Earlier this month, Mintz Levin’s Health Care Enforcement Defense Group published its most recent Health Care Qui Tam Update that looks at 18 health care-related qui tam cases unsealed in October and November of 2016.

The Update presents two unique cases in-depth and covers some of the trends revealed in these recently unsealed cases:

  • The cases identified were filed in federal district courts in 12 states, including California (5), New York (3), Alabama (1), Arkansas (1), Florida (1), Hawaii (1), Kansas (1), New Jersey (1), New Mexico (1), North Carolina (1), Oklahoma (1), and Pennsylvania (1).
  • The federal government declined to intervene in nine of the 18 cases. Five more cases were voluntarily dismissed before any action was taken by the government. The federal government intervened, in whole or in part, in three cases. In the two remaining cases, the government’s intervention status could not be discerned from the unsealed filings.
  • Nature of the Claims
    • Nine of the recently unsealed cases included both state and federal claims.
    • Four involved allegations of unlawful kickbacks. Of these, two also alleged violations of the Stark Law (42 U.S.C. § 1395nn).
    • Claims for relief under state or federal anti-whistleblower retaliation provisions appeared in nine of the 18 recently unsealed cases.
    • The cases remained under seal for an average of just over two years (774 days). The median number of days cases remained under seal was 573.5. United States ex rel. DiBenedetto v. Vahedi, which was heard in the U.S. District Court for the Central District of California, was under seal for the shortest amount of time, at 104 days. United States ex rel. Harmsen v. Moore County Dental Care Center, which was filed in the U.S. District Court for the Middle District of North Carolina, was under seal the longest, at 2,075 days (over five and a half years)
  • In nearly three-quarters of the unsealed cases (13 of 18), relators were current or former employees of the defendant.

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

 

In this final installment of our Health Care Enforcement Review and 2017 Outlook series, we analyze health care enforcement trends gathered from 2016 civil settlements and criminal resolutions of health care fraud and abuse cases. Behind the headlines covering enormous recoveries in 2016, several themes are apparent.

The False Claims Act continued to generate large civil settlements.

Continuing the trend from recent years, the False Claims Act (“FCA”) remained the primary civil enforcement tool against health care providers as well as pharmaceutical, life sciences, and medical device companies, predominantly driven by qui tam FCA complaints filed by relators.  In fiscal year 2016, the Department of Justice obtained more than $4.7 billion in settlements and judgments from FCA cases, $2.5 billion of which it obtained from the health care industry.  Continue Reading Health Care Enforcement Review and 2017 Outlook: Significant Health Care Fraud and Abuse Civil Settlements and Criminal Resolutions

image1_133753922Last month, the U.S. Government Accountability Office (GAO) released a report in which it found that manufacturer drug coupon programs for privately insured patients could potentially cause the Medicare Part B program to overspend on certain high-cost Part B drugs. The pricing for most drugs reimbursed by the Medicare Part B program is based on each drug’s average sales price (ASP), which is defined as the amount that physicians and other purchasers pay manufacturers for the drug. Currently, the ASP does not take into account drug coupons offered to privately insured patients. Continue Reading GAO Report Suggests Discount Coupons Impact Medicare Spending for Part B Drugs

Earlier today, my colleagues Tom Crane and Larry Freedman released a Health Care Enforcement Defense Advisory regarding the Supreme Court’s long-awaited, unanimous decision in Universal Health Services v. United States ex rel. Escobar (“Escobar”). As they discuss in detail, the Court ruled that under certain circumstances the theory of “implied false certification” can give rise to liability under the False Claims Act (“FCA”).

The Court explained that FCA liability can attach when (1) “the claim does not merely request payment, but also makes specific representations about the goods or services provided,” and (2) the defendant’s “failure to disclose noncompliance with material statutory, regulatory, or contractual requirements makes those representations misleading half-truths.”  However, the Court also limited the scope of the FCA  by imposing a “rigorous” and “demanding” standard of materiality.

For more information and a discussion on what this decision might mean for health care enforcement defense, please click here.

The OIG recently issued a favorable advisory opinion permitting a health system (the “Health System”) to become the sole owner of a Group Purchasing Organization (“GPO”), some of whose members were also owned by the Health System (the “Proposed Arrangement”).

Despite determining that the Proposed Arrangement does not qualify for protection under the GPO safe harbor, the OIG considered whether allowing the GPO to be wholly owned by the same entity that also owns almost 1% of the member pool increases the risk of fraud and abuse to Federal health care programs.

The GPO Structure

The GPO has over 84,000 members nationwide, many of which are hospitals, nursing facilities, clinics, physician practices, laboratories, home care, and equipment organizations. It operates by negotiating products and pricing with vendors on behalf of its members and receives administrative fees from the vendors based on a percentage of the value of sales to the members.  The GPO provides annual written disclosures to the members regarding purchases made on behalf of each member and maintains records regarding discounts and vendor administrative fee distributions to members.

The Proposed Arrangement

To increase efficiencies, the GPO underwent a series of mergers and stock sales (not at issue here), after which the Health System owned 95% of the GPO, with an unrelated entity owning the remaining 5%. About 800 of the 84,000 members (just under 1%) are owned by the Health System.  Under the Proposed Arrangement, the Health System would purchase the remaining 5% of the GPO to become the sole owner. Continue Reading OIG Issues Favorable GPO Advisory Opinion

Last week the Supreme Court heard oral argument in a False Claims Act (“FCA”) case in which the Court is considering the validity of the so-called implied false certification theory. This theory attaches FCA liability when a person submits a claim for payment notwithstanding a violation of an underlying law or regulation, but without a factually false claim form. Because of the massive volume of Medicare and Medicaid regulations that a provider could potentially violate, the case is significant. More than two dozen stakeholders weighed in with amici briefs.  Here we discuss some of the important questions raised in the oral argument. Continue Reading Justices Grapple with Limits of False Claims Act Liability in Implied Certification Cases

As 2015 comes to a close and you look ahead to the New Year, we hope that you will consider joining us for an informative webinar on health care enforcement trends for 2016. On Wednesday, January 13, 2016, my colleagues Hope Foster, Laurence Freedman, and Bridget Rohde will host “Health Care Enforcement in 2016: A Look Back on 2015 and Forecasting the Year Ahead.” The webinar will highlight key enforcement activities from 2015 and the trends we expect to see in 2016. Continue Reading Upcoming Webinar and Report – Health Care Enforcement in 2016

Mintz Levin’s Health Care Enforcement Defense Group has published the latest edition of its Qui Tam Update. The October Qui Tam Update reviews 15 health-related False Claims Act cases that were recently unsealed. Over half of the cases involved both state and federal claims, and over 85% of the relators in the cases were current or former employees. Additionally, the government affirmatively declined to intervene in about half of the cases. In this issue, two noteworthy cases are highlighted:

  • Miller v. Neuropsychiatric Institute, LLC, No. 8:14-cv-1110 (M.D. Fla.), involving a novel expansion of False Claims Act liability. Beyond false claims submitted to Medicare and Medicaid, the relator alleged false claims were made that amounted to immigration fraud and Social Security benefits fraud.
  • United States ex. rel. Yvette Odumosu v. Pediatric Services of America Healthcare, No. 1:11-cv-1007 (N.D. Ga.) (“Odumosu”) and United States ex. rel. Sheila McCray v. Pediatric Services of America, Inc., No. CV413-127 (S.D. Ga.) (“McCray”), which resulted in the first ever False Claims Act settlement involving an alleged failure to adequately investigate credit balances and determine whether those balances resulted from overpayments from federal health care programs.

Read the full Qui Tam Update for more information about the trends we’ve observed in all of the recently unsealed cases. In our Qui Tam Update series, we monitor recently unsealed FCA cases, identify trends in health care enforcement, and discuss noteworthy cases and developments. To receive the Qui Tam Update by email, subscribe here.

Next week, my colleague Karen Lovitch will be co-presenting a discussion on Hot Topics in Laboratory Compliance at the American Health Lawyers Association’s Fraud and Compliance Forum in Baltimore, Maryland. The presentation will focus on:

  1. The health care fraud enforcement climate for laboratories;
  2. Relevant state and federal fraud and abuse laws;
  3. Legal risks presented by interactions with health care professionals and other sales and marketing activities; and
  4. Legal and business risks related to interactions with patients, including collection of outstanding invoices.

Continue Reading Hot Topics in Laboratory Compliance at AHLA’s Fraud and Compliance Forum

Earlier today, Attorney General Loretta Lynch announced the largest coordinated crackdown in the Medicare Fraud Strike Force’s eight-year history.  The government brought charges against 243 individuals for approximately $712 million in alleged Medicare fraud.

The government alleges a wide array of misconduct ranging from conspiracy to commit health-care fraud, violations of the Anti-Kickback Statute, money laundering, and aggravated identity theft. The individuals charged include doctors, nurses, patient recruiters, home health care providers, pharmacy owners, and other license medical professionals. Notably, almost 50 of these individuals were charged with fraud related to the Medicare prescription drug benefit program (“Part D”).

Continue Reading Government Announces Health Care Fraud “Takedown”