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The Centers for Medicare and Medicaid Services (CMS) recently published the 2020 Hospital Outpatient Prospective Payment System (OPPS) rule, which finalizes a proposed reduction in Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B drug discount program. Through the final rule, CMS purports to continue Medicare reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. That ruling, and a Court-imposed stay of the cuts, are the subject of a just-argued appeal.  For a detailed walk-through of the litigation up to this point, please see our prior blog post.
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This post is the fourth installment of our blog series on significant, proposed changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law) recently announced by the Department of Health & Human Services (HHS).  The proposed rule issued by the Centers for Medicare & Medicaid Services (CMS) offers new and revised definitions on key Stark Law terms, some of which CMS has previously neglected to define or provide significant guidance.  In addition, CMS proposes a new Stark Law exception for limited remuneration to a physician, which offers health care entities more flexibility for unwritten, short-term compensation arrangements with physicians.
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This post is the third installment of our blog series on recent proposed rules from the Department of Health & Human Services (HHS) that, if finalized, would implement major changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law). Below is an in-depth summary of the Office of Inspector General’s (OIG) proposed modifications to the safe harbors for personal services and management contracts, which includes a proposed new provision protecting outcomes-based payments. We also cover the OIG’s proposed modifications to the warranties safe harbor.
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HHS Proposes Sweeping Changes to AKS and Stark Law, Part 2: Cybersecurity Technology and Electronic Health Records

October 21, 2019 | Blog | By Karen Lovitch, Dianne Bourque, Theresa Carnegie, Rachel Yount

On October 17, 2019, the Department of Health & Human Services published two proposed rules that, if finalized, would implement significant changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law). This post is the latest installment in our blog series covering these proposed rules.
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HHS Proposes Sweeping Changes to AKS and Stark Law, Part 1: Value-Based Arrangements

October 15, 2019 | Blog | By Theresa Carnegie, Rachel Yount

As we reported last week, the Department of Health & Human Services (HHS) recently issued two proposed rules (one by the Office of Inspector General (OIG) and one by the Centers for Medicare & Medicaid Services (CMS)) that, if finalized, would implement sweeping changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (commonly known as the Stark Law). The proposed rules seek to reduce barriers to value-based contracting in several ways, including: (1) creating new safe harbors to the AKS; (2) adding new exceptions to the Stark Law; and (3) retooling existing AKS safe harbors, along with the Civil Monetary Penalties rules regarding beneficiary inducements. Below are key takeaways from both the OIG’s and the CMS’s proposed rules as they relate to the new value-based arrangements safe harbors and Stark Law exceptions.
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HHS Proposes Sweeping Changes to Anti-Kickback Statute and Stark Law

October 10, 2019 | Blog | By Karen Lovitch, Theresa Carnegie, Rachel Yount

On October 9, 2019, the Department of Health & Human Services (HHS) announced significant changes to the Anti-Kickback Statute (AKS) and the Physician Self-Referral Law (known as the Stark Law) through proposed rules issued by the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS). The proposed rules are part of HHS’s Regulatory Sprint to Coordinated Care, which aims to promote value-based care and ease regulatory burden on health care providers, particularly with respect to the AKS and the Stark Law.
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The Court of Appeals for the Third Circuit recently weighed in on a relator’s right to a hearing where the government moves to dismiss a declined qui tam case, holding that the False Claims Act (FCA) does not guarantee a relator an in-person hearing before their declined FCA cases may be dismissed.
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Key Takeaways from CMS’s Final Rule Requiring the Disclosure of Affiliates during Provider Enrollment

September 12, 2019 | Blog | By Daryl Berke, Sarah Beth Kuyers, Karen Lovitch

The Centers for Medicare & Medicare Services (CMS) recently published a final rule with comment period (the “Final Rule”) that is designed to increase CMS’s ability to identify and prevent bad actors from participating in Medicare, Medicaid, and CHIP. Providers and suppliers should take note because implementation will be costly and burdensome. Among other things, the Final Rule requires the disclosure of certain provider and supplier affiliations and permits CMS to revoke or deny enrollment where those affiliations pose an undue risk of fraud and abuse. The Final Rule also grants CMS several additional authorities to revoke or deny a provider’s Medicare enrollment and increases the duration of such revocations and denials. The Final Rule takes effect on November 4, 2019. Comments on the Final Rule are due by 5:00 p.m. on that same day.
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On Monday, the U.S. Court of Appeals for the Eleventh Circuit issued its long-awaited and closely watched decision in United States v. AseraCare Inc.. The court ruled that a claim cannot be deemed false under the False Claims Act (FCA) based on a difference in clinical judgment.  Instead, there must be proof of an objective falsehood. More than three years have passed since the U.S. District Court for the Northern District of Alabama issued the series of rulings that gave rise to the Eleventh Circuit case. 
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DOJ Seeks Dismissal of FCA Qui Tam Case to Escape Onerous Discovery Obligations

August 22, 2019 | Blog | By Jane Haviland, Karen Lovitch

On August 20, 2019, the United States exercised its authority under the False Claims Act (FCA) to seek dismissal of a relator’s qui tam suit because of the defendant’s burdensome discovery demands, in Polansky v. Executive Health Resources, Inc.  Since the lawsuit’s inception in 2012, the U.S. Department of Justice (DOJ), the U.S. Department of Health and Human Services' (HHS) Centers for Medicare and Medicaid Services (CMS), and other government agencies have attempted to fend off a series of burdensome Touhy requests but failed to do so.  Meanwhile, the scope of discovery has ballooned.  Collectively, DOJ and HHS have deployed six attorneys to work this case.  And, to top it off, DOJ is concerned about relator’s credibility and his ability to prove a FCA violation.  DOJ’s dismissal request thus comes as no surprise.
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OIG Reports Focus on Hospice Quality of Care

July 25, 2019 | Blog | By Sarah Beth Kuyers

Earlier this month, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) released two reports regarding its concerns and recommendations related to quality of care at hospice facilities. These reports follow a portfolio report that the OIG released last summer regarding significant vulnerabilities in the Medicare hospice benefit. In these reports, the OIG outlines several quality of care issues and recommends several ways that CMS should strengthen safeguards, all of which may further increase enforcement in an already heavily scrutinized area.
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The Third Circuit Court of Appeals recently dismissed a relator’s False Claims Act (“FCA”) case under the pre-Affordable Care Act (“ACA”) version of the public disclosure bar. The court decided in U.S. ex rel. Denis v. Medco that to escape the FCA’s public disclosure bar by qualifying as an “original source” under the pre-ACA version of the FCA, a relator must have first-hand, non-derivative knowledge of conduct giving rise to the FCA claim.
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On June 26, 2019, a divided Supreme Court in Kisor v. Wilkie issued one of its most important administrative law decisions in decades. The Supreme Court decided to uphold, but dramatically narrow, the doctrine of judicial deference to agency regulations, known as Auer deference, but at the same time unanimously found for petitioner James Kisor in overturning the Federal Circuit’s affirmance of the Board of Veteran’s Appeals decision to deny part of his claim for Vietnam War disability benefits.  We discuss below the majority and minority opinions on Auer deference, the narrow unanimous holding of reversal, and the importance of this decision.
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Insys Bankruptcy Filing Immediately After Global Settlement Triggers Powerful Remedies

June 25, 2019 | Blog | By Samantha Kingsbury, Laurence Freedman

Over the last two years, much of the healthcare world has been watching the government’s prosecution of Insys Therapeutics for its sales and marketing practices related to its Subsys spray.  Subsys is powerful and highly addictive fentanyl spray (administered under the tongue) that was approved by the FDA in 2012 for the treatment of persistent breakthrough pain in adult cancer patients who were already receiving, and tolerant to, regular opioid therapy.  On June 5, 2019, DOJ announced a global resolution with Insys, including criminal pleas, a Deferred Prosecution Agreement (DPA), a civil settlement agreement, and a Corporate Integrity Agreement (CIA).  Then, on June 10, 2019, Insys filed for bankruptcy protection, which triggered DOJ and HHS’s ability to upend these agreements and impose powerful criminal, civil, and exclusion remedies against Insys. While much of the coverage of this case over the last few years has focused on the high-profile prosecution and conviction of company executives (including Insys’s founder) and other employees who were accused of paying kickbacks to prescribers in exchange for increased prescriptions and increased doses of Subsys, the resolution of this case on the corporate side has proven to be equally fascinating. 
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In the latest development in the Department of Justice (DOJ) Antitrust Division’s ongoing investigation into the generic pharmaceutical industry, Heritage Pharmaceuticals, Inc. has entered into a deferred prosecution agreement (DPA) with DOJ. The terms of the DPA require Heritage to pay a $225,000 criminal penalty and provide full cooperation with the ongoing investigation. The one-count felony charge, filed in the Eastern District of Pennsylvania on May 30, alleges that Heritage violated Section 1 of the Sherman Act by conspiring with multiple unnamed parties to divide up the domestic market and fix prices for glyburide, a diabetes medication, from April 2014 through December 2015. According to DOJ, the DPA provides that the United States will not prosecute Heritage for three years.
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Earlier this week the OIG took the somewhat unusual step of issuing a fraud alert directed to Medicare beneficiaries (rather than to Medicare providers) regarding “fraud schemes” that involve genetic testing. According to the OIG, beneficiaries are being offered genetic tests in order to obtain their Medicare information, which is then used to commit identity theft or to submit fraudulent claims to Medicare. Beneficiaries are being targeted through telemarketing calls, booths at public events, health fairs, and door-to-door visits.
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FCA Defendant Abandons Petition Before the Supreme Court

May 22, 2019 | | By Samantha Kingsbury, Brian Dunphy

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.
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DOJ Issues Guidance on Cooperation Credit in FCA Settlements

May 10, 2019 | Blog | By Jane Haviland, Laurence Freedman

The U.S. Department of Justice (DOJ) issued policy guidance on May 6, 2019, about providing credit in False Claims Act (FCA) settlements to corporations for “disclosure, cooperation, and remediation." DOJ has never previously issued guidance regarding credit in FCA matters. This guidance, coupled with the passage of the Tax Cuts and Jobs Act in 2017 (which requires DOJ to specify the amount of “restitution” or “remediation” at the time of settlement), provides meaningful specificity as to what conduct constitutes disclosure, cooperation, and remediation, as well as data for evaluating whether credit is actually reflected in negotiated FCA settlements. This policy guidance is contained in the Justice Manual, Section 4-4.112.
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FCA Relator and U.S. Weigh in on Defendants' Argument that the FCA is Unconstitutional

May 9, 2019 | Blog | By Samantha Kingsbury, Brian Dunphy

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. 
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As many of our readers know, we have been closely following the Polukoff False Claims Act (FCA) qui tam case in the Tenth Circuit for the lessons it might offer in defending FCA cases premised on allegations related to lack of medical necessity (among other topics).  Recently, we had the opportunity to consider this case from a different angle: the lessons it might offer to bankruptcy counsel advising clients who are or have been the subject of a health care fraud investigation and/or FCA qui tam case. 
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