On August 17, 2017, the U.S. Department of Justice (DOJ) announced that it had reached a $465 million false claims settlement with Mylan, the manufacturer of EpiPen, over the company’s alleged underpayment of Medicaid Drug Rebates for EpiPen. The settlement amount and terms were generally announced by Mylan in October 2016 – but back then DOJ refused to confirm the settlement.

Back in October 2016, we theorized that the announced “settlement” was likely a handshake deal, not yet reduced to writing and not signed off on by the necessary parties.  It’s not surprising that it would take ten months to finalize a health care false claims settlement.  In Ellyn’s government days, she worked cases that took years, not months, to get from handshake deal to announced settlement.

And in reviewing the EpiPen settlement and related unsealed documents, there were things we expected to see in the settlement; admittedly we are grizzled veterans when it comes to false claims settlements.  But there were some things about this settlement that raised our eyebrows. So we will (briefly) recap how we got here and the settlement terms, and discuss the four things that surprised us about this settlement.  Continue Reading The Four Things That Surprised Us in the EpiPen False Claims Settlement

Last week, Mintz Levin’s Health Care Enforcement Defense Group published a new Qui Tam Update, which analyzes 21 health care-related False Claims Act qui tam cases unsealed in May 2017, and the findings include:

  • long delays in unsealing remain the norm;
  • relators overwhelmingly consisted of current and former employees (and physicians); and
  • the most common alleged violation was billing fraud (which was claimed in two-thirds of the 21 unsealed cases).

Also of note in this Update:

  • The targeted entities in these 21 cases included outpatient medical and psychological providers, laboratory testing companies, inpatient hospitals, and home health care providers.
  • Of the 21 cases, the government intervened, in whole or in part, in seven cases and declined to intervene in 10.  (Intervention status could not be determined from the docket in four cases.)
  • The cases were filed in 17 different courts (including the Central District of California, the District of South Carolina, the Eastern District of Michigan, and the Northern District of California).

This Update provides in-depth analysis of three of the unsealed cases, which involve allegations regarding (1) “up coding” by a hospital that allegedly billed routine transport as emergency transport, which was reimbursed at a higher rate; (2) billing for medically unnecessary tests that purported to identify susceptibility to opioid addiction and engaging in a kickback scheme; and (3) processing prior authorization requests for MCOs using automated procedures to expedite processing and circumvent medical necessity determinations, resulting in submission of false claims.

Whistleblowers remain a steady source of False Claim Act (FCA) suits against health care and life science companies each year.  Join our upcoming webinar – “Qui Tam Relators: What You Need to Know” on July 12 at 1pm ET. Colleagues in our Health Care Enforcement Defense Practice Group will help companies better understand how to deal with FCA cases, which result in billions of dollars of recovery for the government each year.  Hope Foster, Larry Freedman, Karen Lovitch and Ellyn Sternfield will share insights to the relator process, help companies understand how to react if it is named in a whistleblower suit, and provide tips for how to prevent them.

Register now!

The latest installment in the ongoing saga over EpiPen Medicaid Drug Rebates came on May 31, 2017, when Senator Charles Grassley issued a press release stating that between 2006-2016 taxpayers may have overpaid for EpiPen by as much as $1.27 billion, “far more” than the announced-but-never-confirmed or finalized $465 million DOJ settlement with Mylan.

To understand what the latest news means in the ongoing saga over EpiPen Medicaid Drug Rebates, it is important to understand how we got here.   And why at the end of the day, the information Senator Grassley included in the May 31, 2016 release may be less important than the information he hinted at but omitted from the release. Continue Reading The Latest in the Epipen Medicaid Drug Rebate Saga – Where Are We Now?

On May 17, 2017 the American Bar Association convened its 27th National Institute on Health Care Fraud.  I have attended many of the past annual meetings, and always enjoy the presentations and the opportunity to network with colleagues from all sides of the aisle.  And I always come away with a few nuggets to share with those who did not attend.

Here are my seven top takeaways from this year’s Institute. Continue Reading Seven Takeaways from the ABA National Institute On Health Care Fraud

In July 2015, we posted about the N.Y. Attorney General’s False Claims Act (FCA) settlements with Trinity HomeCare and its related entities, and how the case provided insight into the future of FCA enforcement.  We identified five key trends based on the settlements:

  1. The FCA cases were based on qui tams and pursued by the State Attorney General after federal government declination.
  2. The FCA cases were based on a narrow, single state or regional arrangement, as opposed to allegations of a national scheme or program.
  3. One of the FCA cases was based on conduct about which Trinity had previously been warned.
  4. The FCA cases were based on government billings for specialty drugs.
  5. All parties to the arrangement were named as defendants in the qui tams.

Trinity was already under investigation by the N.Y. Attorney General’s office for its billing of hemophilia drugs (the basis of the first 2015 settlement) when a second qui tam alleged that Trinity submitted false claims in connection with a specialty drug used to treat premature infants at risk for lung disease.  That second qui tam led to the second settlement and now, almost 20 months later, has led to a new Complaint. Continue Reading Five Trends in False Claims Act Enforcement: Take Two

As 2017 began, FDA appeared poised to implement significant changes to the rules governing off-label communications related to drugs, biologics, and medical devices. The Agency had hosted a public hearing in November 2016 to receive input from interested industry stakeholders and members of the public about possible alternatives for off-label regulation, seemingly a first step in exploring more liberal (or possibly stricter) enforcement standards.  However, in January, FDA released a new final rule amending the definitions of “intended use” applicable to drugs and devices in 21 C.F.R. §§ 201.128, 801.4, which would affect how off-label uses are considered with respect to intended use of regulated products, and issued a memo discussing its current position on off-label uses and communications.  In short, all of FDA’s actions since the November public hearing have shown that it intends to continue strict enforcement of off-label promotion despite changes in the highest levels of government and strongly negative industry response. Continue Reading The Past, Present, and Future of Government Regulation of Off-Label Communications – Part 1

6350-Pharma-Summit-blog-buttonMintz Levin and ML Strategies will be hosting the 2nd Annual Pharmacy Industry Summit on April 5th and 6th! The Summit will bring together stakeholders and thought leaders from across the industry to discuss legal and policy challenges facing manufacturers, PBMs, payors, pharmacies, and providers.

With a new administration and state legislatures taking aim at the pharmacy industry, manufacturers, PBMs, payors, and pharmacies face a number of unknowns and questions:

  • What is the fate of FDA User Fees?
  • Will Senator Wyden’s Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act gain traction?
  • What are state legislatures proposing to address drug pricing?
  • Will the Republicans take another shot at the Affordable Care Act?
  • What is President Trump’s “new system” for competition in the drug industry referenced in his March 7th tweet?
  • What’s new in value-based contracting and what does the future hold for innovative contracting arrangements?

With sessions focusing on the Affordable Care Act developments, drug pricing, state law developments, value-based contracting, and the FDA impact on the supply chain, among others, we plan to discuss these and many other issues impacting the pharmacy industry.

For additional information on the Summit, including an agenda and registration information, please visit our event website.

The Stark Law has caused angst for many a physician and many a health care lawyer over the years. The Stark Law has also troubled hospital and health system CEOs looking for ways to align incentives with physicians. Some stakeholders say Congress should do away with the myriad statutes and regulations that comprise the strict liability federal law banning physician self-referral. Those stakeholders suggest either repealing it altogether and letting other fraud and abuse laws do the work, or – as its namesake former-Representative Pete Stark has suggested – replace it with a much simpler prohibition on soliciting referrals for kickbacks or other special treatment.

My colleague, Tom Crane, suggests another approach – revamp the Stark Law’s advisory opinion process so the Centers for Medicare and Medicaid Services (“CMS”) can protect arrangements from sanctions, similar to the Office of the Attorney General’s (“OIG’s)  Anti-Kickback Statute (“AKS”) advisory opinion process. Continue Reading Changes Needed to Stark Law Advisory Opinion Process

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.