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

Late last week, the Department of Justice (DOJ) announced that in FY2015 it obtained more than $3.5 billion in settlements and judgments from civil cases involving allegations of false claims against the government. Once again, health care fraud recoveries led the pack, driven by qui tam (whistleblower) filings, including notable recoveries in qui tam cases where the government declined to intervene.  DOJ awarded qui tam relators a record $597 million, bringing the total awards to relators since the 1986 Amendments to the FCA to $5.3 billion.  Though recoveries vary from year to year, the FY2015 results demonstrate DOJ’s commitment to using the FCA to vigorously pursue allegations of health care fraud, defense department and procurement fraud, and financial and other fraud.

Last year’s recoveries in the health care industry accounted for $1.9 billion of the total FY2015 recoveries – and there is reason to believe that FY2016 will reap similar rewards.  At the September 2015 American Health Lawyers Association Fraud and Compliance Forum, Deputy Assistant Attorney General Joyce Branda underscored DOJ’s commitment to combating health care fraud, pointing to two areas that she believes will be priorities for the DOJ:  cases against skilled nursing facilities for providing medically unnecessary care, and cases against hospitals alleging the payment of physician compensation above fair market value or otherwise in violation of the Stark Law.

These priorities are reflected in DOJ’s FY2015 announcement that touted the largest “failure of care” settlement with a skilled nursing home company, Extendicare Health Services Inc., which agreed to pay $32.3 million to resolve allegations that it billed Medicare for deficient nursing services and medically unreasonable and unnecessary rehabilitation therapy services.  Likewise, there were preludes to these priorities in the late-year Stark Law recoveries from hospitals.  Of the $330 million recovered from hospitals, DOJ noted several settlements with hospitals alleging violations of the Stark Law due to physician compensation arrangements.  These settlements included Adventist Health System for $115 million, North Broward Hospital District for $69.5 million, and Columbus Regional Healthcare System and Dr. Andrew Pippas for $25 million plus contingent payments up to an additional $10 million.  DOJ announced the results of a major initiative against hospitals, and highlighted that hundreds of hospitals cumulatively paid nearly $216 million in settlements to resolve allegations of implanting cardiac devices in Medicare patients contrary to criteria established by CMS.  DOJ noted that it recovered $96 million in settlements and judgments from the pharmaceutical industry, with cases resolving alleged violation of the anti-kickback statute as well as allegations that pharmaceutical companies underpaid rebates owed under the Medicaid Drug Rebate Program.

The recovery of $3.5 billion is the fourth largest yearly recovery by DOJ, exceeded only by recoveries in FCA cases in each of the prior three years.  DOJ reported that it recovered $2.8 billion of the $3.5 billion in cases filed under the qui tam provisions.  Of the $2.8 billion, a record $1.1 billion was recovered in cases in which the U.S. declined to intervene.  DOJ also reported that there were 638 new cases filed under the FCA’s qui tam provisions in FY2015

In health care fraud matters in particular, DOJ recovered $1.4 billion in health care cases in which it intervened, and a record $468 million in health care cases in which it declined.  Additionally, 423 new qui tam matters alleging health care fraud were filed in FY2015. Intervention or no intervention, the statistics underscore that health care cases, and in particular qui tam filings, remain the driver for DOJ for obtaining FCA recoveries.

On June 23, 2015, the OIG issued two reports focusing on fraud, waste, and abuse in the Part D program, the first “Ensuring the Integrity of Medicare Part D” and the second “Questionable Billing Practices and Geographic Hotspots Point to Potential Fraud and Abuse in  Medicare Part D.”  The OIG reports that incidents and investigations relating to Part D are increasing, and as of May 2015, the OIG had over 500 pending complaints and cases involving Part D, which demonstrates an increase of over 130% in the last 5 years.

The OIG highlights that after conducting multiple investigations, it believes that the Part D program continues to suffer from two shortcomings that result in fraud and abuse not being detected or avoided as effectively as possible.  The OIG assigns fault for these two shortcomings to all three parties that are directly involved in Part D oversight, CMS, the Part D plan sponsors, and the Medicare Drug Integrity Contractor (“MEDIC”). These two categories of shortcomings are: “(1) the need to more effectively collect and analyze program data to proactively identify and resolve program vulnerabilities and prevent fraud, waste, and abuse before it occurs; and (2) the need to more fully implement robust oversight designed to ensure proper payments, prevent fraud, and protect beneficiaries.”

Continue Reading Part D Woes, According to the OIG

Written by: Stephanie D. Willis and Aaron M. Tidman

On March 1, 2014, Circular No. 50, which the Chinese National Health and Family Planning Commission (NHFPC) recently promulgated to regulate the conduct of pharmaceutical and medical device companies that do business in China, went into effect.  Circular No. 50, together with Circular No. 49, which a NHFPC sub-agency issued in December 2013 to regulate the compliance conduct of hospitals in China, follow closely on the heels of the Chinese government’s recent investigation into GlaxoSmithKlines sales and marketing practices.  Although the extent to which these new circulars will be enforced remains to be seen, pharmaceutical, medical device, and other healthcare companies doing business in China should ensure that their global compliance programs conform to the latest local requirements.

Circular No. 50 updates the NHFPC’s “Rules on the Establishment of Commercial Bribery Blacklists for Purchase and Distribution in the Health Care Industry,” originally released in 2007.  The new circular establishes a revised “blacklist” system for punishing pharmaceutical and medical device companies that engage in bribery, whether or not criminal liability is pursued or any individual is actually convicted of bribery.  A company or its personnel may be blacklisted for any of the following reasons:

  • Being convicted for bribery under criminal or administrative law;
  • Committing “minor” acts of bribery that Chinese prosecutors decide not to charge;
  • Being investigated and disciplined by Communist Party authorities for acts of bribery;
  • Being punished/penalized by administrative authorities for bribery; or
  • Other factors determined by laws and regulation.

Prior to being blacklisted, companies will have an opportunity to defend themselves at a hearing.  Once a company is blacklisted, however, the consequences are crippling:  public hospitals and other state-funded medical institutions in the Chinese province where the bribery occurred will be prohibited from purchasing any goods or services from the blacklisted company for two years.  If a company is blacklisted two or more times within a five-year period, the company will be prohibited from selling its goods or services to any public hospital or medical institution nationwide.

Continue Reading Avoid the Anti-Corruption “Blacklist:” Chinese Agency Guidance

Written by Ellyn L. Sternfield

CMS wants to change the way that it rewards non-qui tam whistleblowers who report alleged fraudulent or unlawful conduct related to Medicare or Medicaid.  Using an IRS program as a model, CMS recently proposed rule changes to increase the cap on potential non-qui tam whistleblower rewards from a maximum of $1000, to 15% of the final amount collected (capped at $9.9 million) as a result of legal or administrative action.  Continue Reading CMS Proposes to Increase Awards for Non-Qui Tam Whistleblowers

In its most recent advisory, Mintz Levin’s Health Care Enforcement Defense Group reviews the key health care fraud enforcement trends from 2012 in its Year in Review report, as it did for 2011.  The Department of Justice (DOJ) and Department of Health and Human Services’ Office of Inspector General (OIG) again had a landmark year in health care fraud enforcement, and the Year in Review recaps the highlights and emerging trends that demonstrate how the agencies are getting increasingly sophisticated in their fraud-fighting methods in the wake of the Affordable Care Act.

As reported by Hope Foster, Tracy Miner, Jessica Sergi, Samantha Kingsbury, and Stephanie Willis, agency actions involving home health agencies and durable medical equipment companies contribute significantly to the enforcement numbers once again, but interesting developments in civil False Claims Act cases involving off-label marketing and the rising tide of criminal Foreign Corrupt Practices Act resolutions against health care companies add more breadth and nuances to the risk areas that affect the industry.

The Office of Inspector General for the Department of Health and Human Services (OIG) has released its 2012 Spring Semiannual Report (Report) on the legal review, monitoring, and prosecution-related activities undertaken by the agency between October 1, 2011 and March 31, 2012.

The Report highlights the ramp-up of data analytics capabilities, including the “data warehouse” that “integrates data from Medicare Parts A, B, and D so [the OIG] can develop a more comprehensive picture of beneficiaries’ histories of medical care and providers’ billing patterns.”  One area where the OIG is applying more comprehensive reviews is in its hospital compliance initiative (mentioned on page 11 in this segment of the OIG 2012 Work Plan).  Rather than focusing on one or two risk areas during a review of a hospital’s billing and coding activities, the OIG can now review a hospital’s data related to all codes billed to assess compliance risk areas.

In addition to detecting more fraudulent activities in real-time, the OIG’s increasingly sophisticated data analysis activities are uncovering more deficiencies that lead to waste in federal health care programs.  For instance, the Report describes that the states have often received Medicaid overpayments based on faulty drug reimbursement methodologies and  non-compliance with other certain federal requirements. Continue Reading OIG Spring 2012 Semiannual Report Released to Congress

Yesterday the Senate Finance Committee posted an open letter on its website to the health care sector soliciting industry stakeholder insights on ways to combat fraud, waste, and abuse in the Medicare and Medicaid programs.  This letter comes on the heels of an April 25th hearing at which the members questioned government officials from the Department of Health and Human Services’ Office of the Inspector General (HHS-OIG), the Centers for Medicare & Medicaid Services, and the Government Accountability Office about the effectiveness of fraud-fighting efforts.  The open letter now invites a broader audience, including the private sector, to opine on the best ways to prevent and detect unlawful conduct and waste involving government health care programs.

The Committee is requesting actors in the health care sector to submit “white papers” in PDF or Microsoft Word format that address potential improvements in the following categories:

  • Program Integrity Reforms to Protect Beneficiaries and Prevent Fraud and Abuse
  • Payment Integrity Reforms to Ensure Accuracy, Efficiency and Value
  • Fraud and Abuse Enforcement Reforms to Ensure Tougher Penalties Against Those Who Commit Fraud

The white papers should be submitted via email by June 29th to  The Committee members plan to have their staff review the white papers and then compile a summary document highlighting key proposals later in 2012.

This letter is the most recent instance where the government has sought the expertise of the private sector in addressing fraud, waste, and abuse.  Another example came to light in February 2012, when HHS-OIG issued its report related to the Pharmacy Compliance Roundtable, where it convened compliance professionals in the pharmaceutical industry.  There, the private sector players discussed their experiences with Corporate Integrity Agreements (CIAs) and other compliance efforts initiated by the government with HHS-OIG representatives.  Prevention is becoming the new focus of fraud-fighting efforts, and the government needs private sector cooperation to achieve its goals in this area.