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Samantha Kingsbury is an Associate in the firm’s Boston office. Samantha’s practice focuses on health care enforcement defense matters, often involving criminal and administrative actions brought against health care providers and companies by state and federal governmental and regulatory agencies. She has experience preparing self-disclosures and other reports relating to such enforcement matters, as well as developing internal compliance programs. In addition, Samantha handles licensure and regulatory filings for a variety of health care clients, with a focus on hospitals and clinical laboratories. She has worked on several large transactions in Massachusetts involving the change of ownership of major hospital systems, and has assisted national clinical laboratories with respect to licensure and reimbursement issues.

Earlier this week, my colleagues Bruce Sokler, Robert Kidwell, Dionne Lomax, and Farrah Short published an alert about the federal district court for the Eastern District of Michigan’s recent decision to deny both the government’s and defendant hospital’s respective motions for summary judgment in a suit filed by the Department of Justice and the Michigan Attorney General in 2015 against W.A. Foote Memorial Hospital, d/b/a Allegiance Health (“Allegiance”), Hillsdale Community Health Center (“HCHC”), Community Health Center of Branch County (“Branch”), and ProMedica Health System, Inc. (“ProMedica”).  In this case, the government alleged that HCHC orchestrated agreements among the hospitals not to advertise or otherwise market in each other’s territories for competing health care services in violation of the Sherman Act.  (You can read Dionne’s previous alert on the Allegiance complaint here.)  HCHC, Branch and ProMedica have each settled, leaving Allegiance as the sole defendant. Continue Reading Antitrust Suit Against Michigan Hospital Moves Forward After Federal District Court Denies Both Sides’ Motions for Summary Judgment

Our ML Strategies colleagues, Eli GreenspanKatie Weider, and Rodney Whitlock, have published a new edition of the Health Care Weekly Preview.

This edition covers upcoming hearings in the House, including one before the House Ways & Means Committee regarding expiring Medicare programs, as well as changes to Medicare’s payment system.  It also covers an upcoming hearing before the Senate Finance Committee regarding The (CHRONIC) Care Act of 2017, which has been co-sponsored by Democrats and Republicans.

The ML Strategies team also comments on the possibility of a bipartisan bill designed to fix the Affordable Care Act.

Click HERE to read this week’s edition and stay tuned for additional Previews!

Earlier this week, the Office of Inspector General for the Department of Health and Human Services (“OIG”) posted its fiscal year (“FY”) 2016 data about Medicaid Fraud Control Units (“MFCUs”) across the country.

Federal law requires each state to operate a MFCU separate and distinct from the state Medicaid Agency. MFCUs are charged with investigating and prosecuting fraud committed by Medicaid providers and in the state’s administration of the Medicaid Program, as well as patient abuse/neglect that occurs in a Medicaid-funded facility or at the hands of Medicaid providers.  MFCUs currently operate in 49 states and the District of Columbia (North Dakota presently has a waiver but proposals to create a MFCU have been introduced in the state legislature).  They are typically part of a state’s Attorney General’s office and are required to employ investigators, attorneys and auditors.  The OIG is responsible for overseeing MFCUs.  It annually recertifies MFCUs, assesses their performance and compliance with Federal requirements, and administers a Federal grant award that funds a portion of each MFCU’s operational costs. Continue Reading OIG Releases FY 2016 Statistical Data About Medicaid Fraud Control Units

Last month, the U.S. District Court for the District of Utah joined the AseraCare court and others in finding that a relator cannot successfully allege violations of the False Claims Act (“FCA”) based on a purported lack of medical necessity unless there is an objective standard articulated by Medicare.  In fact, District Judge Jill Parrish cited the AseraCare case and many federal appellate decisions when granting dismissal – with prejudice – in United States ex rel. Polukoff v. St. Mark’s et al., No. 16-cv-00304 (D. Utah 2017)Continue Reading Another Court Agrees That A Difference Of Opinion On Medical Necessity Is Insufficient to Show Falsity Under the False Claims Act

On January 12th at 1:00pm EST, my colleague Susan Foster, PhD will present a webinar on Transferring Data from the EU.  In particular, Sue will discuss the ways in which the EU General Data Protection Regulation creates new avenues for data transfers, and narrows others, and will also address sector-specific Commission decisions, privacy seals/certifications, the exception for non-repetitive, limited transfers, and the outlook for BCRs and Model Clauses.

Click here to register!  If you’ve missed the other installments of this important series on EU privacy, recording are available here.

You can access the slides here and the recording here!

On Friday, Robert Kidwell and Bruce Sokler, members of the Firm’s Antitrust and Federal Regulatory practice group, presented a webinar on the Third Circuit’s hotly anticipated decision on the FTC’s appeal of the District Court’s denial of its request for a preliminary injunction on the merger of Penn State Hershey Medical Center and Pinnacle Health System.

This case became a topic of interest after the U.S. District Court for the Middle District of Pennsylvania denied the FTC’s request for a preliminary injunction in May 2016.  In reaching its decision, the District Court defined the “relevant geographic market” in a manner that, if upheld on appeal, would have essentially gutted the FTC’s approach to hospital merger enforcement.  Ultimately, the Third Circuit found that the District Court committed legal error in failing to properly formulate and apply the “hypothetical monopolist test” and issued an opinion that Rob and Bruce characterized as a “big win” for the FTC.

Rob and Bruce also expect this decision to be helpful to the FTC in its ongoing challenge to the Advocate/North Shore merger in Chicago (check out our previous blog post on this topic by clicking here).  Stay tuned for further updates!

Last month, we reported on a Massachusetts federal court jury’s decision to acquit the former CEO of Warner Chilcott in one of the first prosecutions of a health care executive following the Department of Justice’s (“DOJ”) Yates Memo.  Last week, another Massachusetts federal court jury acquitted two more former health care executives of felony charges following another closely watched post-Yates-Memo prosecution.  This time, the jury found William Facteau, the former CEO of Acclarent, and Patrick Fabian, Acclarent’s former Vice President of Sales, not guilty of 14 counts of felony fraud related to Acclarent’s off-label promotion of a medical device (although the jury did find them guilty of related misdemeanor charges). Continue Reading Another Jury Acquits in One of the First Few Prosecutions of Health Care Executives Following DOJ’s Yates Memo

On May 6th, we posted about the possibility that the Department of Justice (“DOJ”) might dramatically increase False Claims Act (“FCA”) penalties after the Railroad Retirement Board (“RRB”) nearly doubled the per-claim penalties it imposed under the FCA.  After nearly two months of anticipation, DOJ published an Interim Final Rule yesterday announcing that it intended to increase the minimum per-claim penalty under Section 3729(a)(1) of the FCA from $5,500 to $10,781 and increase the maximum per-claim penalty from $11,000 to $21,563.  These adjusted amounts will apply only to civil penalties assessed after August 1, 2016, whose violations occurred after November 2, 2015.  Violations that occurred on or before November 2, 2015 and assessments made before August 1, 2016 (whose associated violations occurred after November 2, 2015) will be subject to the current civil monetary penalty amounts.

The penalty increases proposed by DOJ are the same as those proposed by the RRB back in May.  The RRB’s increase resulted from a section of the Bipartisan Budget Act of 2015, called the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the “2015 Adjustment Act”), which required federal agencies to update civil monetary penalties (“CMPs”) within their jurisdiction by August 1, 2016.  The 2015 Adjustment Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990—which is incorporated into the text of the FCA—and enacted a “catch-up adjustment.”  Under the “catch-up adjustment,” CMPs must be adjusted based on the difference between the Consumer Price Index (“CPI”) in October of the calendar year in which they were established or last adjusted and the CPI in October 2015.

DOJ last raised the civil penalty amounts under the FCA to their current levels in August 1999, but because the 2015 Adjustment Act repealed the legislation responsible for the 1999 adjustment, DOJ looked back to 1986 when civil penalties were set at a minimum of $5,000 and a maximum of $10,000.  This calculation resulted in a CPI multiplier of more than 215% resulting in the new minimum per-claim penalty of $10,781 ($5,000 x 2.15628) and a maximum per-claim penalty of $21,563 ($10,000 x 2.15628).  Under the 2015 Adjustment Act, the increases are required unless DOJ, with the concurrence of the Director of the Office of Management and Budget, makes a determination to increase a civil penalty less than the otherwise required amount.  As to the FCA civil penalty, as well as scores of other civil penalties under DOJ’s jurisdiction, DOJ declined to seek this exception.

DOJ is providing a 60-day period for public comment on this Interim Final Rule.  Like the rest of the health care industry, we will be watching closely to see if commenters are able to convince the Department to reconsider these astronomical penalty amounts.

Like many before it, this year has been one to watch in government health care fraud enforcement efforts.  In September 2015, the Department of Justice (DOJ) released the “Yates Memo,” which reaffirmed the government’s commitment to investigating and prosecuting culpable individuals in cases involving suspected corporate fraud.  We discussed and analyzed the Yates Memo in greater depth in two September 2015 blog posts (click here and here) and in our Health Care Enforcement Defense Group’s 2015 Year in Review.

While the Yates Memo was not specific to health care companies, the health care industry was anxious to see how the government’s strong re-commitment to holding individuals accountable for corporate wrongdoing would play out given its aggressive pursuit of health care fraudsters.  Perhaps the best known test case came when the government announced in October 2015 that it had arrested W. Carl Reichel, the former president of Warner Chilcott, a subsidiary of a pharmaceutical manufacturer. Reichel was indicted and charged with a single count of conspiring to pay kickbacks to physicians in violation of the Anti-Kickback Statute (AKS). Continue Reading Jury Acquits Former Pharma Exec in One of the First Post-Yates Memo Health Care Fraud Prosecutions

The already enormous per-claim penalties under the federal False Claims Act (“FCA”) may nearly double by August 1, 2016, ratcheting up the stakes of FCA cases for health care providers, pharmaceutical and medical device manufacturers, and life sciences companies subject to the FCA. This week, the Railroad Retirement Board (“RRB”) published an interim final rule raising the minimum per-claim penalties under the FCA and the Program Fraud Civil Remedies Act (“PFCRA”) to $10,781 from $5,500, and increasing the maximum per-claim penalties to $21,563 from $11,000 (aspects of the penalties under the FCA and the PFCRA are within RRB’s jurisdiction). Although the RRB’s position may not affect the health care industry, other federal agencies are required to follow suit and adjust the per-claim penalties by July 1, 2016 and to make them effective by August 1, 2016.

An FCA violation results in “a civil penalty of not less than $5,000 and not more than $10,000, as adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461 note; Public Law 104–410), plus 3 times the amount of damages which the Government sustains because of the act of that person.” Currently, the Department of Justice (“DOJ”) has set FCA penalties at a minimum of $5,500 and a maximum of $11,000 per claim. Even at the current level, many stakeholders think the per-claim penalties are out of line with any damage to federal health care programs.  For example, a single claim for which the government reimbursed a provider $100 could result in a penalty of up to $11,000.  And that penalty applies to every false claim.

What is behind the increase?

A section of the Bipartisan Budget Act of 2015, entitled the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Adjustment Act”), requires federal agencies to update the civil monetary penalties within their jurisdiction. The 2015 Adjustment Act amended the Federal Civil Penalties Inflation Adjustment Act of 1990—which is incorporated into the text of the FCA—and enacted a “catch-up adjustment.” Notably, the “head of an agency” must adjust civil monetary penalties through an interim final rule (rather than through a proposed rule with a notice and comment period) by July 1, 2016, and the adjustment must take effect by August 1, 2016. Continue Reading Already Enormous False Claims Act Penalties Set to Increase