Additional Compliance Resources

DOJ announced on February 6, 2019, the Settlement Agreement resolving allegations in DOJ’s Complaint that Greenway caused its customers to submit false Medicare and Medicaid claims for payments under the EHR Incentive Programs in violation of the FCA and that it paid illegal kickbacks to current customers to recommend Greenway products (that are used to generate incentive payments or avoid penalties under the EHR Incentive Programs) to new customers. Under the Settlement Agreement, Greenway agreed to pay approximately $57 million to resolve the allegations without admitting liability. Greenway also entered into a five-year CIA with strict compliance oversight, reporting obligations and costly obligations to provide the latest version of Greenway’s EHR software to each of Greenway’s current customers at no additional charge.

This settlement comes nearly two years after eCW entered into a groundbreaking settlement with DOJ. At that time, we wondered whether it may be a sign of increasing FCA actions against vendors of EHR technology (CEHRT) certified through the health information technology (HIT) certification program of the Office of the National Coordinator of HIT (ONC). Statements by the United States Attorney for the District of Vermont, Christina E. Nolan, in the DOJ press release discussing the Greenway settlement seem to answer that question very directly in the affirmative. She says that “EHR companies should consider themselves on notice.” It is notable that, unlike the eCW case, the Greenway case was not initiated by a relator, but pursued by DOJ directly. In light of the government’s continued focus on vendors of EHR technology used to earn payments or avoid penalties for failing to succeed under the EHR Incentive Programs (or their successor value-based payment programs), HIT vendors should:

  • Take care to accurately and transparently demonstrate their software during HIT certification program testing
  • Review, and consider improvements to, their systems and other procedures for identifying, responding to and correcting software design and quality issues that call into question EHR software’s conformity to applicable EHR certification criteria or present patient safety or clinician usability risks; and
  • Review existing customer reference, referral and marketing arrangements for compliance with the Anti-Kickback Statute.

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This latest installment of the Health Care Enforcement Quarterly Roundup reflects on trends that persisted in 2018 and those emerging trends that will carry us into 2019 and beyond. Leading off with the US Department of Justice’s (DOJ) December announcement of its fiscal year 2018 False Claims Act (FCA) recoveries, it remains clear that the health care industry is a primary target of FCA enforcement activity. We also revisit the current state of implementation of DOJ’s Granston Memorandum, substantive revisions to the Yates Memorandum, critical interpretations of the landmark Escobar case (including those expected in the coming year), and continued enforcement activity in the pain management industry.

Click here to read the full issue of the Health Care Enforcement Quarterly Roundup

Click here to download a PDF of the issue. 

In September 2015, Deputy Attorney General Sally Yates issued the Yates memo on individual accountability in the context of corporate investigations. It is no understatement to say that this memo created a near-cottage industry of articles and panels on the memo’s impact on government investigations and officer/director liability.

After the change in administration, a favorite parlor game of the defense bar was wagering on the memo’s survival. And after Deputy Attorney General Rod Rosenstein revealed, in September and October 2017, that the Yates memo was under active reconsideration, discussions turned serious about whether the memo would be preserved, diluted or outright reversed and whether the distinctions between criminal and civil False Claims Act matters would receive needed nuance.

Click here to read the full article as published in Law360.

In the latest installment of Health Care Enforcement Quarterly Roundup, we examine key enforcement trends in the health care industry that we have observed over the past few months. In this issue, we report on:

  • Practical applications of recent guidance from the US Department of Justice (DOJ)
  • A recent blow to DOJ’s effort to use the federal False Claims Act (FCA) to attack Medicare Advantage reimbursement
  • Continued enforcement efforts at the state and federal level to combat the opioid crisis
  • Potential changes to the Stark Law and Anti-Kickback Statute
  • Continued reporting on how the lower courts have interpreted the landmark Escobar case

Click here to read the full issue of the Health Care Enforcement Quarterly Roundup.

Join us on for a webinar discussion on Tuesday, October 23. will take a deep dive into the trends and issues covered in this installment of the Health Care Enforcement Quarterly Roundup. Click here to register.

Last month, Insys Therapeutics, Inc. announced that it reached a settlement-in-principle with the U.S. Department of Justice (DOJ) to settle claims that it knowingly offered and paid kickbacks to induce physicians and nurse practitioners to prescribe the drug Subsys and that it knowingly caused Medicare and other federal health care programs to pay for non-covered uses of the drug. The drugmaker agreed to pay at least $150 million and up to $75 million more based on “contingent events.” According to a status report filed by DOJ, the tentative agreement is subject to further approval and resolution of related issues. The settlement does not resolve state civil fraud and consumer protection claims against the company.

The consolidated lawsuits subject to the settlement allege that Insys violated the False Claims Act and Anti-Kickback Statute in connection with its marketing of Subsys, a sub-lingual spray form of the powerful opioid fentanyl. The Food and Drug Administration has approved Subsys for, and only for, the treatment of persistent breakthrough pain in adult cancer patients who are already receiving, and tolerant to, around-the-clock opioid therapy. The government’s complaint alleges that Insys provided kickbacks in the form of arrangements disguised as otherwise permissible activities. Specifically, it alleges that Insys instituted a sham speaker program, paying thousands of dollars in fees to practitioners for speeches “attended only by the prescriber’s own office staff, by close friends who attended multiple presentations, or by people who were not medical professionals and had no legitimate reason for attending.” Many of these speeches were held at restaurants and did not include any substantive presentation. Insys also allegedly provided jobs for prescribers’ friends and relatives, visits to strip clubs, and lavish meals and entertainment. Continue Reading Insys Announces Settlement-in-Principle with DOJ Over Alleged Subsys Kickback Scheme

This week, the Sixth Circuit declined the en banc petition of Brookdale Senior Living Communities to revisit a three-judge panel’s two-to-one decision to permit the Relator’s third amended complaint to move forward. We previously analyzed this decision here. The court’s one-page order did not explain the reasoning for declining the petition, although it noted that the dissenting judge voted in favor of re-hearing.

Fortunately, most courts have taken to heart the Supreme Court’s direction that materiality is a “demanding” and “rigorous” test in which “minor or insubstantial” non-compliance would not qualify as material. However, the Sixth Circuit’s decision that noncompliance with a physician signature timing requirement sufficiently alleged materiality under Escobar arguably is inconsistent with Escobar. The better analysis of the Relator’s complaint would conclude that the Relator pled insufficient facts, under the Rule 9(b) particularity standard, to suggest that the untimely physician signature somehow resulted in the government paying for home health services for which it otherwise would not have paid. As the dissenting opinion noted, the Sixth Circuit created the “timing” requirement in a prior opinion in this matter. Given this unusual circumstance, this case may be distinguishable in other cases in which the court is less constrained by their prior ruling.

On August 24, 2018, the Office of Inspector General (OIG), Department of Health and Human Services (HHS) published a request for information, seeking input from the public on potential new safe harbors to the Anti-Kickback Statute and exceptions to the beneficiary inducement prohibition in the Civil Monetary Penalty (CMP) Law to remove impediments to care coordination and value-based care. The broad scope of the laws involved and the wide-ranging nature of OIG’s request underscore the potential significance of anticipated regulatory reforms for virtually every healthcare stakeholder.

The request for information follows a similar request by the Centers for Medicare and Medicaid Services (CMS) published on June 25, 2018, regarding the physician self-referral law, commonly known as the Stark Law. Both of these requests are part of HHS’s “Regulatory Sprint to Coordinated Care,” which is being spearheaded by the Deputy Secretary as an effort to address regulatory obstacles to coordinated care.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving anything of value in exchange for or to induce a person to make referrals for items and services that are payable by a federal health care program, or to purchase, lease, order or arrange for or recommend purchasing, leasing or ordering any services or items that may be covered by a federal health care program. The beneficiary inducement prohibition in the CMP Law authorizes the imposition of civil money penalties for paying or offering any remuneration to a Medicare or Medicaid beneficiary that the offeror knows or should know is likely to influence the beneficiary’s selection of a particular provider or supplier of Medicare or Medicaid payable items. Many value-based payment models implicate these statutes, and the OIG acknowledges that they are widely viewed as impediments to arrangements that would advance coordinated care.

While the request for information arises in the context of a concerted focus on care coordination and value-based payment, the request is wide-ranging and effectively invites stakeholders to provide comments on a broad range of potential issues under both the Anti-Kickback Statute and the beneficiary inducement prohibition. The OIG solicits comments across four general categories: (1) promoting care coordination and value-based care; (2) beneficiary engagement, including beneficiary incentives and cost-sharing waivers; (3) other regulatory topics, including feedback on current fraud and abuse waivers, cybersecurity-related items and services, and new exceptions required by the Bipartisan Budget Act of 2018; and (4) the intersection of the Stark Law and the Anti-Kickback Statute.

The OIG encourages individuals and organizations who previously submitted comments to CMS in response to its request for information on the Stark Law to also submit comments directly to OIG, even where those comments may be duplicative, to ensure they are considered by OIG as it exercises its independent authority with respect to the Anti-Kickback Statute and CMP Law.

Comments are due by October 26, 2018.

During a July 17, 2018, hearing before the House Ways and Means Subcommittee on Health, United States Department of Health and Human Services (HHS) Deputy Secretary Eric Hargan testified about HHS’ efforts to review and address obstacles that longstanding fraud and abuse laws pose to shifting the Medicare payment system to a value-based, coordinated care payment system. Deputy Secretary Hargan confirmed that the agency is looking at regulatory reforms to both the physician self-referral law (Stark Law) and the Anti-Kickback Statute (AKS) as part of HHS’ “Regulatory Sprint to Coordinate Care.”

According to Hargan’s testimony, “the goal of the sprint is to remove regulatory barriers to coordinated care while ensuring patient safety. We want to genuinely engage stakeholders in this effort, and solicit feedback at each stage—but this is a sprint, not a jog. These words were chosen specifically because we want to fix, as quickly as possible, the regulatory processes that have increased provider burden.”

As part of this Sprint, in June the Centers for Medicare & Medicaid Services (CMS) issued a broad Stark Law Request for Information (RFI) that solicited public comments on how the Stark Law impedes care coordination and how Stark Law exceptions could be modified or create to promote such coordination as well as on how other exceptions may require regulatory change to reduce regulatory burden. Comments to the Stark Law RFI are due August 24.  We previously reported on the Stark Law RFI here.

In his testimony, Hargan stated that HHS is also looking at the AKS and its intersection with the Stark Law based on feedback from providers who find it “very difficult if not impossible to understand” how to comply with both laws.  Hargan described a four-agency task force that is working together to examine obstacles to coordinate care related to the Stark Law, the AKS, the Health Insurance Portability and Accountability Act of 1996 (HIPAA)  and rules under 42 CFR Part 2 related to opioid and substance abuse disorder treatment.  This task force is composed of CMS, the HHS Office of Inspector General (OIG), the HHS Office of Civil Rights, and the Substance Abuse and Mental Health Services Administration (SAMHSA) to “coordinate amongst themselves to facilitate a coordinated care system” to “reduce duplication, overlap and contradictions” in regulations and “ensure regulatory requirements are aligned.”  As part of this effort, Hargan indicated that HHS would soon issue an RFI on AKS reforms as part of the Sprint.

HHS has already begun exploring changes to the AKS regarding drug pricing.  On July 18, 2018, OIG sent a proposed rule to the Office of Management and Budget entitled “Removal Of Safe Harbor Protection for Rebates to Plans or PBMs Involving Prescription Pharmaceuticals and Creation of New Safe Harbor Protection.”  While the text of the proposed rule is not available at this time, the rule is expected to propose revisions to the AKS discount safe harbor to scale back or exclude rebates from drug manufacturers.

How will key trends and developments in health care policy and enforcement impact future litigants? In the latest Health Care Enforcement Quarterly Roundup, we address this question in the context of:

  • Continued interpretations of the landmark Escobar case
  • The latest guidance from US Department of Justice (DOJ) leadership regarding enforcement priorities
  • The uptick in state and federal efforts to combat the opioid crisis
  • Recent court decisions regarding the use of statistical sampling in False Claims Act (FCA) cases
  • A recent increase in regulatory scrutiny of co-location and shared services/equipment arrangements

Materials from our corresponding Q2 webinar can be accessed below.

Click here to read the full issue of the Health Care Enforcement Quarterly Roundup.

Click here to view the archived webinar.

The materiality test articulated in Escobar has become one of the most litigated issues in False Claims Act (FCA) practice. Most courts have taken to heart the Supreme Court’s direction that materiality is a “demanding” and “rigorous” test in which “minor or insubstantial” non-compliance would not qualify as material. However, a recent Sixth Circuit two-to-one decision found that noncompliance with a physician signature timing requirement sufficiently alleged materiality under Escobar, reversing the district court’s dismissal of the case. United States ex rel. Prather v. Brookdale Senior Living Communities, Inc., 892 F.3d 822 (6th Cir. 2018). This opinion arguably is inconsistent with Escobar. The better analysis of Relator’s complaint would conclude that the Relator pled insufficient facts, under the Rule 9(b) particularity standard, to suggest that the untimely physician signature somehow resulted in the government paying for home health services for which it otherwise would not have paid.

Case Summary

This decision was Relator’s second time before the Sixth Circuit litigating the complaint she filed in 2012 against Brookdale Senior Living, Inc., and related entities (Brookdale) after the government declined to intervene. The dispute centers around compliance with the regulation, 42 C.F.R. §424.22(a), which pertains to home health services. Section 424.22(a) provides that a “physician must certify the patient’s eligibility for the home health benefit,” including that the individual is home bound and eligible for home care under Medicare’s coverage rules. Subsection (a)(2) has a timing requirement for this certification; “the certification of need for home health services must be obtained at the time the plan of care is established or as soon thereafter as possible and must be signed and dated by the physician who establishes the plan.” Relator alleged that she was engaged to help Brookdale deal with a large backlog of Medicare claims, including obtaining physician certifications months after a patient’s treatment began. She argued that claims with these “late” certifications violated § 424.22(a)(2) and rendered those claims false under an implied certification theory. Continue Reading Timing is Everything: The Sixth Circuit’s Application of the Materiality Test