Other Notable Enforcement Actions

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

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.

Health Care Enforcement Q2 Roundup Webinar
Date: Tuesday, July 17, 2018
Time: 11:00 am PDT | 12:00 pm MDT | 1:00 pm CDT | 2:00 pm EDT

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How will recent developments and emerging trends related to health care fraud and abuse impact future investigation targets and litigants?

Our upcoming Health Care Enforcement Quarterly Roundup webinar will address this critical question and discuss trends related to:

  • Continued interpretations of landmark Escobar case
  • Recent guidance from DOJ leadership regarding enforcement priorities
  • Uptick in state and federal efforts to combat the opioid crisis
  • Court guidance on the use of statistical sampling in False Claims Act (FCA) cases
  • Growing Circuit split on key FCA provisions, including the public disclosure bar, statute of limitations and tolling of claims
  • Other trends that are critical to health care business operations and compliance with the ever-changing regulatory landscape

Attendees will also receive an advance copy of McDermott’s Health Care Enforcement Quarterly Roundup report on the day of the webinar and will have the opportunity to ask questions of the panel through the webinar platform.

Earlier this week, the US Department of Justice (DOJ) launched a new front in its effort to combat the opioid crisis and explicitly stated that it will deploy the False Claims Act (FCA) as part of its offensive. In a press release and parallel speech delivered by Attorney General Jeff Sessions on February 28, 2018, DOJ announced the creation of the Prescription Interdiction & Litigation (PIL) Task Force.

According to DOJ, the PIL Task Force will combat the opioid crisis at every level of the distribution system, from manufacturers to distributors (including pharmacies, pain management clinics, drug testing facilities and individual physicians). DOJ will use all available civil and criminal remedies to hold manufacturers accountable, building on its existing coordination with the US Food and Drug Administration (FDA) to ensure proper labeling and marketing.  Likewise, DOJ will use civil and criminal actions to ensure that distributors and pharmacies are following US Drug Enforcement Administration (DEA) rules implemented to prevent diversion and improper prescribing. Finally, DOJ will use the FCA and other enforcement tools to pursue pain-management clinics, drug testing facilities and physicians that make opioid prescriptions. Continue Reading New DOJ Task Force to Take on Opioid Crisis Using the FCA and Other Enforcement Tools

In a two-page memorandum, the US Department of Justice (DOJ) announced a broad policy statement prohibiting the use of agency guidance documents as the basis for proving legal violations in civil enforcement actions, including actions brought under the False Claims Act (FCA). The extent to which these policy changes ultimately create relief for health care defendants in FCA actions is unclear at this time. That said, the memo provides defendants with a valuable tool in defending FCA actions, either brought by DOJ or relator’s counsel, that attempt to use alleged noncompliance with agency sub-regulatory guidance as support for an FCA theory.

Continue reading

The government’s focus on the US opioid crisis has been consistently expanding over the past year beyond manufacturers to reach prescribers and health care providers who submit claims to federal health care programs for opioid prescriptions. These efforts increasingly include investigations under the False Claims Act and administrative actions, in addition to the more traditional criminal approach to these issues.

With the Trump administration’s public health emergency orders, it is expected for the government’s enforcement activities, including those instigated by relators and their counsel, to grow in this area.

Continue Reading.

As first reported in the National Law Journal, the US Department of Justice (DOJ), Civil Division, recently issued an important memorandum to its lawyers handling qui tam cases filed under the False Claims Act (FCA) outlining circumstances under which the United States should seek to dismiss a case where it has declined intervention and, therefore, is not participating actively in the continued litigation of the case against the defendant by the qui tam relator. Continue Reading DOJ Issues Memorandum Outlining Factors for Evaluating Dismissal of Qui Tam FCA Cases in Which the Government Has Declined to Intervene

Every day across the country, health-care organizations are asking themselves: Have we identified an overpayment? On Aug. 3, a federal judge in the Southern District of New York took the first judicial stab at answering this rather existential question in United States ex rel. Kane v. HealthFirst Inc. (see related article in the Leading the News section).

Read the full article from Bloomberg BNA’s Health Care Fraud Report™.

On Tuesday, August 11, 2015, in United States ex rel. Barko v. Haliburton et al., the U.S. Court of Appeals for the D.C. Circuit issued an opinion vacating another series of rulings by the United States District Court for the District of Columbia that had required defendant Kellogg Brown & Root, Inc. (KBR) to produce the privileged files underlying its internal investigation into allegations that the company defrauded the U.S. government. The District Court had concluded that KBR impliedly waived the privilege by putting the contents of its corporate investigation at issue in the litigation when it produced an in-house lawyer as a deposition witness on the topic of KBR’s investigation and referenced that testimony in connection with its motion for summary judgment. The District Court had also ruled that the attorney-client privilege did not extend to summary reports prepared by KBR’s non-lawyer investigators. In vacating the District Court’s ruling, the D.C. Circuit reached three key holdings.

First, the D.C. Circuit held that KBR did not put the privileged investigation files at issue in the case by merely referencing the testimony in a footnote in its summary judgment brief because “KBR neither directly stated that the [internal] investigation revealed no wrongdoing nor sought any specific relief because of the results of the investigation.” In reaching this holding, the D.C. Circuit reasoned that cursory statements made in footnotes of briefs should not be indulged as a matter of practice, and the mere inference of “no wrongdoing” that could be drawn from KBR’s footnoted assertion held little weight because as a summary judgment movant, all inferences were to be drawn against KBR.

Second, the D.C. Circuit held that simply designating an in-house lawyer in response to a deposition notice on the topic of the privileged nature of an internal investigation, while still preserving the privilege in response to specific questioning during the deposition, does not compel the production of privileged materials reviewed by the witness to prepare for the deposition under Federal Rule of Evidence 612. In reaching this holding, the D.C. Circuit observed that “[i]f all it took to defeat the privilege and protection attaching to an internal investigation was to notice a deposition regarding the investigations (and the privilege and protection attaching to them), we would expect to see such attempts to end-run these barriers to discovery in every lawsuit in which a prior internal investigation was conducted relating to the claims.” It was this potential “floodgates” consequence that drove the D.C. Circuit to conclude that “the District Court’s rulings would ring alarm bells in corporate general counsel offices throughout the country about what kinds of descriptions of investigatory and disclosure practices could be used by an adversary to defeat all claims of privilege and protection of an internal investigation.”

Finally, the D.C. Circuit held that the District Court wrongly concluded that some of the summary reports prepared by KBR’s investigators were not privileged because it was clear that portions of the documents summarized statements made to the investigator, who “effectively steps into the shoes the attorney,” by KBR employees. The D.C. Circuit clarified that the privilege attaches to a summary report prepared by an attorney (or its agent) where the purpose is “to put in usable form the information obtained from the client.”  However, the court rejected KBR’s argument that such summary reports should be considered privileged for all purposes, as opposed to receiving qualified protection as work product.  In doing so, the D.C. Circuit spurned the notion that “everything in an internal investigation is attorney-client privileged” and cautioned that “there is nothing gained by sloppily insisting on [asserting] both [attorney-client privilege and work product protection for the same content] or by failing to distinguish between them.”

There are several lessons to be gleaned from the D.C. Circuit’s second opinion in the KBR/Barko litigation. These include:

  • The attorney-client privilege remains a powerful tool in protecting the confidentiality of internal corporate investigations.
  • In-house counsel may continue to use non-lawyers to carry out internal investigations without jeopardizing the privilege, but the work product of such individuals is only protected on a qualified basis except to the extent that it reveals or summarizes a privileged communication with an employee.
  • In the litigation context, plaintiffs cannot pierce the privilege by merely noticing a privileged investigation as a topic in a corporate deposition, and corporate defendants do not waive the privilege by designating an in-house lawyer as a corporate witness to testify about that topic, so long as the privilege is vigorously protected by counsel during the deposition.
  • To avoid any assertions of implied privilege waiver, counsel must be mindful about how they publicly describe an internal investigation, including by avoiding overtly stating that the investigation “revealed no wrongdoing” and not seeking any litigation-related relief based on the results of the investigation.