Health Care Compliance, Fraud and Abuse, & Regulatory Counseling

On May 14, FDA announced that it issued five Warning Letters to companies that manufacture and market homeopathic drugs for human use. The letters all cite cGMP deficiencies relating to inspectional observations and conclude that the products are misbranded prescription drugs under the Federal Food, Drug, and Cosmetic Act because “in light of their toxicity or other potentiality for harmful effect, or the method of their use, or the collateral measures necessary to their use, they are not safe for use except under the supervision of a practitioner licensed by law to administer such drugs” and they are not labeled for prescription use only.

In 2019 so far, FDA has issued Warning Letters to eleven separate homeopathic drug manufacturers, including the five letters referenced above. All of the Warning Letters, except one, cite observations from inspections and focus on cGMP and quality violations at the manufacturing facilities, including contamination and varying amounts of active ingredients, that could lead to consumer harm.

This latest installment in our ongoing coverage of the Polukoff False Claims Act (FCA) qui tam case might be one of our last posts about the case. Last week, Intermountain Health Care, Inc. and IHC Health Services, Inc. d/b/a Intermountain Medical Center (Intermountain), one of the hospital defendants in this matter, which had previously filed a Petition for a Writ of Certiorari with the U.S. Supreme Court on issues relevant to this case (as we reported in February), filed an Unopposed Motion to Dismiss before the high court.

As part of our ongoing discussion of the Polukoff False Claims Act (FCA) qui tam case (involving allegations that certain heart procedures performed by a cardiologist, and billed for by two hospital defendants, were not medically necessary), we reported in February that some defendants filed a petition for a writ of certiorari with the United States Supreme Court. 

Yesterday, May 8, 2019, the Centers for Medicaid & Medicaid Services (“CMS”) released its final rule requiring drug manufacturers to disclose a drug’s wholesale acquisition cost (“WAC”) in direct-to-consumer television advertisements. The rule, which will become final 60 days after the official publication of the rule (which will be tomorrow, May 10, 2019) was proposal last fall. CMS is largely adopting the rule as published last fall with minor technical changes for clarification

This week, Congress will continue to look at lowering health costs. The House has been focused on both drug costs and overall health care costs, advancing packages to strengthen the individual market in addition to a series of bipartisan drug pricing bills. We cover this and more in this week's preview.

In recent months, we’ve highlighted several changes that CMS is implementing to combat opioid misuse. In this post, we focus on CMS’s new Medicare Part D Opioid Overutilization Policies.


Last year, CMS published a road map outlining the agency’s approach to addressing the nation’s opioid epidemic. CMS’s strategy has three prongs: (1) prevent new cases of opioid use disorder (OUD); (2) expand treatment for individuals with OUDs; and (3) leverage data to improve the agency’s prevention and treatment options.


In line with that strategy, the agency published an article detailing its Medicare Part D Opioid Overutilization Policies for 2019. The policies focus on improving communication between and among Part D plans (PDPs) and providers to better coordinate efforts to prevent opioid misuse. As CMS points out, “Providers are in the best position to identify and manage potential opioid overutilization in the Medicare Part D population. Medicare prescription drug plans can assist providers by alerting them about unusual utilization patterns in prescription claims.”

The Supreme Court denied a petition for certiorari last Monday in U.S. ex rel. Prather v. Brookdale Senior Living Communities, Inc., No. 17-5826 (6th Cir. June 11, 2018), again declining to revisit or clarify the False Claims Act's “materiality” standard set forth in its 2016 decision in Universal Health Services v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016). 

In Prather, the relator alleged that defendant Brookdale Senior Living Communities, Inc. (Brookdale), a home health provider, submitted bills for medical services that were “untimely” signed and certified by physicians in violation of Medicare regulations.  When submitting Medicare claims, Brookdale purportedly did not obtain the required physician certifications attesting that the medical services provided by Brookdale were necessary until months after establishing a patient’s plan of care.  Because Medicare regulations under 42 C.F.R. § 424.22(a)(2) require physician certifications “at the time the plan of care is established or as soon thereafter as possible,” the relator alleged that Brookdale’s untimely certifications rendered the claims false under the implied false certification theory.  The district court dismissed the complaint on materiality grounds, holding that the noncompliance was insubstantial and that the relator failed to allege that the government had ever denied a claim based on a violation of the timing requirement under the Medicare regulations.

No one wants to be faced with a large, unexpected medical bill after receiving health care services. Unfortunately, patients often find themselves in this situation after seeking emergency treatment or transportation, undergoing a surgical procedure, or even the birth of a child. These “surprise medical bills” occur when the patient goes to a hospital or facility that is “in-network” with the patient’s health plan, but the physician providing the services is not and is considered “out-of-network” or “OON.” This issue found its way back to the national stage this week, with several important highlights.

Earlier this month, the Department of Health and Human Services Office of the Inspector General (OIG) issued an advisory opinion (Advisory Opinion No. 19-03) (Opinion) concluding that a program consisting of free, in-home follow-up care to patients at a higher risk of admission or readmission (the Arrangement) was “low risk” under the civil monetary penalties prohibition on beneficiary inducement (the Beneficiary Inducement CMP). This comes as good news to hospitals and other providers who are focused on care coordination and value-based programs.

Last week, a U.S. district court judge in the Southern District of Florida upheld a magistrate judge’s decision to dismiss False Claims Act (FCA) allegations against a compounding pharmacy, its private equity firm owner, and two individuals. DOJ filed its complaint in intervention last February against the pharmacy, Patient Care America (PCA); its private equity backer, Riordan Lewis & Haden, Inc.; and two individual executives. The government alleged that the parties engaged in an illegal kickback scheme that resulted in the submission of false claims to TRICARE for expensive compounded drugs. This case is reportedly the first in which the federal government intervened against a private equity firm owner.

AltaMed Health Services (AltaMed) and California Physicians Services (doing business as Blue Shield of California (BSC)) recently received notice from their business associate, Sharecare Health Data Services (SHDS), of a hack of SHDS’s network that stores patients’ medical records.  The hacker was able to acquire and/or access patients’ protected health information (PHI) contained in the medical records kept by SHDS on behalf of AltaMed and BSC. The breach of AltaMed’s data was discovered on June 22, 2018, and the breach for BSC was discovered a few days later on June 26, 2018. Upon investigation, however, officials determined that both breaches went undetected for over a month and actually began on May 21, 2018.

On February 26, 2019, the Senate Finance Committee heard testimony from top executives representing seven high-profile drug manufacturers.  This hearing was the second to examine drug pricing in America. The Committee’s questions to executives from Pfizer, Merck & Co., Johnson & Johnson, AbbVie, Bristol-Myers Squibb, Sanofi, and AstraZeneca were aimed at identifying why already-high drug prices continue to climb and what can be done to stop the trend. The hearing comes during a period of increasing pressure on pharmaceutical manufacturers and others in the drug supply chain to improve patient access to drugs, increase transparency in drug pricing, and stop the trend of significant price increases.  This type of high profile hearing just confirms that these pressures will continue, and as a number of proposals to address drug prices work their way through Congress and multiple federal agencies, the discussion around drug pricing reforms will undoubtedly continue.  Following on ML Strategies’ coverage of the Senate hearing, below are a handful of key takeaways from the hearing.

What might 2019 mean for the 340B program? This post addresses the on-going litigation over the OPPS Medicare payment reduction for 340B drugs, ceiling price validation, and state initiatives related to the 340B program.

On Tuesday, executives from seven of the largest pharmaceutical companies testified before the Senate Finance Committee on rising prescription drug prices. While the hearing was expected to be packed with fireworks as Senators of both parties grilled the nation's top pharmaceutical executives, it was largely uneventful.

Last month, we highlighted a few of the changes CMS proposes in Parts I and II of the Advance Notice and Draft Call Letter. Here, we take a look at CMS’s next steps to combat opioid misuse. CMS is rolling out several new initiatives in this space this year and next.

Read about health care qui tam litigation trends for the 12 months that ended on January 31 and significant cases, including two involving the issue of medical necessity.

The Department of Justice (DOJ) recently announced a $1.99 million False Claims Act (FCA) settlement with GenomeDx Biosciences Corp. (“GenomeDx”), a laboratory headquartered in Vancouver, British Columbia with operations in San Diego. The matter arose as the result of a qui tam case brought by two former employees in September 2017.

Federal regulators are flexing their regulatory muscle to accelerate a long-desired but often elusive goal: the interoperability of health information technology (health IT) systems. Interoperability refers to the ability of different health IT systems, including electronic health record (EHR) systems, to meaningfully communicate with one another.

Last week the Department of Justice (DOJ) announced a $57 million settlement with electronic health record (EHR) software vendor Greenway Health LLC (Greenway).  According to DOJ, Greenway violated the False Claims Act (FCA) by fraudulently obtaining certification of its software and misrepresenting its software’s capabilities to customers, thereby causing its customers to submit false attestations of “meaningful use” of EHR technology when seeking to qualify for incentive payments available through the Medicare and Medicaid EHR Incentive Program.  The complaint also alleged that Greenway illegally paid kickbacks to customer in exchange for recommendations to prospective new customers.

As of January 30, 2019, CMS lifted its temporary provider enrollment moratoria for home health agencies in Florida, Illinois, Michigan and Texas. The Enrollment Moratorium had prevented new home health agencies in these states from enrolling in Medicare and Medicaid.