The Tenth Circuit Court of Appeals has issued a significant decision, finding that a physician’s medical judgment about the medical necessity of heart procedures can be “false or fraudulent” under the federal False Claims Act (FCA). United States ex rel. Polukoff v. St. Mark’s Hosp., et al., No. 17-4014 (10th Cir. Jul. 9, 2018). The district court previously had dismissed the FCA case on a motion to dismiss, a development my colleagues discussed in detail in a prior post. The Tenth Circuit’s ruling not only revived relator’s qui tam FCA case, but also may open the door to more FCA lawsuits based on allegations that claims for treatments or services reimbursed by federal health care programs are “false” because they are not “medically necessary.” Continue Reading Tenth Circuit Revives FCA Claim Based on Alleged Lack of Medical Necessity
Brian Dunphy is a Member in the firm’s Litigation and Health Law practices in the Boston office, and also is part of the firm’s Health Care Enforcement Defense Group. He focuses his practice on litigation and health care matters involving investigations and voluntary disclosures and has defended clients against allegations of false claims, whistleblower claims, and in SEC investigations and enforcement proceedings. For his commitment to pro bono work, Brian was selected to participate in the Boston Bar Association’s 2010–2011 Public Interest Leadership Program.
Like prior years, 2017 saw large government recoveries and a high volume of False Claims Act (“FCA”) cases, which remain the government’s primary health care enforcement tool. The Department of Justice (“DOJ”) reported on December 21, 2017 that it obtained $3.7 billion in FCA settlements and judgments during the fiscal year (“FY”) ending September 30, 2017, down from $4.7 billion in FY 2016. Federal recoveries from the health care industry (including drug companies, hospitals, pharmacies, laboratories, and physicians), however, remained consistent: $2.4 billion in FY 2017 compared to $2.5 billion in FY 2016.
DOJ also reported that relators filed 669 qui tam FCA lawsuits last year, an average of more than 12 new cases every week. Among this high volume of qui tam FCA cases, relators asserted myriad theories of FCA liability against many different types of health care providers and suppliers.
In 2017, courts issued numerous decisions interpreting the legal standards under the FCA and assessing the viability of a multitude of FCA liability theories. These decisions will affect the prosecution and defense of FCA cases for years to come. In particular, district and appellate courts grappled with the Supreme Court’s 2016 decision in Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (“Escobar”). Given the large volume of decisions under Escobar, we will discuss the application of that decision in tomorrow’s post. Continue Reading Health Care Enforcement Year in Review and 2018 Outlook: Major Case Law Developments
The President has released a “budget blueprint” for fiscal year 2018. Although there are many aspects of the budget blueprint to digest, several budget items signal that government health care fraud enforcement remains a priority under the new administration.
- Overall, the President’s 2018 budget requests $69.0 billion for the Department of Health and Human Services (“HHS”). According to the blueprint, this a $15.1 billion or 17.9% decrease from the FY 2017 annualized level.
- However, the budget blueprint increases funding for the Health Care Fraud and Abuse Control (HCFAC) program, which is designed to coordinate federal, state and local health care fraud and abuse enforcement efforts.
- Specifically, the blueprint proposes $751 million of discretionary funding for the HCFAC program, which exceeds FY 2017 funding by $70 million, according to the budget blueprint.
- The budget blueprint explains that additional funding for the HCFAC program “has allowed the Centers for Medicare & Medicaid Services in recent years to shift away from a ‘pay-and-chase’ model toward identifying and preventing fraudulent or improper payments from being paid in the first place.”
In a proposed budget that cuts HHS funding by nearly 18%, the increase in HCFAC funding stands out. The President’s budget affirms a trend that we have observed away from “pay-and-chase” toward proactive data analysis. As discussed in a prior post, recent False Claims Act cases strongly suggest that growing experience with data mining has given enforcers greater confidence in their ability to identify potential fraud and abuse. As a result, proactive data analysis could lead to a greater number of FCA cases originating with government investigators instead of through qui tam FCA actions.
In a closely watched False Claims Act (“FCA”) case, the Fourth Circuit Court of Appeals decided that the Department of Justice (“DOJ”) has an unreviewable right to object to a proposed settlement agreement between a relator and a defendant when the Government has declined to intervene in the case. United States ex rel. Michaels v. Agape Senior Community, Inc., No. 15-2145 (4th Cir. Feb 14, 2017). In addition, as most expected, the court declined to decide the legal issue whether FCA plaintiffs may rely on statistical sampling of claims to prove FCA liability and damages, concluding that it had “improvidently granted” an interlocutory appeal of the lower court’s ruling on the use of statistical sampling. This decision thus leaves intact the district court’s decision that rejected the relator’s proposed use of statistical sampling to prove FCA liability and damages. The Fourth Circuit’s decision not to address the use of sampling in FCA cases leaves many open questions. Continue Reading Fourth Circuit Permits DOJ to Reject an FCA Settlement, But Punts Decision on Statistical Sampling
In this final installment of our Health Care Enforcement Review and 2017 Outlook series, we analyze health care enforcement trends gathered from 2016 civil settlements and criminal resolutions of health care fraud and abuse cases. Behind the headlines covering enormous recoveries in 2016, several themes are apparent.
The False Claims Act continued to generate large civil settlements.
Continuing the trend from recent years, the False Claims Act (“FCA”) remained the primary civil enforcement tool against health care providers as well as pharmaceutical, life sciences, and medical device companies, predominantly driven by qui tam FCA complaints filed by relators. In fiscal year 2016, the Department of Justice obtained more than $4.7 billion in settlements and judgments from FCA cases, $2.5 billion of which it obtained from the health care industry. Continue Reading Health Care Enforcement Review and 2017 Outlook: Significant Health Care Fraud and Abuse Civil Settlements and Criminal Resolutions
As is well known, drug prices have been widely discussed nationally. They have been the subject of Congressional hearings and, in the case of Mylan, a high profile settlement.
Massachusetts has also focused intently on drug prices in recent months. My colleagues in ML Strategies recently published an alert surveying the current Massachusetts landscape around drug pricing and spending. The alert discusses, among other things, the following developments:
- The Center for Health Information and Analysis (CHIA) published its annual report on the performance of the Massachusetts health care system and addressed the growth of prescription drug spending.
- The Office of Attorney General Maura Healey recently released her office’s annual report examining pharmaceutical cost trends in the Commonwealth.
- The Massachusetts Health Policy Commission (HPC) discussed drug pricing extensively during its annual cost trends hearings on October 17th and 18th. In written testimony submitted before the cost trends hearings, both payers and providers expressed their view that rising pharmaceutical spending is a top area of concern (our full coverage of the cost trends hearing is here.)
- Massachusetts state Senator Mark Montigny introduced An Act to Promote Transparency and Cost Control of Pharmaceutical Drug Prices (S. 1048), which aimed to control growth in prescription drug costs by mandating several pricing disclosure requirements. The bill failed to emerge from a legislative committee, but similar efforts addressing pharmaceutical spending are likely to emerge in the next legislative session.
The full alert is available here.
Please join Mintz Levin for a webinar discussing health care fraud enforcement in the pharmacy and pharmaceutical industry on October 26, 2016 at 1 pm (ET). My colleagues Theresa Carnegie, Larry Freedman, and Ellyn Sternfield, members of Mintz Levin’s Health Law and Health Care Enforcement Defense practices, will discuss enforcement trends facing the industry.
The webinar will cover topics relevant to virtually all sectors of the health care and life sciences industries, especially pharmaceutical manufacturers, pharmacies, pharmacy benefit managers (PBMs), and health insurers as well as those who invest in the health care and life sciences industries.
During the webinar, my colleagues will discuss:
- Litigation, investigations, and settlements involving pharmaceutical manufacturers, PBMs, specialty pharmacies, and health care providers;
- Federal (including the Department of Justice and the Office of Inspector General) and state enforcement focus on the financial relationships among the companies and providers involved in the pharmaceutical supply chain; and
- Emerging trends in government enforcement and what is fueling them.
The webinar is approved for CLE credit in California and New York.
You can register for the webinar here.
The civil monetary penalties for violations of myriad health care laws continue to rise. In June, we discussed the enormous increase in penalties under the federal False Claims Act (“FCA”). Through an interim final rule, the Department of Justice nearly doubled the per-claim FCA penalty. The minimum per-claim FCA penalty increased from $5,500 to $10,781 and the maximum per-claim FCA penalty increased from $11,000 to $21,563. The FCA penalties nearly doubled because the Federal Civil Penalties Inflation Adjustment Act of 2015 (the “2015 Adjustment Act”) required federal agencies to update civil monetary penalties (“CMPs”) within their jurisdiction by August 1, 2016 to catch-up with inflation.
Because of the 2015 Adjustment Act, numerous other CMPs—in addition to the FCA—recently have increased or likely will increase. Continue Reading Penalties For Health Care Law Violations Surge
Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update on August 4, 2016. This Update covers 31 health care-related False Claims Act cases that have been unsealed since the last Health Care Qui Tam Update.
The Update takes an in-depth look at three noteworthy cases and analyzes the trends observed in recently unsealed cases:
- A substantial majority of the unsealed cases had been under seal for periods well in excess of the required statutory period. Of the 31 complaints, 28 were filed before 2015, with three unsealed complaints dating back to 2010. Of the remaining complaints, four were filed in 2012, eight in 2013, 12 in 2014 and three in 2015. As these cases illustrate, lengthy extensions of the seal on qui tam actions continue to be routine.
- The cases identified were filed in federal district courts in 18 states, including multiple cases in California (3), New York (4), Florida (4), Kentucky (2), Massachusetts (2), Ohio (2), and Pennsylvania (3).
- The federal government declined to intervene, or elected not to intervene at this time, in 23 of the 31 cases. The federal government intervened, in whole or in part, in eight cases.
- Nature of the Claims
- 15 of the recently unsealed cases involved both state and federal claims.
- Nine involved allegations of unlawful kickbacks. Of these nine, five also alleged violations of the Stark Law.
- Claims for relief under state or federal anti-whistleblower retaliation provisions appeared in six of the 31 recently unsealed cases.
- In nearly two-thirds of the unsealed cases (20 of 31), relators were current or former employees of the defendant. In two cases, the relator’s relationship to the defendant was not revealed by the unsealed filings.
The full Update is available here.
The long-running test-referral prosecution against Biodiagnostic Laboratory Services, LLC (“BLS”), a New Jersey clinical blood testing laboratory; its owner and employees; and BLS’s referring physicians recently reached another milestone. In a criminal case that the U.S. Attorney’s Office for the District of New Jersey has called the “largest physician bribery case ever prosecuted,” resulting in 40 guilty pleas, BLS was sentenced on June 28, 2016 and ordered to forfeit all of its assets.
In addition, on June 30, 2016, the 27th BLS referring physician pleaded guilty to charges that he violated the Federal Travel Act by taking bribes from BLS. The physician admitted that, between April 2011 and June 2012, BLS paid him approximately $1,500 per month. This physician plea is another in the long line of individual criminal pleas, 38 of which are catalogued here. Continue Reading Biodiagnostic Laboratory Services Sentenced; Another Physician Pleads Guilty