivers (ACO Waivers) of the physician self-referral law (Stark law), the federal Anti-Kickback Statute, and the Civil Monetary Penalties Law (CMP) provision relating to beneficiary inducements for Medicare accountable care organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). The ACO Waivers waive the application of these fraud and abuse laws to certain ACO activities that are reasonably related …

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