Health Law & Policy Matters

Health Care Attorneys | Mintz Levin Law Firm

Fraud and Abuse Waivers for MSSP ACOs Extended Another Year

Posted in Accountable Care Organizations, Fraud & Abuse, Physicians, State & Federal Audits, Investigations & Litigation

Written by:  Stephanie D. Willis

Fridays are for fraud and abuse news-related releases, yet again.  Last Friday, the HHS Office of the Inspector General (OIG) released a notice (Notice) informing the public that it has delayed the release of a final rule regarding applicable fraud and abuse law waivers for ACOs participating in the Medicare Shared Savings Program (MSSP).  Accordingly, the OIG extended the application of the waivers from the fraud and abuse laws stated in the November 2011 Interim Final Rule (IFR) for another year (until Nov. 2, 2015).  The waivers from the IFR essentially allow ACOs participating in the MSSP to test out innovative relationships among participating providers with a “pass” from the OIG and Centers for Medicare & Medicaid Services (CMS) with regard to their authority to enforce the Physician Self-Referral Law, the Anti-Kickback Statute(AKS), the Gainsharing Civil Monetary Penalty Law (CMP), and the Beneficiary Inducement CMP.

In the Notice, the OIG has acknowledged that it “would benefit from additional input from stakeholders” on the following four topics:

  1. How and to what extent ACOs are using the IFR’s waivers;
  2. Whether the IFR’s waivers currently serve the needs of ACOs and the Medicare program;
  3. Whether the IFR’s waivers “adequately protect the Medicare program and beneficiaries from the types of harms associated with referral payments or payments to reduce or limit services;” and
  4. Whether there are new or changed considerations that should inform the development of additional notice and comment rulemaking.

The OIG has not established a deadline for receiving stakeholder comments.

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Mintz Levin’s Health Care Qui Tam Update

Posted in Fraud & Abuse, State & Federal Audits, Investigations & Litigation

Written by: Kimberly J. Gold

Mintz Levin’s most recent Qui Tam Update authored by our Health Care Enforcement Defense Practice provides a broad overview of 65 recently unsealed health care–related qui tam cases, with an in-depth look at six cases.

The six featured cases are:

  • United States ex rel. Fox Rx, Inc. v. Managed Health Care Associates, Inc., No. 2:13cv6154 (C.D. Cal.) and United States. ex rel. Fox Rx, Inc. v. Managed Health Care Associates, Inc., No. 2:13cv8433 (C.D. Cal.), regarding two false claims allegations by a private Medicare Part D sponsor against pharmacy providers.
  • United States ex rel. Angel v. Alliance Rehabilitation LLC, No. 1:10cv2124 D.D.C.), regarding a $2.78 million settlement to resolve allegations of false claims for physical therapy services.
  • United States ex rel. Madany v. Shahab, No. 2:09-cv-13693 (E.D. Mich.), regarding false claims for home health services based on underlying Anti-Kickback Statute violations.
  • United States ex rel. Brown v. Holy Spirit Hospital of the Sisters of Christian Charity, No. 1:12-cv-1197 (M.D. Pa.), regarding false claims for diagnostic tests that were never performed and failure to report or repay overpayments.
  • United States ex rel. Mahmood v. Elizabethtown Hematology Oncology, PLC, et al., No. 3:11-cv-00376 (W.D. Ky.), regarding a $3.7 million settlement to resolve allegations of false claims for chemotherapy infusion treatments.

The Fox cases are significant because they illustrate that whistleblowers can come not only from their current and former employees, but also from their business relationships.  In the past, sponsors of Medicare Part D prescription drug plans have rarely served as relators, but Fox has brought multiple claims against pharmacy providers. One of Fox’s other cases was noted in our November 2013 Qui Tam Update.

In our Qui Tam Update series, we monitor recently unsealed FCA cases, identify trends in health care enforcement, and discuss noteworthy cases and developments. To receive the Qui Tam Update by email, subscribe here.

Supreme Court Examines Boundaries of Antitrust Immunity

Posted in Antitrust, State & Federal Audits, Investigations & Litigation

On October 14, 2014, the US Supreme Court heard oral arguments in North Carolina State Board of Dental Examiners v. FTC, a Fourth Circuit decision upholding an FTC finding that the North Carolina State Board of Dental Examiners did not qualify for antitrust immunity after excluding non-dentists from providing teeth-whitening services. The question under consideration is whether regulatory bodies comprised of market participants are considered private actors, thus requiring active state supervision before receiving antitrust immunity.  Our colleague, Dionne Lomax, has drafted an Alert that reviews the history of the state action doctrine and the arguments in this important case, which could have broad implications for the structure and operation of state professional review boards and associations.  Click here to read the full Alert.

Business Interruption Insurance for Ebola – Managing Risk for Hospitals and Healthcare Providers

Posted in Hospitals & Health Systems, Physicians

Written by:  Heidi Lawson and Scott Rader

William Gallagher Associates, a Boston-based insurance broker, has announced the rollout of a new policy to cover Ebola-related losses at hospitals and other healthcare providers involved in primary care emergency treatment.  Styled as Pandemic Disease Business Interruption Insurance and provided by the Ark Syndicate at Lloyd’s, this policy will provide insurance coverage to healthcare providers arising out of a “non-physical damage event” like a voluntary or mandatory quarantine of nurses and medical professionals.  Covered losses under the policy are contemplated to include the cost of paying for staff replacements and the reimbursement of lost revenues due to quarantines, and the cost of stockpiling additional supplies and vaccines on a daily basis.  The product is planned to be sold as a bespoke insurance policy tailored to a client’s individual needs, and will be written on a contract-by-contract basis without any standard set of exclusions.  With Ebola cases on the rise this insurance could help providers manage this costly risk by providing important business interruption protection.  Since this insurance coverage will be tailored to a client’s individual needs, special attention should be given to the policy wording and scope of coverage to make sure the coverage meets the expectations of the insured.  In addition, because this coverage is being underwritten by the Ark Syndicate at Lloyd’s, particular consideration should be given to choice of law and choice of venue clauses.  If you have any questions regarding this new insurance product, or regarding a legal review of other insurance coverages for hospitals and healthcare providers, please contact Scott Rader, Elizabeth Kurpis or Heidi Lawson.  Also, watch this space in the coming weeks and months to see if any other insurance carriers will be willing to offer similar business interruption coverage to providers (and even other businesses) that could be impacted by Ebola.

Front End Changes and, Again, More DIR Columns

Posted in Payors & PBMs, Pharma & Medical Devices, Pharmacies, Reimbursement, State & Federal Audits, Investigations & Litigation

Since the beginning of the Medicare Part D program, CMS has introduced many reporting mechanisms for trying to understand drug pricing, price concessions, and the cost of providing services to Part D members.  The tool CMS has turned to most often is the direct and indirect remuneration (“DIR”) report.  The stated purpose of DIR reporting is for a plan sponsor to report all price concessions it received throughout the plan year that impacted how much it cost to provide Part D services to its members.  CMS then reconciles its payments to plan sponsors based on their DIR reports.  Over the last eight years, CMS has continuously expanded DIR reporting requirements trying to further understand the costs associated with the Part D program.  The DIR reports required to be filed this year for contract year 2013 included more than twice the number of DIR categories and columns as when the Part D program started in 2006.  The number of new columns and newly discovered or created categories of DIR or other remuneration that need to be reported on a DIR report (even though it is not DIR, for example, bona fide service fees) grow so quickly that at times it has been nearly impossible to obtain substantive guidance from CMS regarding what types of amounts go into what categories, often leaving plan sponsors in a frustrating and at times scary position. Continue Reading

Life Care Centers Seeks Sixth Circuit Review of Decision Allowing Statistical Sampling/Extrapolation in FCA Case

Posted in Fraud & Abuse, Long-term Care/Skilled Nursing Facilities, State & Federal Audits, Investigations & Litigation

Written by Larry Freedman, Samantha Kingsbury, and Ellyn Sternfield

 Last week, we posted about U.S. District Court Judge Harry Mattice’s September 29th ruling that government attorneys could extrapolate from a small sample of patient admissions to over 50,000 patient admissions (and over 150,000 claims) by Life Care Centers of America, Inc. (a nursing home operator) to try to hold Life Care Centers liable under the False Claims Act (FCA).

Less than two weeks later, Life Care Centers submitted a motion to Judge Mattice asking him to certify for an interlocutory appeal his September ruling.  Life Care Centers seeks Sixth Circuit review of whether (1) the government can satisfy its burden of proof for liability under the FCA using statistical sampling and extrapolation; and (2) Life Care Centers’ constitutional Due Process rights would be violated if it did not know which claims were allegedly false and thus were unable to prepare a defense to each claim. Continue Reading

OIG Issues Long-Awaited Proposed Rule on AKS Safe Harbors, CMPs, and Gainsharing

Posted in Fraud & Abuse, Health Care Reform, Hospitals & Health Systems, Physicians, Reimbursement

Last Friday, the HHS Office of the Inspector General issued a highly anticipated proposed rule that provides new and modified regulatory safe harbors to the Anti-Kickback Statute, amends regulatory provisions related to enforcement of the Beneficiary Inducement Civil Monetary Penalty Law (CMP) provisions, and attempts to narrow the prohibitions covered by the Gainsharing CMP.   The proposed rule affects a wide range of increasingly common health care business arrangements, including referral services, cost-sharing waivers (including under Medicare Part D), free transportation services, coupons, rebates, and retailer reward programs.

A Health Care Alert authored by my colleagues Theresa Carnegie, Thomas Crane, Carrie Roll, and Stephanie Willis provides an in-depth summary and analysis of the OIG’s proposals and notes areas ripe for stakeholder input.  Comments to the Proposed Rule are due December 2, 2014.

ML Strategies Posts Weekly Health Care Update on October 13, 2014

Posted in Accountable Care Organizations, Health Care Reform, Hospitals & Health Systems, Payors & PBMs, Pharma & Medical Devices, Physicians, Telemedicine

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.

This past week, the Pioneer ACO quality and financial data was finally released with mixed results. The evolution of ACOs continues to be a leading issue for the Obama Administration heading into the end of the year. As policymakers continue to consider programmatic changes to the ACO programs, stakeholders from drug manufacturers to telehealth companies are all becoming heavily invested in the next iteration of the most high profile delivery system reform initiative created by the Affordable Care Act.

Click here to read this week’s full Health Care Update.

The Supreme Court Continues to Punt on False Claims Cases

Posted in Clinical Trials & Research/FDA, Fraud & Abuse, Pharma & Medical Devices, State & Federal Audits, Investigations & Litigation

The first day of the Supreme Court term saw it decline, without comment, certiorari on two cases raising issues of liability and the sufficiency of pleading under the federal False Claims Act (FCA). 

I first wrote about the case of U.S. ex rel. Ge v. Takeda in August 2013, when the U.S. had appealed a federal court’s dismissal of the FCA case.  Ge’s qui tam Complaint had premised FCA liability on an assertion that the defendant company had violated FDA reporting regulations.  She contended that if the company had complied with FDA regulations, federal health care programs may not have paid for the drugs at issue.  The government did not quarrel with the court’s finding that Ge’s pleadings lacked the requisite specificity under Rule 9(b), but the U.S. did challenge the court’s finding that FCA liability could not be premised on failure to follow FDA requirements because compliance with those requirements was not a material condition to payment of the claims at issue. 

And as I wrote in December 2013, the First Circuit Court of Appeals gave the government the appearance of a victory in the Ge case, ruling that Ge’s Complaint in fact lacked the requisite specificity under Rule 9(b), but found that it did not need to reach the issue of whether the lower court was “overly restrictive” in finding FDA violations could not be the basis of FCA violations. The Supreme Court’s denial of certiorari left that ruling intact.

In the case of U.S. ex rel. Rostholder v. Omnicare, the  Fourth Circuit’s decision went where the First Circuit dared not tread, affirming the dismissal of Rostholder’s qui tam complaint on the grounds that allegations that the defendant company violated FDA regulations was not in and of itself sufficient to plead an actionable FCA violation because “(t)he correction of regulatory problems is a worthy goal, but not actionable under the FCA in the absence of actual fraudulent conduct.”  The Supreme Court’s denial of certiorari also leaves that decision intact.

Besides denial of certiorari and allegations regarding FDA violations, the two cases share another commonality:  the federal government declined to intervene in each qui tam case prior to the lower court’s dismissal on 9(b) grounds. 

Whether the government declinations of intervention played a role in the Supreme Court’s decision to decline certiorari, we do not know.  But as noted by my colleagues Tom Crane, Brian Dunphy, and Larry Freedman in a recent blog post, we do know that circuit courts around the country remain split on the degree of specificity required to plead FCA violations.  And the Supreme Court’s denial of certiorari in the Rostholder and Ge cases does nothing to resolve that split. 

Federal Judge Rules to Allow Extrapolation on More Than 50,000 Patient Admissions in FCA Case

Posted in Fraud & Abuse, Long-term Care/Skilled Nursing Facilities, State & Federal Audits, Investigations & Litigation, Uncategorized

Written by:  Ellyn L. Sternfield and Samantha P. Kingsbury

Last week, a Tennessee federal district court judge ruled that government attorneys can extrapolate from a small sample of billing statements to over 50,000 patient admissions by Life Care Centers of America, Inc. (a nursing home operator) to try to hold Life Care Centers liable under the False Claims Act (FCA).

Life Care Centers is accused of billing for unnecessary care between 2006 and 2012.  To prove its claims, the government wants to review a random sample of 400 patient admissions and then extrapolate its findings related to false billings to more than 50,000 additional patient admissions (comprising 154,621 total claims).  In ruling for the government and rejecting Life Care Centers’ motion for summary judgment, the judge noted that FCA cases often involve a high number of claims and it would be too burdensome to require government attorneys to build a discrete case for every allegedly false claim.  He further explained that “[t]he purpose of the FCA, as well as the development and expansion of government programs as to which it might be employed, support the use of statistical sampling in complex FCA actions where a claim-by-claim review is impracticable.” 

In rejecting Life Care Centers’ objections, the judge found that the defendants could still fight the government’s extrapolation by challenging the government’s methodology, cross-examining statistical experts and calling its own expert witnesses (thus curing any due process concerns).  He also acknowledged that while the FCA does not explicitly authorize the use of extrapolation, it does not bar the practice – a restriction that Congress could have easily imposed had it intended to preclude the use of statistical sampling.

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