On November 15, 2023, the U.S Department of Justice (DOJ) announced a $45.6 million consent judgment (Settlement) with six skilled nursing facilities (SNFs), as well as the owner of the SNFs and its management company which managed the SNFs, to resolve alleged violations of the False Claims Act (FCA) tied to medical director arrangements violating the Anti-Kickback Statute (AKS). The Settlement is notable for its inclusion of the owner and the management company in addition to the SNFs, which indicates DOJ’s interest in scrutinizing the actions of individuals and management entities in connection with problematic arrangements under federal fraud and abuse laws.Continue Reading DOJ Settlement Targets Owner and Management Company in Addition to Post-Acute Care Facilities
On June 22, 2023, New York State Public Health Law § 2802-b, added a Health Equity Impact Assessment (HEIA) to the Certificate of Need (CON) process for certain health care facilities. The new requirement comes as part of larger legislative changes to the Public Health Laws passed in 2021. The new HEIA requirement applies to any CON applications submitted on or after June 22, 2023, except there is a partial carve out for Diagnostic and Treatment Centers whose patient population is 50 percent or more Medicaid eligible or uninsured. The Department of Health also issued regulations on June 29, 2023 (10 NYCRR 400.26). The purpose of the HEIA is to understand the health equity impact on a specific project, the impact it may have on medically underserved groups and to ensure community input and assessment are considered. The Department of Health has expressed that their vision is “to have health equity considerations meaningfully impact the planning and execution of health care facility projects.” (NYSDOH, Health Equity Impact Assessment, Webinar Series: Program Documents, September 14, 2023.)Continue Reading New York Implements Health Equity Impact Assessment as New Requirement for Certificate of Need Process
On May 2, 2023, legislators approved the $229 billion New York State FY 2023-2024 Budget Bill (“the Budget”), which was signed by Governor Hochul on May 3, 2023. Article VII of the Budget touches almost every aspect of the New York healthcare system, including home health, hospitals, laboratories, and reproductive health. It contains wide-ranging provisions that expand access to care, allow clinicians to provide more services, and allocate needed resources to providers. It targets Medicaid in multiple ways, including an extension of the Medicaid Global Cap on system-wide spending growth through FY 2025.[i] Here, we outline some of the key provisions that this Budget contains.Continue Reading New York Enacts Long Negotiated Budget Bill with Sweeping Implications for Health Care
On June 30, 2022, Governor Gavin Newsom signed the 2022-2023 California state budget, which included a trailer bill, Senate Bill 184 (the Bill) which makes numerous statutory revisions impacting health programs and consumers. The Bill establishes the Office of Health Care Affordability (OHCA) within the Department of Health Care Access and Information to combat rising health care costs. California will join other states such as Massachusetts, Oregon, and Nevada in implementing a health care cost commission.Continue Reading California Governor Signs Trailer Bill to State Budget Increasing Oversight of Health Care Entities Statewide
On June 2, 2022, the New York State Legislature passed A08472, “An Act to Amend the Public Health Law, in Relation to the Establishment, Incorporation, Construction, or Increase in Capacity of For-Profit Hospice” (“the Act”). The Act prohibits the Public Health and Health Planning Council (PHHPC) of the New York Department of Health (DOH) from approving any new applications for the establishment, incorporation, or construction of a for-profit hospice. Additionally, the bill prohibits PHHPC from approving any increases in capacity to existing for-profit hospices in the state. The two current for-profit hospices will remain approved but cannot expand capacity. The Act will now be presented to the Governor for signature. Once signed by the Governor, the Act will become effective immediately.Continue Reading New York State Legislature Passes Act Enacting Moratorium on For-Profit Hospices
On September 18, 2019, the Department of Justice (DOJ) announced a $21.36 million settlement with compounding pharmacy Patient Care America (PCA), as well as PCA’s Chief Executive, PCA’s former Vice President of Operations, and a private equity firm (PE Firm) that managed PCA on behalf of investors. The settlement resolves a False Claims Act (FCA) lawsuit alleging involvement in a kickback scheme designed to generate unnecessary referrals for prescription pain creams, scar creams, and vitamins reimbursed by TRICARE, the federal health care program for military members and their families. No determination of liability was made as part of the settlement. See our prior analysis of DOJ’s intervention in this case here.
Continue Reading DOJ Reaches $21.36 Million Agreement with Compounding Pharmacy, Two of its Executives, and Managing Private Equity Firm to Resolve FCA Allegations
On June 11, 2019, the New York Court of Appeals issued an opinion in Andrew Carothers, M.D., P.C. v. Progressive Insurance Company, 2019 NY Slip Op 04643, holding that an insurer could withhold payments for medical services provided by professional corporations “when there is willful and material failure to abide by licensing and incorporation statutes” without a direct finding of fraud. The court found that medical professional corporations (PCs) ceding too much control of management activities, including finances and operations, to a non-physician violates the Business Corporation law and the corporate practice of medicine doctrine, making the entity improperly incorporated, thus allowing an insurance company to withhold payment. While the scope of the Carothers case was limited to “no-fault” insurance reimbursement, this opinion is instructive on how New York courts may in the future examine the arrangements between PCs and management service organizations (MSOs).
Continue Reading New York Court of Appeals Holds that PCs that Cede Excessive Control to MSOs Violate the Corporate Practice of Medicine Doctrine
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.”
Continue Reading Private Equity Firm Named as Defendant in False Claims Act Case Targeting A Portfolio Company