Last week, Mintz Levin’s Health Care Enforcement Defense Group published a new Qui Tam Update, which analyzes 46 health care-related False Claims Act qui tam cases unsealed in February and March 2018 and the trends they reflect:

  • Long delays in unsealing remain common. While one case was unsealed after 61 days (just one day over the 60-day period specified by statute), the average time under seal for these cases was 851 days (i.e., approximately 2 years, 4 months). The oldest case was under seal for just over 6 years.
  • 17 of the 46 cases were dismissed in their entirety. The remaining 29 cases were still active.
  • Former employees were again the most common type of relator, accounting for 23 of the 46 cases at issue. Current employees and business partners were also among relators.
    • Notably, patients joined the relator ranks in two of the cases we reviewed.
  • These cases were filed in 38 different courts. Jurisdictions with the most unsealed cases were:
    • Middle District of Florida (Jacksonville, Orlando, and Tampa) with six;
    • Northern District of Ohio (Cleveland) with three; and
    • District of Kansas, the Eastern District of Tennessee (Chattanooga and Knoxville), the Northern District of Illinois (Chicago), and the Southern District of Florida (Miami, Fort Lauderdale, and West Palm Beach) with two each.
  • Home health and hospice providers, as well as hospitals and hospital systems, were the most common type of defendant in the cases we reviewed (with 7 cases filed against home health and hospice providers and 7 cases filed against hospitals and hospital systems). Five cases were brought against pharmaceutical and biotech firms; three cases were filed against physicians and physician practices; and three case were filed against health insurers.

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

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

Last week, Mintz Levin’s Health Care Enforcement Defense Group published a new Qui Tam Update, which analyzes 60 health care-related False Claims Act qui tam cases unsealed in December 2017 and January 2018 and the trends they reflect:

  • The government intervened in 14% of those unsealed cases (a figure that is consistent with the longer-term trends we have seen over the prior twelve months).
  • Of the 60 unsealed cases, only 28 were being litigated (at least initially). The remaining 32 cases were docketed as closed or dismissed.
  • The 60 unsealed cases were filed in 38 different courts. Jurisdictions with the most unsealed cases included:
    • The Central District of California (which includes Los Angeles) with six cases;
    • The Middle District of Florida (which includes Jacksonville, Orlando, and Tampa) with 4 cases; and
    • The District of Connecticut and Eastern District of Louisiana (New Orleans), each with 3 cases.
  • The most frequently targeted types of defendants included:
    • Pharmaceutical companies, hospitals, and healthcare systems, with each accounting for 9 of the 60 unsealed cases.
    • Physicians and physician group practices, which were targeted in 7 cases.
    • Home health and hospice providers, which were the subject of 6 cases.
    • Outpatient clinics, which were defendants in 5 cases.
  • Former employees were again the most frequent relator type, accounting for 23 of the 60 unsealed cases. Expert witnesses brought 7 cases and current employees brought 2 cases.
  • Only one of the cases was unsealed within the 60-day period specified by statute. That case was under seal for 55 days.
  • The longest time a case was under seal was almost eight-and-a-half years. Average time under seal for this cohort was 700 days, though half of these cases were unsealed in 16 months or less, and 23 of these 60 cases were unsealed in less than a year.

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

States may be starting to take aim at prescription automatic refill programs. Automatic refill programs have been proven to increase patient adherence, especially among patients with chronic conditions. However, these programs are not popular among regulators: Medicare Part D and several state boards of pharmacy have prohibited these programs for mail order pharmacies and an increasing number of state Medicaid programs are prohibiting automatic refill programs for both mail and retail pharmacies. Regulators argue that automatic refill programs result in waste to the system, stockpiling, and federal program payment for unneeded prescriptions.

Last week, Wal-Mart and Sam’s Club paid $825,000 to the Minnesota Attorney General and the Department of Justice to settle allegations that they violated the False Claims Act and Minnesota False Claims Act by automatically refilling prescriptions and billing Medicaid without a specific authorization from the patient. These alleged violations appear to be for prescriptions filled at both retail and mail. Continue Reading The Hazards of Prescription Auto-Refill Programs

Recently the U.S. Department of Justice (DOJ) issued a statement that it had intervened in a False Claims Act (FCA) case against Insys Therapeutics, Inc. and consolidated five separate qui tam cases into one case, U.S. ex rel Guzman v. Insys Therapeutics, Inc., filed in the U.S. District Court for the Central District of California. The complaint revealed that multiple states—California, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, Michigan, Minnesota, Montana, Nevada, Massachusetts, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Tennessee, Texas, Virginia, and Washington—as well as the District of Columbia, have also joined the case.

Continue Reading DOJ Continues Aggressive Enforcement Action Against Opioid Manufacturers

The Department of Justice (DOJ) recently intervened in a False Claims Act (FCA) case that raises a variety of interesting allegations, including payment of kickbacks by a compounding pharmacy to contracted marketing companies in the form of percentage-based compensation, to TRICARE beneficiaries in the form of copayment waivers, and to physicians who submitted prescriptions without seeing patients.  According to the complaint, Patient Care America (PCA), a Florida compounding pharmacy, implemented a scheme to manipulate the compounding formula for pain and scar creams that resulted in the submission of false claims to TRICARE.  The complaint also names two of PCA’s senior executives (one of which has since left the company) as well as the private equity firm that owns a controlling interest in PCA. Continue Reading DOJ Intervenes in False Claims Act Case Against a Compounding Pharmacy and a Private Equity Firm

Mintz Levin’s Health Care Enforcement Defense Group recently published its most recent Health Care Qui Tam Update. This Update analyzes the 47 health care-related qui tam cases unsealed in August and September 2017.  Highlights from this Update include:

  • a relatively high rate of intervention;
  • cases filed in 30 different courts;
  • cases brought against a variety of different health care providers;
  • almost half of the cases filed by current or former employees; and
  • faster times for unsealing cases.

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

Two new DOJ policies about False Claims Act enforcement became public last week. First, DOJ’s Associate Attorney General announced a new civil enforcement policy that instructs False Claims Act litigators not to use any sub-regulatory guidance to create legal obligations. Second, we learned that DOJ’s Civil Fraud section instructed all False Claims Act litigators to consider whether declined qui tam actions should be dismissed under the Department’s authority in Section 3730(c)(2)(A) of the False Claims Act. The central theme of this policy is that dismissal of qui tam actions is warranted when it is in the federal interest to do so, and the policy clearly sets out seven such federal interests. Continue Reading Perspective on DOJ Pivot on FCA Enforcement Policy

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