Written by: Ryan J. Cuthbertson
The Supreme Court heard oral arguments on January 13, 2015 in a government contracts whistleblower case that could have a far-reaching impact on more than just federal contractors.
The case involves the tolling of claims for any “offense” involving fraud against the federal government until 5 years after the formal end to a conflict under the Wartime Suspension of Limitations Act (WSLA). The Fourth Circuit Court of Appeals construed the WSLA broadly to find that an “offense” under the WLSA included civil claims under the FCA and that the WSLA could be triggered without a formal declaration of war. The Fourth Circuit did not restrict its decision to war-related contracts or procurement activities and the Department of Justice, likewise, argued for a very broad interpretation of the WSLA.
In a recent Law360 article (which extensively quoted Larry Freedman of Mintz Levin’s Health Law Practice), experts including Freedman discuss how broad and significant the impact of a ruling affirming the Fourth Circuit would be. In the article, Freedman says that the outcome will affect anyone who accepts federal funding, including health care providers, financial services companies, and grant programs. He also notes that the Fourth Circuit’s interpretation could allow for indefinite tolling of FCA actions. For more details on the case and its potential impacts, see the article published by Portfolio Media, Inc. here.
ML Strategies has posted its weekly Health Care Update. This publication provides timely information on implementation of the Affordable Care Act, Congressional initiatives affecting the health care industry, and federal and state health regulatory developments.
Highlights this week include an update on the Congressional landscape with respect to the Sustainable Growth Rate patch, commonly referred to as the “Doc Fix,” and a list of medical device guidance documents that the FDA is planning to publish in 2015.
Click here to read this week’s full Health Care Update.
Bloomberg BNA recently published a Health Care Fraud Report entitled Outlook 2015: Uptick Expected in Stark, Anti-Kickback FCA Cases, Self-Disclosures, which examines the top issues for health care providers and suppliers to watch in 2015.
My colleagues Tom Crane and Larry Freedman were quoted extensively in the article, and they discussed a broad range of health care fraud and abuse issues to watch, including the:
- Continuing growth of provider self-disclosures to the Centers for Medicare & Medicaid Services (“CMS”) and the Office of Inspector General (“OIG”);
- Possible collateral uses by relators of the information about financial relationships between drug and device manufacturers and physicians and teaching hospitals disclosed as part of CMS’s Open Payments program (i.e., the “Sunshine Act”);
- Proposed new safe harbors to the Anti-kickback Statute and the so-called “gainsharing” Civil Monetary Penalties Law;
- Use of statistical sampling as evidence of a wider scope of false claims to prove liability in litigation under the False Claims Act (“FCA”);
- Increasing focus by the Department of Justice and relators on FCA claims based upon physician compensation arrangements with hospitals, including potential Stark Law violations;
- Continuing questions about the viability of a “worthless services” theory of liability under the FCA; and
- Recovery Audit Contractor program changes.
On December 22, 2014, a federal district court in New Jersey found that Mylan Pharmaceuticals, Inc. (“Mylan”) alleged facts sufficient to plead an antitrust claim under Section 2 of the Sherman Act against defendant, Celgene Corporation (“Celgene”), for denying a generic rival access to samples of its branded drugs that are distributed pursuant to a Risk Evaluation and Mitigation Strategies (“REMS”) program. Citing the Supreme Court’s decisions in Otter Tail Power Co. v. United States, and other relevant cases that discuss the scope of an affirmative duty to deal with rivals, the District Court preserved the Plaintiff’s Section 2 claim by finding that Celgene’s conduct fit within one of the limited exceptions to the general rule that there is no duty to deal with competitors, concluding that antitrust liability could be found without allegations of a prior course or history of dealing with the Plaintiff. The attached antitrust alert, “Court Rules Antitrust Claim May Proceed Against Celgene,” highlights the noteworthy aspects of this decision, including the fact that this is one of the few cases to address potential liability under Section 2 in connection with FDA-required REMS programs and is likely to be instructive on such issues as litigation in this area unfolds. The Court’s analysis also adds to the continuing debate over the application of Section 2 to situations involving a refusal to deal with a rival, as lower courts continue to adopt disparate interpretations of the Supreme Court’s 2004 decision in Verizon Communications Inc. v. Law Offices of Curtis V. Trinko.
Written by: Lauren M. Moldawer*
Earlier this week the OIG released an advisory opinion stating that a nonprofit organization’s proposed arrangement to provide copayment assistance to financially needy patients would not result in civil monetary penalties or administrative sanctions, even though it could potentially generate prohibited remunerations under the anti-kickback statute. In its opinion the OIG found that the nonprofit’s administration of the program and position as an independent charity between the donors and the patients provides “sufficient insulation” such that the assistance to patients is not attributed to any donor.
Under the proposed arrangement, financial assistance would be provided to patients diagnosed with either Chron’s disease or ulcerative colitis. Patients would apply for the program and eligibility would be determined by income level and national clinical standards for the diseases. The eligibility determination would not take into account the patient’s providers, drugs, services, or insurance. The financial assistance would be provided directly to the health care provider or supplier, whenever possible. Donors would include individuals, foundations and corporations, including pharmaceutical manufacturers. However, no donor or health plan, or affiliate thereof, would sit on the board of the charity.
Written by: Nili S. Yolin
The Nonprofit Revitalization Act brought sweeping changes to the laws that govern not-for-profit corporations in New York. Our colleagues Anthony E. Hubbard and Daniel E. Wilcox have authored an Advisory that provides an in-depth summary of key provisions of the Act that have recently gone into effect. As discussed in a prior Advisory, the Act represents the first time in more than four decades that the New York Not-for-Profit Corporation Law has undergone any significant change, which regulators and industry insiders alike hope will strengthen nonprofit governance and accountability, mitigate excessive administrative burdens, and improve audit and financial reporting requirements. Click here to read the full Advisory.
The Supreme Court announced it will be hearing King v. Burwell – a case which could determine the future scope and reach of the Affordable Care Act (ACA) – on March 4, 2015. In light of this announcement, our colleagues, Andrew Shin and Steven Weiner, have issued an Advisory discussing the potential impact of the case as well as steps Congress could take to remediate an adverse decision.
The full Advisory can be read here. As noted in the Advisory, this decision could have significant and far reaching impacts on the ACA. A decision adverse to the government could largely gut the ACA in the 34 states that have chosen not to establish their own exchanges.
Written By: Ryan J. Cuthbertson
The Office for Human Research Protections (OHRP) is extending the comment period for its Draft Guidance on Disclosing Reasonably Foreseeable Risks in Research Evaluating Standards of Care (Draft Guidance). Parties interested in commenting will now have an additional 30 days – until January 23, 2015. As noted previously, the Draft Guidance “aims to clarify many of the issues…about the use of standard-of-care procedures in clinical research” and was initially published on October 24, 2014. Below is a look at some of the comments received thus far.
OHRP is extending the deadline in response to public requests to allow interested parties sufficient time to fully review and thoughtfully respond to the document. An extension was called for by organizations such as Public Responsibility in Medicine and Research (PRIM&R) and Rare Disease Legislative Advocates (RDLA), the latter of which solicited petitions to aid the request, citing the dramatic impact of the guidance on rare disease patients and families.
Written by: Andrew Shin and Rachel Irving Pitts
Although health care reform implementation via the Affordable Care Act (ACA) has focused mostly on federal changes to the health care marketplace, individual States are getting some much needed help to design and implement their own efforts to improve quality and lower health system costs. On Tuesday, December 16, the Centers for Medicare and Medicaid Services (CMS) announced a second round of grant funding and technical assistance to 28 states, three territories and the District of Columbia. With these Round Two awards, $665 million will be available for states through the State Innovation Models (SIM) initiative to either design payment and delivery reform initiatives or actually implement them, with the bulk of the funding going to implementation. Continue Reading