Fraud & Abuse: 2016 Year in Review
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Fraud and Abuse: 2016 Year In Review February 14, 2017 Jeffrey Fitzgerald, Esq. [email protected] Asher Funk, Esq. [email protected]
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Transcript of Fraud & Abuse: 2016 Year in Review
Fraud and Abuse:2016 Year In Review
February 14, 2017
Jeffrey Fitzgerald, [email protected]
Asher Funk, [email protected]
Settlement Trends
Pharma cases still here but dwindling– Pfizer ($785M - alleged drug pricing)
– Genentech ($67M – effectivenessmisrepresentations)
– Valeant ($54 - kickback allegations including freedinners and sham speaker payments)
– Biocomparables ($36M – off-label marketing)
– Forest Laboratories ($38M – off-label marketing)
– Cardinal Health ($44M - failure to report suspiciousopioid orders)
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Settlement Trends
Increase in long term care
– Kindred ($125M – unnecessary therapy)
– Life Care Centers ($145M – unnecessary therapy)
– Medford Center for Living ($28M – quality)
– No. American Health ($28.5 - medical necessity)
– Westlake Convalescent ($3.5M – medical necessity)
– Daybreak Partners ($5.3M – worthless services)
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Settlement Trends
Anti-Kickback Statute allegations continue
– Olympus ($646M – marketing & other inducements)
– Respironics ($35M – free call center support, but onlyfor purchasers)
– Tenet Health ($513M – payments to pre-natal clinics)
– Lexington Medical Center ($17M – employed MDcomp above FMV for 28 MDs)
– Memorial University ($10M – employed MD compover FMV and losses on medical practices)
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Noteworthy Settlements
FDNY paid $4.3 for ambulance transports thatlacked medical necessity documentation
Continuum Health Partners paid $2.95M toresolve litigation over $800K in late refundedoverpayments
CVS paid $3.5M for filling 500 forged opioidprescriptions
3 separate ortho clinics collectively paid $2.4Mfor using re-imported drugs
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Enforcement Trends
Focus on individual is increasing
– Fall 2015: DOJ issues the Yates Memo
– Bostwick Lab owner pays $3.75M to settle FCAsuit (company paid $6.5M in 2015)
– No. American Health (required board chair to pay$1M of total $28.5M settlement)
– Former CEO of Tuomey excluded and fined $1M
– Theranos CEO banned from owning a lab underCLIA
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Enforcement Trends
Focus on individual is increasing
– But, Warner Chilcott CEO acquitted
– Bohner v. Burwell, court upheld the four-yearexclusion of a pharma executive who pled guilty toan FDA misdemeanor count
– Dec. 2016: Forest Park Hosp. - 21 people indictedrelated to payments from private pay hospital
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Court Decision Trends
General increase in Court of Appeals decisions
– 63 appellate decisions during the last year
– May reflect relator’s investment in cases and easeof filing an appeal
– Hard to see a trend in appellate rulings
– Pleading standards and application of Rule 9(b)loomed large
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Court Decision Trends
Courts confirm the ambiguity cannot be basis forFCA liability– U.S. ex rel. Olson v. Fairview Health Servs. of Minn, 8th
Cir., (definition of “children’s hospital” was ambiguousand hospital’s interpretation was not unreasonable)
– U.S. ex rel Donegan v. Anesthesia Assocs. of Kan. City,8th Cir., (definition of “emergence” from anesthesiawas ambiguous and group’s interpretation was notunreasonable)
– U.S. ex rel. Wall v. Vista Hospice Care and U.S. ex rel. etal, v. Aseracare Inc. (differing opinion on hospiceeligibility insufficient)
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Court Decision Trends
Limits of False Claims Act liability to be tested– U.S. ex rel. D’Agostino v. EV3, Inc., 1st Cir., upheld
dismissal and ruled that alleged false statements toFDA were not material to CMS for payment
– U.S. ex rel. Greenfield v. Medco Health Sys., dismissedclaims that drug companies donations to a hemophiliacharity were kickbacks
– U.S. ex rel. Bingham v. HCA, dismissed claim that “freeparking” to physicians violated AKS and Stark Law
– U.S. ex rel. Swoben v. United Healthcare Ins. Co., 9thCir., reversed dismissal of action alleging MedicareAdvantage Organizations inflated risk adjustmentscores in violation of the FCA
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Court Decision Trends
Rule 9(b) continues to be effective for defendants…– U.S. ex rel. Eberhard v. Physicians Choice Lab. Servs., LLC,
6th Cir., dismissed claims where relator failed to include“representative examples” or plead the submission offalse claims
– U.S. ex rel. Kelly v. Novartis Pharm. Corp., 1st Cir.,affirmed dismissal because relators did not pleadparticular allegations about specific fraudulent claims forpayment
– U.S. ex rel. Chase v. LifePath Hospice, Inc., dismissedclaims against Hospice provider where relator failed toallege facts about which Medicare claims were fraudulent
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Noteworthy Court Decisions
U.S. ex rel. Ecobar v. Universal Health Svcs. (USSC)(6/16/2016)
– Court held that claims to the government implicitlyrepresent compliance with regulations
– FCA liability turns on whether compliance with aregulation is material to government’s decision to paythe claim
– Little guidance as to what material means• Rejected DOJ argument that a legal right to deny
payment for noncompliance constitutes material
• Condition of payment v. condition of participationdistinction continues to have meaning
– Evidence of materiality must be pled with particularity12
Noteworthy Court Decisions
State Farm Fire & Cas. Co. v. U.S ex rel. Rigsby, SupremeCourt ruled that violations of the FCA seal requirementdo not result in automatic dismissal
U.S., ex rel. Johnson v. Kaner Med. Grp., P.A., 5th Cir.,upheld dismissal of claims involving incorrectlycompleted reimbursement forms based on merenegligence
U.S. ex rel. Sheldon v. Kettering Health Network,individual data breaches not sufficient to establish aviolation of the HITECH Act and the FCA
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HIPAA Privacy & Security
OCR guidance on patient right to accessrecords under Privacy Rule (Jan. 2016)
Cybersecurity attacks continue
– Banner Health notifying 3.7M of cyber-attack
– Newkirk Products (issues health plan ID cards)cyber-attack potentially affects 3.4M
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HIPAA Privacy & Security
OCR publishing enforcement actions
– 13 resolutions in 2016 (up from 6 in 2015)
– Largest to date: Advocate Health ($5.5M for issuesaffecting ~4M)
– First enforcement against Business Associate:Catholic Health Care Services of the Archdioceseof Philadelphia—theft of mobile device
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Other Enforcement Developments
OIG issued 13 advisory opinions, but terminatedor modified 6 prior opinions
OIG and DOJ increased penalties
OIG issued new safe harbors for co-payreductions, retailer coupons and access to care
OIG touting data analytics looking at aggregateMedicare payment data by geographic area
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The DOJ’s “Year in Review”
Notable shift in percentage of settlement dollars from cases initiated by DOJ
Qui tam actions are 83% of new matters, but only 61% of dollars recovered
Recoveries from non-intervened cases returned to traditional levels
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Predictions for 2016 –How Did We Score?
Supreme Court limits the use of “implied certification” in FCAcases to express “conditions of payment”
Yates Memo does not create a substantial difference inresolution of FCA cases by providers
But increased enforcement and rhetoric of DOJ or OIGpursuing individuals criminally, under FCA or with exclusion(including some “exemplar” cases)
FCA enforcement continues to be dominated bywhistleblower cases with little or no clear DOJ priority agenda
Increase in FCA cases based on physician compensation
Increased state level enforcement (MFCU and AttorneyGeneral) and growing volume of FCA cases based on Medicaid
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Grade
Predictions for 2017
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Appellate courts weigh in on the FCA’s materiality standard,but no consistency or clarity
Enforcement focused on AKS and financial relationshipscontinues to be at high levels
No decrease in focus on long term care, hospice and homehealth
Government commences / continues dragnet targetingopioid and controlled substances prescriptions in a widevariety of settings
Enforcement and rhetoric by DOJ and OIG about pursuingindividuals (more “exemplar” cases involving exclusion)
Jeffrey FitzgeraldShareholder | Polsinelli PC
Denver, CO303.583.8205
Asher FunkShareholder | Polsinelli PC
Chicago, IL312.873.3635
Fraud and Abuse:2016 Year In Review
February 14, 2017
Jeffrey Fitzgerald, [email protected]
Asher Funk, [email protected]
