Health care providers continue to experience significant levels of scrutiny from CMS, OIG, audit and recovery contractors, as well as state and federal law enforcement agencies. As a result of heightened enforcement activity, health care providers may be at risk. This presentation will update you on the current regulatory and enforcement environment.

1. Fraud and Abuse:
2016 Year In Review
February 14, 2017
Jeffrey Fitzgerald, Esq.
jfitzgerald@polsinelli.com
Asher Funk, Esq.
afunk@polsinelli.com

2. Settlement Trends
 Pharma cases still here but dwindling
– Pfizer ($785M - alleged drug pricing)
– Genentech ($67M – effectiveness
misrepresentations)
– Valeant ($54 - kickback allegations including free
dinners and sham speaker payments)
– Biocomparables ($36M – off-label marketing)
– Forest Laboratories ($38M – off-label marketing)
– Cardinal Health ($44M - failure to report suspicious
opioid orders)
2

3. 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)
3

4. Settlement Trends
 Anti-Kickback Statute allegations continue
– Olympus ($646M – marketing & other inducements)
– Respironics ($35M – free call center support, but only
for purchasers)
– Tenet Health ($513M – payments to pre-natal clinics)
– Lexington Medical Center ($17M – employed MD
comp above FMV for 28 MDs)
– Memorial University ($10M – employed MD comp
over FMV and losses on medical practices)
4

5. Noteworthy Settlements
 FDNY paid $4.3 for ambulance transports that
lacked medical necessity documentation
 Continuum Health Partners paid $2.95M to
resolve litigation over $800K in late refunded
overpayments
 CVS paid $3.5M for filling 500 forged opioid
prescriptions
 3 separate ortho clinics collectively paid $2.4M
for using re-imported drugs
5

6. Enforcement Trends
 Focus on individual is increasing
– Fall 2015: DOJ issues the Yates Memo
– Bostwick Lab owner pays $3.75M to settle FCA
suit (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 under
CLIA
6

7. Enforcement Trends
 Focus on individual is increasing
– But, Warner Chilcott CEO acquitted
– Bohner v. Burwell, court upheld the four-year
exclusion of a pharma executive who pled guilty to
an FDA misdemeanor count
– Dec. 2016: Forest Park Hosp. - 21 people indicted
related to payments from private pay hospital
7

8. 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 ease
of filing an appeal
– Hard to see a trend in appellate rulings
– Pleading standards and application of Rule 9(b)
loomed large
8

9. Court Decision Trends
 Courts confirm the ambiguity cannot be basis for
FCA liability
– U.S. ex rel. Olson v. Fairview Health Servs. of Minn, 8th
Cir., (definition of “children’s hospital” was ambiguous
and hospital’s interpretation was not unreasonable)
– U.S. ex rel Donegan v. Anesthesia Assocs. of Kan. City,
8th Cir., (definition of “emergence” from anesthesia
was ambiguous and group’s interpretation was not
unreasonable)
– U.S. ex rel. Wall v. Vista Hospice Care and U.S. ex rel. et
al, v. Aseracare Inc. (differing opinion on hospice
eligibility insufficient)
9

10. 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 to
FDA were not material to CMS for payment
– U.S. ex rel. Greenfield v. Medco Health Sys., dismissed
claims that drug companies donations to a hemophilia
charity were kickbacks
– U.S. ex rel. Bingham v. HCA, dismissed claim that “free
parking” to physicians violated AKS and Stark Law
– U.S. ex rel. Swoben v. United Healthcare Ins. Co., 9th
Cir., reversed dismissal of action alleging Medicare
Advantage Organizations inflated risk adjustment
scores in violation of the FCA
10

11. 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 of
false claims
– U.S. ex rel. Kelly v. Novartis Pharm. Corp., 1st Cir.,
affirmed dismissal because relators did not plead
particular allegations about specific fraudulent claims for
payment
– U.S. ex rel. Chase v. LifePath Hospice, Inc., dismissed
claims against Hospice provider where relator failed to
allege facts about which Medicare claims were fraudulent
11

12. Noteworthy Court Decisions
 U.S. ex rel. Ecobar v. Universal Health Svcs. (USSC)
(6/16/2016)
– Court held that claims to the government implicitly
represent compliance with regulations
– FCA liability turns on whether compliance with a
regulation is material to government’s decision to pay
the 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 participation
distinction continues to have meaning
– Evidence of materiality must be pled with particularity
12

13. Noteworthy Court Decisions
 State Farm Fire & Cas. Co. v. U.S ex rel. Rigsby, Supreme
Court ruled that violations of the FCA seal requirement
do not result in automatic dismissal
 U.S., ex rel. Johnson v. Kaner Med. Grp., P.A., 5th Cir.,
upheld dismissal of claims involving incorrectly
completed reimbursement forms based on mere
negligence
 U.S. ex rel. Sheldon v. Kettering Health Network,
individual data breaches not sufficient to establish a
violation of the HITECH Act and the FCA
13

14. HIPAA Privacy & Security
 OCR guidance on patient right to access
records 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
14

15. HIPAA Privacy & Security
 OCR publishing enforcement actions
– 13 resolutions in 2016 (up from 6 in 2015)
– Largest to date: Advocate Health ($5.5M for issues
affecting ~4M)
– First enforcement against Business Associate:
Catholic Health Care Services of the Archdiocese
of Philadelphia—theft of mobile device
15

16. Other Enforcement Developments
 OIG issued 13 advisory opinions, but terminated
or modified 6 prior opinions
 OIG and DOJ increased penalties
 OIG issued new safe harbors for co-pay
reductions, retailer coupons and access to care
 OIG touting data analytics looking at aggregate
Medicare payment data by geographic area
16

17. 17

18. 18

20. 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
20

21. Predictions for 2016 –
How Did We Score?
 Supreme Court limits the use of “implied certification” in FCA
cases to express “conditions of payment”
 Yates Memo does not create a substantial difference in
resolution of FCA cases by providers
 But increased enforcement and rhetoric of DOJ or OIG
pursuing individuals criminally, under FCA or with exclusion
(including some “exemplar” cases)
 FCA enforcement continues to be dominated by
whistleblower cases with little or no clear DOJ priority agenda
 Increase in FCA cases based on physician compensation
 Increased state level enforcement (MFCU and Attorney
General) and growing volume of FCA cases based on Medicaid
21
Grade

22. Predictions for 2017
22
 Appellate courts weigh in on the FCA’s materiality standard,
but no consistency or clarity
 Enforcement focused on AKS and financial relationships
continues to be at high levels
 No decrease in focus on long term care, hospice and home
health
 Government commences / continues dragnet targeting
opioid and controlled substances prescriptions in a wide
variety of settings
 Enforcement and rhetoric by DOJ and OIG about pursuing
individuals (more “exemplar” cases involving exclusion)

23. Jeffrey Fitzgerald
Shareholder | Polsinelli PC
Denver, CO
303.583.8205
jfitzgerald@polsinelli.com
Asher Funk
Shareholder | Polsinelli PC
Chicago, IL
312.873.3635
afunk@polsinelli.com

24. Fraud and Abuse:
2016 Year In Review
February 14, 2017
Jeffrey Fitzgerald, Esq.
jfitzgerald@polsinelli.com
Asher Funk, Esq.
afunk@polsinelli.com