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 …
Archives: Government Enforcement
Subscribe to Government Enforcement RSS FeedPrivate 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 …
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 …
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.…
Bipartisan Budget Act Revises Stark Law, Increases Penalties for AKS and CMP Law Violations, and Expands Telehealth Coverage
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
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
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
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
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
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
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
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
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
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 …
HHS Issues Limited Waiver of HIPAA Sanctions Post-Hurricane Harvey
The U.S. Department of Health and Human Services (HHS) has used its authority to waive certain provisions of HIPAA in response to Hurricane Harvey. HHS previously declared a public health emergency in Texas and Louisiana related to the hurricane and its aftermath. …
OIG Settles EMTALA Allegations Involving Psychiatric Care
On June 2, 2017, AnMed Health and the Office of Inspector General (OIG) for the United States Department of Health and Human Services agreed to a $1.295 million settlement of allegations that AnMed had violated the Emergency Medical Treatment & Labor Act (EMTALA) (Section 1867 of the Social Security Act). The OIG alleged that AnMed failed to provide appropriate medical screening and stabilizing treatment to individuals presenting to the ED with unstable psychiatric emergency medical conditions.…
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).…
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) …
FTC Intervenes in Physician Practice Acquisition in North Dakota
On June 22, 2017 the Federal Trade Commission (FTC) filed an administrative complaint and a request for a preliminary injunction in federal court to block a proposed physician practice acquisition in North Dakota (the Transaction), the agency’s latest intervention in opposition to consolidation at the physician practice level. In this case, the FTC (accompanied by the Attorney General of North Dakota) opposes a proposed acquisition of Mid Dakota Clinic, P.C. (MDC) by Sanford Bismarck (a subsidiary of multi-state health system Sanford Health, collectively Sanford) on the grounds that the Transaction, …
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 …
Connecticut Legislature Expands Universe of Available Disciplinary Actions Against Licensed Practitioners
The Connecticut Legislature recently approved Public Act 17-10, a bill that establishes a new disciplinary action that may be taken against certain licensed practitioners in Connecticut, including physicians, physician assistants, nurses, dentists, podiatrists, physical therapists, psychologists, and EMS personnel.…
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 …
Anthem Terminates Cigna Merger Following D.C. Circuit Setback
On May 12, 2017, Anthem Inc. announced that it had terminated its merger agreement with Cigna Corporation, a deal that would have united the second and third largest sellers of health insurance to large companies in the country. Anthem’s termination of the merger came two weeks to the day after the U.S. Court of Appeals for the D.C. Circuit rejected Anthem’s appeal of an injunction blocking the merger issued by a U.S. District Court earlier this year. Anthem terminated the merger one week after filing a petition for a writ …
Court Rejects Health Care System’s Efforts to Dismiss Government’s Anti-Steering Managed Care Antitrust Case
On March 30, 2017, the U.S. District Court for the Western District of North Carolina rejected a motion for judgment on the pleadings (akin to a motion to dismiss) by Carolinas HealthCare System (CHS) in a novel health care antitrust suit brought by the Department of Justice (DOJ) and State of North Carolina (collectively, the Government).
The Government filed suit against CHS, a health system consisting of 10 hospitals in and around Charlotte, North Carolina, in June 2016, alleging that contractual provisions mandated by CHS in its contracts with health …
