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
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 volume of health care–related qui tam litigation under the False Claims Act (FCA) remained robust in 2017. Based on our review of the data in Mintz Levin’s Health Care Qui Tam Database, we identified over 150 qui tam lawsuits that were unsealed in the twelve months ended November 30, 2017. This post, which is the first in our Health Care Enforcement Review and 2018 Outlook series, discusses a number of interesting trends. Continue Reading Health Care Enforcement Year in Review and 2018 Outlook: Trends In Health Care False Claims Act Cases
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
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.
Last week, the Department of Justice (DOJ) entered into a $34 million settlement with Mercy Hospital Springfield (“Hospital”) of Springfield, Missouri, and its affiliate Mercy Clinic (“Clinic”). The settlement resolves an allegation that the Clinic violated the Stark Law by compensating twelve Clinic physicians in a manner that took into account the volume and value of the physicians’ referrals to the Hospital’s infusion center. The U.S. contended that the defendants’ Stark Law violations caused their reimbursement claims to Medicare for infusion services to violate the False Claims Act. Continue Reading Hospital and its Clinic Agree to $34 Million Settlement to False Claims Act Allegation that Compensation to Oncologists Violated the Stark Law
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
Back in early October, we were all transfixed by the announced Mylan settlement with the U.S. Department of Justice (DOJ) over Mylan’s alleged underpayments of Medicaid Drug Rebates for the EpiPen. Although Mylan indicated that its $465 million settlement resolved all potential liability to government programs over EpiPen’s classification for Medicaid Drug Rebate purposes, DOJ would not confirm the specifics of the settlement and it appeared that no actual settlement documents had even been drafted. We blogged our thoughts that the “settlement” was actually a handshake deal that had not been reduced to writing, had not been agreed to by the states, and had left the extent of any releases and future compliance to be negotiated. And we said Congressional scrutiny would not end due to the announced settlement.
Multiple state and government officials decried the announced settlement as inadequate. Senator Grassley went so far as to schedule a Senate hearing on the settlement, but was forced to postpone it when no one from DOJ or Mylan would agree to attend and testify.
Then the election intervened, and EpiPen rebates were yesterday’s news. However, Senator Grassley, for one, is not letting go. But at this point, his focus is more on government action, or inaction, over drug classifications. And depending on what his inquiry reveals, it may end up hurting, not helping, any government case against Mylan, and potentially other drug manufacturers, based on classification of drugs for purposes of Medicaid Drug Rebates.