The Department of Health and Human Services Office of the Inspector General (OIG) has issued an Advisory Opinion (Opinion) in connection with a hospital’s gainsharing arrangement (Arrangement) with a designated group of neurosurgeons who perform spinal fusion surgeries at the hospital. According to the Opinion, the OIG would not impose sanctions because the Arrangement, when viewed in its entirety, is not designed or likely to induce the neurosurgeons to (i) reduce or limit medically necessary services to their Medicare or Medicaid patients, or (ii) increase referrals to the hospital. This Opinion is the latest in a line of earlier advisory opinions to “bless” gainsharing arrangements that meet certain criteria for minimizing the risk of fraud and abuse. Continue Reading OIG Reaffirms Permissibility of Certain Gainsharing Arrangements

In both civil and criminal enforcement proceedings, 2017 was perhaps most notable for the cases brought against individual health care providers and small physician practice owners.  Among the factors that may have resulted in the uptick in cases against individuals are the Yates Memo issued in late 2015, improved and increased reliance on sophisticated data analytics, and the aggressive focus on opioid addiction and its causes. Continue Reading Health Care Enforcement Review and 2018 Outlook: Criminal and Civil Enforcement Trends

Throughout 2017, the lower courts built upon the standard for determining materiality under the False Claims Act (FCA) established by the U.S. Supreme Court in Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (“Escobar”). In Escobar, decided in June 2016, the Court endorsed the “implied false certification” theory of liability under the FCA, premised on a “rigorous” and “demanding” element of “materiality.”  As expected, this decision triggered a spate of litigation over what “materiality” means, and how to apply this requirement.

By way of background, the Court held that the “implied false certification” theory has two elements:

  • “the claim does not merely request payment, but also makes specific representations about the goods or services provided,” and
  • the defendant’s “failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.”

The Court described the materiality standard as centered on “the likely or actual behavior” of the agency that made the payment decision, not whether the agency had the legal authority to deny payment, as argued by the Department of Justice (DOJ) prior to the Court’s decision. To be material, the Court reasoned, the misrepresentation must go to the essence of the bargain, and noncompliance cannot be “minor or insubstantial.”  The Court noted that materiality can be determined based on a number of factors – none of which are dispositive – and held that a court’s decision, though fact-specific, still could lead to dismissal on a motion to dismiss or at summary judgment. Those looking for additional background on the Escobar decision should see our Health Care Enforcement Defense AdvisoryContinue Reading Health Care Enforcement Year in Review and 2018 Outlook: The False Claims Act’s Materiality Standard as Established by Escobar Continues to Evolve

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

Earlier this week, Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update. This Update covers 34 health care-related qui tam cases that were unsealed in July 2017.

Here are some of the highlights:

– Of the 34 cases unsealed in July 2017, the government intervened (in whole or in part) in six cases and declined to intervene in 28.

– These 34 unsealed cases were filed in 21 different courts, including:

  • Five in the Southern District of Ohio;
  • Three in the District of Arizona; and
  • Three in the Western District of Virginia.

Continue Reading Mintz’s Health Care Enforcement Defense Group Publishes New Qui Tam Update

Last Thursday, November 17, 2017, the Centers for Medicare & Medicaid Services (CMS) released its proposed contract year 2019 Medicare Advantage and Part D regulations. The proposed rule is scheduled to be published in the Federal Register on November 28, 2017.

The proposed rule focuses on many issues including but not limited to:

  • Implementing certain parts of the Comprehensive Addiction and Recovery Act of 2016, aimed at establishing additional methods that Part D plans can use to reduce abuse or misuse of frequently abused drugs;
  • Changes to certain Medicare Advantage provisions relating to marketing and delivery of information;
  • Establishing “preclusion lists” under Medicare Advantage and Part D to limit when a Medicare Advantage organization and Part D plan sponsor may pay for a service or drug based on the provider who prescribed or furnished the service or drug;
  • Part D Network requirements relating to any willing provider, including defining mail-order pharmacy;
  • Part D beneficiaries’ access to generic drugs and follow-on biological products;
  • Changes to medical loss ratio calculation and reporting; and
  • Updates to the Medicare Advantage and Part D Star Rating System.

Within the proposed rule, CMS also included a request for information regarding the application of manufacturer rebates and pharmacy price concessions to drug prices at the point of sale. CMS has been gathering information regarding this topic for a number of years but appears to be seeking more detailed information in this request.

In the coming weeks we will be issuing detailed posts on these topics as well as others.

Based on the significance and number of the changes proposed, we anticipate that CMS will receive many comments from all segments of industry and beneficiary groups that may be affected by the proposed changes.  Comments are due to CMS before 5:00 pm on January 16, 2018.

In this post, I will be focusing on the intersection of off-label communications with government enforcement of health care fraud through the False Claims Act. Over the past eight years, the U.S. Department of Justice (“DOJ”) has been particularly aggressive in using the False Claims Act to pursue recoveries from individuals, health care providers, and drug manufacturers that participate in federal health benefit programs. In fact, from 2009 to 2016, DOJ collected $19.3 billion from health care False Claims Act settlements and judgments, with $2.5 billion recovered in fiscal year 2016, alone. (More DOJ false claims statistics can be found here.) DOJ’s enforcement efforts are not solely targeted against garden variety billing fraud, but also involve claims arising from alleged violations of health care regulatory requirements. Among other things, the DOJ has been targeting claims for reimbursement for off-label uses of regulated products. DOJ’s aggressive policy of holding manufacturers accountable for off-label claims under the False Claims Act is entirely consistent with FDA’s stance on off-label communications as described in the January memo. However, recent court interpretations of off-label communications as protected First Amendment speech, as well as interpretations of the causality component of False Claims Act claims, have apparently caused DOJ to reconsider its strategy with respect to such cases. Continue Reading The Past, Present, and Future of Government Regulation of Off-Label Communications – Part 5

Earlier this month, Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update that looks at 23 health care-related qui tam cases unsealed in June 2017. The Update provides an in-depth analysis of six cases in which the government intervened, and discusses why these cases are notable in the health care industry.

The Update also provides a summary of the trends revealed in these recently unsealed cases:

  • The cases identified were filed in federal district courts in 18 states, including four filed in the active Middle District of Florida.
  • Of the cases identified, the federal government intervened, in whole or in part, in eight cases and declined to intervene in 13. There were two cases in which the intervention status could not be determined from the case docket.
  • The entities named in the qui tam actions included outpatient medical providers, laboratory testing companies, inpatient hospitals, and medical supply companies.
  • In all but three cases, the relators were current or former employees of the defendants.
  • Once again, there were long delays in unsealing these cases, with an average time under seal of just over two years and four months. And one case had been under seal for almost nine years.

Click HERE for the full Update and to find our key takeaways from the cases discussed.

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

A court in the Southern District of New York (“SDNY” or the “Court”) recently released an important decision applying the Supreme Court’s landmark Escobar ruling to a qui tam action involving percentage fee arrangements for billing agents.  Among other claims, the City of New York (“the City”) and its billing agent, Computer Sciences Corporation (“CSC”) allegedly used an illegal incentive-based compensation arrangement for CSC’s services when billing New York Medicaid for services provided to eligible children under New York’s Early Intervention Program (“EIP”).   EIP provides “early intervention services” to certain children with development delays using federal funds provided under the Individuals with Disabilities Education Act.  EIP allows municipalities like the City to pay providers directly for EIP services and then seek reimbursement from other payors, like third party payors and New York Medicaid.

Continue Reading Implied False Certification Theory Fails in FCA Case Against Billing Agent