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 …
Tag Archives: Department of Justice
DOJ Intervenes in False Claims Act Case Against Insys Therapeutics
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
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
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
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 …
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.…
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.…
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. …
“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 …
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 …
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 …
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 …
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 …
Second Circuit Denies En Banc Rehearing in Microsoft Email Case
On January 24, 2016, the U.S. Court of Appeals for the Second Circuit denied the Department of Justice’s request for an en banc rehearing in In the Matter of a Warrant to Search a Certain Email Account Controlled and Maintained by Microsoft Corp. a/k/a Microsoft Corp. v. United States (No. 14-2985). The denial leaves in place a controversial decision by a three judge panel that quashed a warrant obtained by the DOJ under the Stored Communications Act (SCA) seeking the contents of a Microsoft customer’s emails. The majority panel …
