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One-Two Punch: On Consecutive Days, DOJ Announces High Dollar Fraud and Abuse Settlements with Hospitals

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Physicians and Allied Health Professionals, Reimbursement

The Department of Justice (DOJ) announced two significant False Claims Act (FCA) settlements in recent days that signal continued close government scrutiny of billing, coding and referral practices at hospitals.

On August 2, DOJ announced an $84.5 million dollar settlement with Michigan-based health system William Beaumont Hospital. The settlement resolves allegations of non-compliance with the Anti-Kickback Statute (AKS) and Stark Law arising from “improper relationships with eight referring physicians” that led to the submission of false claims to government health care programs.

DOJ alleged that the defendant provided compensation substantially …

CMS issues Request for Information on the burdens the Stark Law may Impose on Care Coordination

By Nawa Lodin on Posted in Fraud and Abuse, Government Enforcement, Reimbursement, Uncategorized

The Centers for Medicare and Medicaid Services (CMS) issued a Request for Information (RFI) seeking input from the public on the burden the Stark Law may impose on patient care and recommendations on how to address any undue impact, specifically on care coordination.

The Stark Law, also known as the physician self-referral law, prohibits a physician from making referrals of a Medicare of Medicaid patient to an entity providing designated health services with which he or she (or an immediate family member) has a financial interest.

CMS Administrator Seema Verma …

Connecticut Enacts Law Revising Various Department of Public Health Statutes

By Robinson+Cole's Health Law Group on Posted in 2018 Connecticut Legislative Update, Government Enforcement, Hospitals and Health Systems, Legislation, Long Term Care and Nursing Homes, Medicare and Medicaid, Physicians and Allied Health Professionals, Reimbursement

On June 13, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-168 “An Act Concerning the Department of Public Health’s Recommendations Regarding Various Revisions to the Public Health Statutes” (PA 18-168). This legislation makes a number of changes to state laws concerning public health and the responsibilities of the Department of Public Health (DPH), including laws affecting advanced practice registered nurses (APRNs), advance directives, the scope of practice for podiatry, respiratory care, reportable events at nursing homes, and the supervision of physician assistants. …

Massachusetts Files Suit Against Connecticut-Based Purdue Pharma for Opioid Related Harms

By Nawa Lodin on Posted in Government Enforcement, Life Sciences, Pharmaceuticals and Biologics

On June 13, 2018, Attorney General Maura Healey filed a complaint in Massachusetts Superior Court on behalf of the Commonwealth against Purdue Pharma Inc. and Purdue Pharma L.P., Connecticut-based drug companies that manufacture and market OxyContin.  The lawsuit also names sixteen individual defendants, including current and former CEOs and certain members of the board of Purdue Pharma Inc. This is not the first time a Purdue Pharma company has been accused of wrongdoing with respect to the marketing of opioids. In 2007, Purdue Frederick Company (an affiliate of Purdue Pharma …

Connecticut Legislature Revises DSS Provider Audit Processes

By Robinson+Cole's Health Law Group on Posted in 2018 Connecticut Legislative Update, Government Enforcement, Hospitals and Health Systems, Legislation, Physicians and Allied Health Professionals, Reimbursement

On June 1, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-76 “An Act Concerning Audits of Medical Assistance Providers” (PA 18-76), which makes several changes to the Medicaid provider audit process conducted by or on behalf of the Connecticut Department of Social Services (DSS). PA 18-76 is effective July 1, 2018.…

Connecticut Legislature Operationalizes New Health Oversight Agency: The Office of Health Strategy

By Robinson+Cole's Health Law Group on Posted in 2018 Connecticut Legislative Update, Ambulatory Surgical Centers (ASC), Antitrust, Government Enforcement, Health Information Technology, Hospitals and Health Systems, Legislation, Physicians and Allied Health Professionals, Privacy and Security

On May 14, 2018, Connecticut Governor Dannel P. Malloy signed into law Public Act No. 18-91 “An Act Concerning the Office of Health Strategy” (PA 18-91), a bill that operationalizes the Office of Health Strategy (OHS), a new health oversight agency in Connecticut. OHS is a division of the Department of Public Health (DPH) “for administrative purposes only” that was provisionally established by the Connecticut General Assembly within the budget implementer bill passed in a special session in late 2017 and accorded responsibility for developing and implementing a …

DOJ Enters Into Largest-Ever Civil Settlement with Hospital for Drug Diversion

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals

On May 16, 2018, the U.S. Attorney’s Office for the Southern District of Georgia announced that it had entered into the “largest hospital drug diversion civil penalty settlement in U.S. History” in the amount of $4.1 million dollars.  The settlement with a Georgia hospital resolves allegations that the hospital “failed to provide effective controls and procedures to guard against theft and loss of controlled substances” that resulted in tens of thousands of 30mg oxycodone tablets being unaccounted for and believed to have been diverted for illegal uses over a four …

DOJ Intervenes in False Claims Act Case Against Insys Therapeutics

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals

The Department of Justice (DOJ), recently intervened in a civil False Claims Act (FCA) case filed against Insys Therapeutics, Inc. (Insys) in the Central District of California that alleges FCA violations arising from the payment of kickbacks in violation of the Anti-Kickback Statute (AKS) as well as other fraudulent activities. Insys is an embattled Arizona-based pharmaceutical manufacturer of a highly-addictive sublingual opioid spray known as Subsys, and is currently the subject of a number of criminal and civil suits ongoing across the country (certain of which were consolidated into this …

DOJ Announces Criminal Conviction of Physician for HIPAA Violation

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Life Sciences, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals, Privacy and Security

On April 30, 2018 a Massachusetts physician was convicted of a criminal violation of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as well as one count of obstruction of a criminal health care investigation, in a Massachusetts federal court. The convictions relate to the purported sharing of confidential patient information by the physician with pharmaceutical sales representatives that allowed the pharmaceutical company to target patients with specific conditions (and to correspondingly facilitate the receipt of prior authorizations for the company’s drugs from patients’ insurers).…

Supreme Court Order Indicates Interest in Reviewing Campie, the False Claims Act Outlier of the Ninth Circuit

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Life Sciences, Medicare and Medicaid, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals, Reimbursement

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 …

Private Equity Firm Named as Defendant in False Claims Act Case Targeting A Portfolio Company

By Leslie Levinson and Erica Youngerman on Posted in Department of Justice, Fraud and Abuse, Government Enforcement, Home Health Agencies, Hospice, Long Term Care and Nursing Homes, Medicare and Medicaid, Physicians and Allied Health Professionals, Private Equity

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 …

Fifth Circuit Reinstates Provider’s Collateral Challenge to the Medicare Appeal Process

By Nawa Lodin and Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospice, Long Term Care and Nursing Homes, Medicare and Medicaid, Reimbursement

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 …

State Enforcement Actions Demonstrate Continued Scrutiny of Health Care Fraud

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Physicians and Allied Health Professionals, Reimbursement

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.…

Bipartisan Budget Act Revises Stark Law, Increases Penalties for AKS and CMP Law Violations, and Expands Telehealth Coverage

By Meaghan Mary Cooper on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Reimbursement, Telehealth

On February 9, 2018, Congress passed the Bipartisan Budget Act of 2018 (the Act), which included a number of important health law provisions..

AKS and CMP Violations

Under the Act, Congress doubled the statutory civil fines for certain violations of the Anti-kickback Statue (AKS) and adjusted certain fines under the Civil Monetary Penalty (CMP) Law. The Act also increased the maximum criminal penalty from $25,000 to $100,000 and increased the maximum incarceration period from five years to ten years.…

Recent Anti-Kickback Cases Emphasize Government Scrutiny of Speaker’s Bureaus and Lavish Meals Funded by Pharmaceutical and Device Manufacturers

By Conor Duffy on Posted in Commercial Health Insurance, Department of Justice, Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medical Devices, Medicare and Medicaid, Office of Inspector General, Pharmaceuticals and Biologics, Physicians and Allied Health Professionals, Reimbursement

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.…

Escobar Compels Florida District Court to Overturn $350 Million Jury Verdict Arising from Claims of Inadequate Documentation

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Physicians and Allied Health Professionals, Reimbursement

Last month, a U.S. District Court in the Middle District of Florida overturned judgments totaling $347,864,285 returned by a jury under the federal False Claims Act (FCA) and Florida’s state equivalent against the owners and operators of 53 specialized nursing facilities in Florida, determining that the plaintiffs’ allegations failed to satisfy the “demanding” and “rigorous” materiality standard endorsed by the Supreme Court in its 2016 Escobar decision. In an order released January 11, 2018, the District Court reversed the jury’s conclusions and granted the defendants judgment as a matter of …

CMS Announces Change to Student Documentation Requirement Intended to Reduce Burden on Teaching Physicians

By Conor Duffy on Posted in Academic Medical Centers, Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Physicians and Allied Health Professionals, Reimbursement

On February 2, 2018, the Centers for Medicare & Medicaid Services (CMS) released Transmittal 3971 (Change Request 10412), which revises a section of the Medicare Claims Processing Manual (Manual), that provides guidance regarding billing for Evaluation and Management (E/M) services involving students.  According to CMS, the Change Request is part of a broader goal to reduce the administrative burden on practitioners.…

“Brand Memo” from the U.S. Department of Justice: Reading Between the Lines

By Melissa (Lisa) Thompson on Posted in Department of Justice, Fraud and Abuse, Government Enforcement

On January 25, 2018, Associate Attorney General Rachel Brand issued a memo on behalf of the U.S. Department of Justice (DOJ) prohibiting certain DOJ uses of federal agency guidance documents in affirmative civil enforcement (ACE) cases (the “Brand Memo”). ACE cases include lawsuits brought by the DOJ on behalf of the United States to recover money lost to fraud or other misconduct, or to impose penalties for violations of Federal health, safety, civil rights or environmental laws, for example, False Claims Act enforcement by the DOJ.

The “Brand …

REMINDER: Annual Reporting Deadline Approaches for Connecticut Hospitals and Hospital Systems

By Conor Duffy on Posted in Government Enforcement, Hospitals and Health Systems, Physicians and Allied Health Professionals

Hospitals and hospital systems in Connecticut must file annual reports by January 15, 2018 describing (1) the activities of their group practices (e.g., medical foundations or faculty practice plans), and (2) their respective affiliations with other hospitals or hospital systems.

Under Section 19a-486i of the Connecticut General Statutes, hospitals and hospital systems in Connecticut are obligated to file the separate reports in writing on an annual basis with the Connecticut Attorney General (AG) and Department of Public Health (DPH).  Previously, the reports had been due by December 31 each year, …

CMS Approves Laboratory Alerts to Physicians in Rare Stark Law Advisory Opinion

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Life Sciences, Medicare and Medicaid, Physicians and Allied Health Professionals, Reimbursement

The Centers for Medicare & Medicaid Services (CMS) issued a rare advisory opinion (CMS-AO-2017-1) under the Stark Law (Section 1877 of the Social Security Act, codified at 42 U.S.C. § 1395) earlier this fall, addressing a proposed arrangement under which a web-based diagnostic testing portal sought to provide referring physicians with free alerts related to test results.…

FTC Granted Preliminary Injunction to Block Physician Practice Acquisition

By Conor Duffy on Posted in Government Enforcement, Hospitals and Health Systems, Physicians and Allied Health Professionals, Reimbursement

On December 13, 2017 a magistrate judge in the U.S. District Court for the District of North Dakota granted a request of the Federal Trade Commission (FTC) and North Dakota Attorney General to preliminarily enjoin Sanford Health from completing its proposed acquisition (via its subsidiary Sanford Bismarck) of Mid Dakota Clinic, P.C., a multispecialty physician practice located in and around the cities of Bismarck and Mandan, North Dakota (see our previous analysis of the FTC’s decision to intervene here).…

OIG Rescinds Advisory Opinion Due to Requestor’s Failure to Disclose Information

By Nathaniel Arden on Posted in Fraud and Abuse, Government Enforcement, Hospitals and Health Systems, Medicare and Medicaid, Office of Inspector General

On November 28, 2017, the Office of Inspector General (OIG) rescinded advisory opinion 06-04, in which it had previously determined that a charity’s (Requestor) proposal to provide assistance to financially needy Medicare beneficiaries did not warrant the imposition of sanctions. The OIG explained that “public interest requires rescission” after finding that Requestor failed to comply with earlier factual certifications that were material to the original advisory opinion.

Under the program, the Requestor provides assistance with premiums and cost-sharing obligations for patients with two specific chronic diseases. Most of the …

Fourth and Fifth Circuits Rely on Escobar to Render Important Fraud Decisions

By Conor Duffy on Posted in Fraud and Abuse, Government Enforcement, Medicare and Medicaid, Reimbursement

Recent decisions in the Fourth and Fifth Circuit Courts of Appeals demonstrate the central role that the Supreme Court’s Escobar decision continues to play in fraud litigation despite, or as a result of, continued uncertainty as to the application of the “rigorous” and “demanding” materiality standard endorsed in that decision. The decisions discussed below provide additional circuit-level guidance for litigants, but also raise additional questions as to the scope of the Escobar ruling and the efficacy of the implied false certification theory of FCA liability.

First, on September 29, 2017 …

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