Polsinelli Health Care Series

1. Health Care Fraud & Abuse
Year in Review
Polsinelli Webinar – January 30, 2018
Asher Funk, Esq.
afunk@polsinelli.com
Jeffrey Fitzgerald, Esq.
jfitzgerald@polsinelli.com

2. 2

3. Overall F&A Liability Down
3

4. Overall F&A Liability Down
4

5. Overall F&A Liability Down
5

6. Settlement Trends
 Fewer, but some, “Big Company—Big Dollar”
– Shire: $350M (marketing and AKS)
– AmerisourceBergen: $260M (FDA manufacturing)
– Novo Nordisk: $59M (FDA compliance)
– Celegene: $280M (off-label marketing)
– Mylan: $465M (EpiPen pricing and coding)
– DaVita Rx: $65M (pharmacy billing)
– eClinicalWorks: $155M (EHR meaningful use certifications)
6

7. Settlement Trends
 Fewer, but some, AKS / financial relationships
– Indiana Univ. & HealthNet: $18M
– Mercy Hospital Springfield: $34M
– Pacific Alliance Med Center: $42M
– Compassionate Care Hospice: $2.4M
– Family Medicine Centers (S.C.): $2M
– UPMC Hamot: $20.7M
– Meadows Med Center: $13M
7

8. Settlement Trends
 Uptick in Long Term Care
– Genesis Healthcare: $54M (unnecessary therapy and
ineligible hospice care)
– Reliant Care: $8M (unnecessary therapy)
– Foundations of Healthcare: $19.5M (unnecessary therapy
and ineligible hospice care)
– Health Services Mgmt: $5M (worthless services)
– Vitas Hospice $75M (unnecessary hospice care)
– Catholic Health (Buffalo, NY): $6M (unnecessary therapy) 8

9. Settlement Trends
 Uptick in Medicaid-based matters
– MB2 Dental: $8.45M (misc. compliance)
– Family Care Visiting Nurses: $5.3 (RN services
furnished by non-licensed persons)
– Contemporary Support Services: $4.5M
(unsupervised staff and billing paperwork time as
clinical time)
9

10. Settlement Trends
 Focus on patient assistance programs
– United Therapeutics $210M settlement for the use of nonprofit
foundation to cover patient co-pays in return for referrals
– Industry-wide probe by DOJ initiated in 2015-2016 includes:
Astellas, Celgene, Pfizer and Johnson & Johnson
– OIG guidance looms large:
• May 2014 Special Advisory Bulletin
• Withdrawal of favorable Advisory Opinion for Caring Voice Coalition,
Inc.
• Patient Services, Inc., lawsuit against OIG
10

11. Settlement Trends
 Individual liability
– Freedom Health (former COO paid $750,000)
– eClinicalWorks (executives jointly liable for full $155M
settlement, developer and project managers paid $80,000)
– AMI Monitoring, Inc. and Spectocor LLC (president paid
$1M)
– Edison Adult Medical Daycare (former and current owners
each paid $200,000)
11

12. Settlement Trends
 Individual liability
– Between 2013-2016, no more than 8 FCA settlements per year with
individuals
– More than 26 FCA settlements with individuals during 2017
– Focus on physicians and other practitioners
– Settlements addressed:
• Medically unnecessary care
• Improper billing or billing for services never provided
• Financial relationships (AKS and Stark)
12

13. False Claims Litigation
 Trial courts: business as usual
 Appeals: increase to measurable volume
– Approx. 50 published appeals decisions
13

14. False Claims Litigation
22
88%
8%
4%
Qui tam, litigated by relator
Qui tam, DOJ intervened
USA initiated
Origins of Cases at Court of Appeals
14

15. False Claims Litigation
80%
4%
16% Affirmed
Reversed
Other
12%
80%
8%
Plaintiff
Defendant
Appeal Ruling Who Prevailed?
15

16. False Claims Litigation
 Escobar Update—Defining Materiality
– Key considerations
• What the government knew
• What the government did (or did not do)
• Importance of underlying statute, regulation, or requirement
– US ex rel. Petratos v. Genentech, Inc. (3rd Cir.)
– US ex rel. Harman v. Trinity Industries Inc. (5th Cir.)
– US ex rel. Campie v. Gilead Sciences, Inc. (9th Cir.)
16

17. Less OIG & CMS Guidance
 OIG: only 7 advisory opinions
 No OIG “alerts” or comparable items
 CMS updated its Stark Self-Disclosure Protocol
– Edits were minor and not substantive
 CMS updated 42 CFR Part 2 regulations
(substance abuse treatment confidentiality)
17

18. “Effectiveness Documents”
 DOJ and OIG separately published “tools” to
assess effectiveness of a compliance program
– DOJ: high level—8 pages governing 11 topics, mostly
inform of thought questions, but identifies areas of
highest DOJ interest
– OIG: detailed—54 pages; tracks traditional 7 elements
of compliance program; could be used as a checklist if
streamlined
18

19. Extreme Opioid Rhetoric
 Declared public health emergency (10/26/17)
 Personal attention from AG Jeff Sessions
 DEA/DOJ: New Opioid Detection Unit
– $20M plus 12 DOJ attorneys; focus districts
 Health Affairs: deem hospital-acquired condition
(10/8/2017)
 GAO: expanded Part D oversight needed (11/16/2017)
 60 Minutes–Washington Post (blame manufacturers,
distributors, and lack of DEA enforcement) (late 2017) 19

20. Active Opioid Enforcement
 Settlements: McKesson paid $150M; Costco pharmacy
paid $11.75M; CVS paid $5M in 2017; 2 pharmacists
paid $5M
 37 State AGs investigating role of health insurance and
Pharma (Delaware AG filed complaint 1/18/2018)
 Court recognizes “addiction as malpractice” claim
(Koon v. Walden, Mo. Ct. App. 10/24/2017)
 State and local lawsuits against manufacturers to
recover Medicaid and other costs
20

21. Predictions for 2017 – How Did We Score?
21
 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, home
health
 Government commences / continues dragnet targeting
controlled substances prescriptions in a variety of settings
 Enforcement and rhetoric by DOJ and OIG about pursuing
individuals (more “exemplar” cases involving exclusion)
Grade

22. Predictions for 2018
 Repeat prediction #1: more appellate courts decisions on the
FCA’s materiality standard, but still no consistency or clarity
 Repeat prediction #2: continued government enforcement
related to controlled substance prescriptions in all areas
 DOJ/OIG continue to pursue individuals (no repeal of Yates
Memo), but noticeable trends (and strategies) will emerge
 Uptick in settlements targeting beneficiary inducement or AKS
violations based on assistance programs or co-pay waivers
 Aggressive use of administrative remedies (revocation,
suspension, exclusions, non-enrollment)
22

23. 23

24. Questions or Comments?
24
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