On December 27, 2022, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule (Proposed Rule) which proposes certain policy and technical changes to Medicare regulations, including a notable change to the current standard under the “60-Day Rule” for identifying a Medicare overpayment. Specifically, CMS indicated that it is proposing to (i) “adopt by reference” the federal False Claims Act’s (FCA) definitions of “knowing” and “knowingly” as governing when an overpayment is identified, and (ii) eliminate the “reasonable diligence” standard that has been in place, but subject to challenges, for a number of years.
FCA
DOJ Announces Settlement with EHR Company to Resolve Criminal and Civil Kickback Investigations Tied to Opioid Prescribing
By Conor Duffy on
On January 27, 2020, the Department of Justice (DOJ) announced a $145 million settlement with Practice Fusion Inc., an electronic health records (EHR) software company that resolves parallel criminal and civil investigations involving allegations of kickbacks, false claims, and non-compliance with federal EHR program requirements. We previously discussed a preliminary settlement in this case here, and in announcing the finalizing of that settlement the DOJ has shed more light on the allegedly improper conduct at issue. According to the DOJ, this is the first criminal action ever brought against an EHR company, and the “unique” deferred prosecution agreement (DPA) imposed by the DOJ against Practice Fusion that seeks “to ensure acceptance of responsibility and transparency as to” underlying conduct may reflect a new approach to settlements with corporate health care defendants.
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DOJ Reaches Settlement with Patient Assistance Foundation Resolving Allegations of FCA Violations
On January 21, 2020, the Department of Justice (DOJ) announced a $3 million settlement with Patient Services, Inc. (PSI) to resolve allegations of False Claims Act (FCA) violations. The DOJ alleged that PSI enabled three pharmaceutical companies to pay kickbacks to patients by funneling money to patients taking drugs manufactured by those same pharmaceutical companies. In addition to the $3 million, PSI has entered into a three-year integrity agreement with Health and Human Services’s Office of the Inspector General. The settlement involved no determination of liability.
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DOJ Announces $26.67 Million Settlement with Laboratory to Resolve FCA Allegations
On November 26, 2019, the Department of Justice (DOJ) announced a $26.67 million settlement with a laboratory testing corporation, Boston Heart Diagnostics Corporation (Boston Heart). The settlement resolves allegations of False Claims Act (FCA) violations related to alleged payments for patient referrals in violation of the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (PSR Law) – commonly known as the Stark Law – and other improper billing.
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DOJ Announces Physician Self-Referral (Stark) Law Settlement in Excess of $46 Million with California Health System and Surgical Group
By Robinson+Cole's Health Law Group on
On November 15, 2019, the Department of Justice (DOJ) announced it had reached a settlement with Sutter Health (Sutter) and Sacramento Cardiovascular Surgeons Medical Group Inc. (Sac Cardio) to resolve alleged violations of the Physician Self-Referral Law (PSR Law), commonly known as the Stark Law. Sutter is a California-based health services provider; Sac Cardio is a Sacramento-based practice group of three cardiovascular surgeons. The total settlement in excess of $46 million includes $30.5 million from Sutter to resolve allegations of an improper financial relationship specific to compensation arrangements with Sac Cardio. Sac Cardio has agreed to pay $506,000 to resolve allegations of duplicative billing associated with one of these compensation arrangements. Separately, the settlement includes another $15,117,516 from Sutter to resolve self-disclosed conduct principally concerning the PSR Law.
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Government Continues to Closely Scrutinize Pharmaceutical Marketing Practices
On September 4, 2019, the Department of Justice (DOJ) announced a $15.4 million settlement with pharmaceutical company Mallinckrodt ARD LLC (Mallinckrodt) to resolve alleged violations of the Anti-Kickback Statute (AKS) in two whistleblower suits filed under the False Claims Act (FCA). The settlement addresses allegations of AKS violations between 2009-2013 by sales representatives of a company later acquired by Mallinckrodt via the “wining and dining” of physicians to induce Medicare prescriptions of that company’s drug. Interestingly, the settlements do not cover related allegations within those FCA suits that Mallinckrodt improperly used a patient assistance foundation to “pay illegal kickbacks in the form of copay subsidies” for the same drug.
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Eleventh Circuit Endorses Objective Falsehood Standard for False Claims Cases Concerning Physician Judgment of Hospice Eligibility
“A mere difference of opinion between physicians, without more, is not enough to show falsity.”
In a 3-0 decision issued September 9, 2019, the U.S. Court of Appeals for the Eleventh Circuit affirmed a three-year-old district court ruling in United States v. AseraCare, Inc. that a Medicare claim for hospice services cannot be deemed false under the False Claims Act (FCA) based on a difference in clinical judgment. This decision – apparently the first circuit-level determination of the “standard for falsity [under the FCA] in the context of the Medicare hospice benefit” – will affect all hospice providers, as the Department of Justice (DOJ) and whistleblowers will not be able to rely on disagreements between physician opinions as the basis for establishing falsity under the FCA. Instead, the Eleventh Circuit instructs that a claim for hospice reimbursement “cannot be “false” – and thus cannot trigger FCA liability – if the underlying clinical judgment does not reflect an objective falsehood.” The Eleventh Circuit’s decision emphasizes that reasonable differences of opinion between physician reviewers of medical documentation are not sufficient to suggest that the judgments concerning a particular patient’s eligibility for Medicare’s hospice benefit, or any claims submitted based on such judgments, are false for purposes of the FCA.
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DOJ Enters into $225 Million Settlement with Opioid Manufacturer to Resolve Criminal and Civil Investigations
On June 5, 2019, the Department of Justice (DOJ) announced a global settlement with Insys Therapeutics (Insys) that preliminarily resolves criminal and civil cases against the opioid manufacturer in a number of jurisdictions. Under the terms of the settlement, Insys agreed to pay a total of $225 million – $195 million in civil remedies and $30 million in criminal restitution (comprising a $2 million fine and $28 million in forfeiture). In addition to the monetary penalties, Insys entered into a five year deferred prosecution agreement with DOJ, as well as a five year Corporate Integrity Agreement (CIA) and Conditional Exclusion Release with the Office of Inspector General (OIG). Additionally, an operating subsidiary of Insys pleaded guilty to mail fraud.
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U.S. Supreme Court Clarifies Scope of False Claims Act Statutes of Limitations
In a unanimous decision issued on May 13, 2019, the U.S. Supreme Court sought to resolve lingering confusion over the statute of limitations under the False Claims Act (FCA) for qui tam suits in which the federal government declines to intervene. In Cochise Consultancy, Inc. v. United States Ex Rel. Hunt, the Court held that a relator’s claim may be brought within 3 years after the government was made aware of underlying material claims, even where the government did not intervene in the case, because 10 years had not passed since the actions giving rise to such claims occurred, applying the periods in 31 U.S.C. § 3731(b)(2) to the case. Cochise addresses confusion over applicability of 31 U.S.C. § 3731(b), which contains two separate limitations periods (along with a repose period) that can apply to an FCA suit. Under that law, an FCA action may be brought (1) 6 years from the date of the violation, or (2) 3 years from the date the U.S. official responsible for acting knew or should have known of the violation, but no later than 10 years from the date the violation occurred.
The FCA makes it unlawful for individuals or entities to knowingly submit or cause to be submitted false claims for government payment. FCA suits may be brought by the government, or by private citizens in qui tam actions in the name of the United States. In qui tam actions the relator must serve the complaint on the government, and the government then has an opportunity to intervene in the suit.…
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Seeking to Incentivize Self-Disclosures, DOJ Issues Guidance on Credit for Cooperation with FCA Investigations
On May 7, 2019, the U.S. Department of Justice (DOJ) provided important new guidance addressing cooperation credit that may be available to defendants in False Claims Act (FCA) investigations (Guidance). The Guidance – issued in the form of an update to DOJ’s Justice Manual – explains how defendants in an FCA investigation may be awarded credit by DOJ for certain disclosures, cooperation, and remedial activities.
The Guidance is intended to incentivize companies and individuals to (i) be forthcoming with the government upon discovery of potential FCA violations, (ii) aid ongoing FCA investigations, and (iii) undertake appropriate remedial actions in response to misconduct. The Guidance provides examples of actions that FCA defendants may be able to take to reduce potential penalties under the FCA. As discussed below, DOJ’s examples appear to re-emphasize DOJ’s focus on individual accountability for corporate wrongdoing.
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