Health Care Compliance, Fraud and Abuse, & Regulatory Counseling

About a month ago, I predicted on this blog that Food and Drug Administration’s November 2020 enforcement discretion deadline announced as part of its Comprehensive Regenerative Medicine Policy Framework would most likely not be extended. My view was based on a June 17 editorial by agency leadership discussing the risks of unapproved cellular therapy products, which didn’t suggest an extension was forthcoming, as well as an increase in Warning/Untitled Letters related to such products as compared to this time last year. In that earlier blog post I wrote: “Nothing in this newly published editorial suggests that [the Food and Drug Administration (FDA)] will be taking its proverbial foot off the pedal to slow down its efforts towards further oversight of the private stem cell clinic industry after November 2020.”

On June 26, the Department of Health and Human Services Office of the Inspector General (OIG) issued Advisory Opinion No. 20-03 approving the payment by a discount medical plan organization (DMPO) of a five dollar ($5.00) fee to chiropractors for the referral of new members to the DMPO.  OIG determined that even though the arrangement could result in prohibited remuneration, it would not impose administrative sanctions or civil monetary penalties for violation of the federal Anti-Kickback Statute (AKS). 

The Centers for Medicare & Medicaid Services (CMS) has taken another step to further the adoption of value-based purchasing within the health care industry. (Readers may recall the Department of Health & Human Services’ two proposed rules – one from CMS and another from the Office of Inspector General – issued late last year, aimed at reducing barriers to value-based arrangements, which we discussed here.) CMS released its new proposed rule to “support state flexibility to enter into innovative value-based purchasing arrangements (VBPs) with manufacturers, and to provide manufacturers with regulatory support to enter into VBPs with payers, including Medicaid.”

The Department of Justice (DOJ) has announced its first criminal securities fraud prosecution related to COVID-19, and it involves health care fraud as well. Mark Schena, president of Arrayit Corporation, a publicly traded medical technology company, faces criminal charges in connection with false and fraudulent claims submitted for allergy and COVID-19 testing. The complaint charges Schena with one count of securities fraud and one count of conspiracy to commit health care fraud. From 2018 to present, Arrayit, under Schena’s direction, allegedly submitted or caused the submission of over $5.9 million in Medicare claims and over $63 million in private insurance claims for allergy and COVID-19 tests that were not medically necessary, were not provided as claimed, or were tainted by the payment of kickbacks and bribes.

A few weeks ago, we posted about a publication by the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) of responses to certain frequently asked questions (FAQs) received from the health care community regarding regulatory flexibility for providers that needed it to adequately respond to COVID-19 concerns.  This flexibility specifically relates to the OIG’s administrative enforcement authorities, including the federal Anti-Kickback Statute (AKS) and Civil Monetary Penalties Law prohibiting beneficiary inducement (Beneficiary Inducement CMPL).

Earlier this month, Blue Bell Creameries L.P. (Blue Bell) agreed to plead guilty to charges that it distributed contaminated ice cream products that were linked to a 2015 listeriosis outbreak.  The Blue Bell outbreak made headlines in 2015, largely because it resulted in multiple cases of listeriosis and, tragically, three deaths.  Aside from the obvious health-related consequences to the public and reputational harm to the nationally-known manufacturer of sweet treats, the basis for the various charges and causes of action related to the outbreak demonstrate the broad range of legal consequences, both civil and criminal, that can result from the failure to address food safety requirements and regulatory compliance more generally.

Recently, newspapers and television news programs have been full of stories about laboratory testing and the important role it will play in containing the spread of COVID-19 and reopening U.S. economic activity. But these stories have told a mixed tale. The Washington Post and The New York Times both ran front page stories on April 19, 2020 about how the Centers for Disease Control and Prevention (CDC) had bungled production of the first U.S. test kits for detecting the presence of the novel coronavirus by manufacturing them in a lab contaminated with the virus, according to the Food and Drug Administration (FDA). The FDA, which regulates test kits, testing materials, and testing instruments, had investigated the causes of its sister agency’s failure, which delayed by weeks the nation’s fight against the virus.

Only days before those stories ran, news outlets reported that Great Britain had paid $20 million to purchase antibody tests from China but, upon their arrival in Great Britain, those tests were found not to work. On April 26, 2020, the front page story in The New York Times headlined that “Testing Remains Scarce as States Weigh Reopening.”

Day after day, we have read conflicting stories about lab testing: do we have sufficient capacity and capability or do we not? If we do not, why don’t we? We have seen an alphabet soup of federal agencies named as being involved with clinical labs and working towards a solution to the many issues that have been raised. Having worked with labs for decades, we thought we would explore these really important questions. Which agency is responsible for what, and what are they doing? Every day we receive questions like these, and we thought that we would share what we have learned.

On Friday, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) issued responses to a series of frequently asked questions (FAQs), in an effort to provide some level of regulatory flexibility for health care providers responding to COVID-19 concerns.  These FAQs relate to enforcement of the OIG’s administrative enforcement authorities under the federal Anti-Kickback Statute (AKS) and Civil Monetary Penalties Law prohibiting beneficiary inducement (Beneficiary Inducement CMPL) only.

The ongoing COVID-19 pandemic has introduced uncertainty and unique challenges in nearly every aspect of life. During this unprecedented time, Mintz is working to keep our clients and community informed and empowered to navigate this new world. To that end, we’ve created a number of webinars on a variety of COVID-19-related topics of interest to health care industry stakeholders. In case you missed them, here’s a highlights reel of what we’ve covered so far – just click on the links below to access the webinar recordings.

As many of our readers know, as a result of the public health emergency caused by COVID-19, effective March 1, 2020, the U.S. Department of Health and Human Services (“HHS”) issued blanket waivers of its authority under Section 1877(g) of the Social Security Act (which authorizes the imposition of certain sanctions for violations of the Stark Law) with respect to 18 categories of remuneration and/or referrals (the “Blanket Waivers”).

In response to the spread of COVID-19, on March 23, 2020, President Trump signed Executive Order 13910 (Order) to prevent the hoarding of health and medical resources necessary to respond to the spread of COVID-19 within the United States. Through the Order, the President delegated his authority under the Defense Production Act of 1950, 50 U.S.C. § 4512 (Act) to the Secretary of Health and Human Services (HHS). The Order authorizes HHS to protect scarce and threatened health care and medical items by designating particular items as protected under the Act (Designated Items). Once an item is designated, the Act makes it a crime for any person to accumulate Designated Items: (i) in excess of the reasonable demands of business, personal, or home consumption; or (ii) for the purpose of resale at prices in excess of prevailing market prices. In this post, we discuss four things to know in connection with the Order.

Last Tuesday, we blogged about the arrest of the owner of a Georgia-based marketing company who was charged with health care fraud and conspiracy to violate the Anti-Kickback Statute. The government has alleged that laboratories paid the company kickbacks for Coronavirus (COVID-19) testing leads.

The very next day, the United States Attorney’s Office in San Antonio, Texas charged 39 year-old Christopher Perez with allegedly perpetuating a COVID-19-related hoax by posting a false threat on Facebook in which he claimed to have paid someone to spread COVID-19 at grocery stores in Texas. These prompt actions to implement Attorney General William Barr’s March 16 call to prioritize the detection, investigation, and detection of all criminal conduct related to the COVID-19 pandemic caused us to wonder what the federal government is doing about enforcement. The answer is: a lot.

The Department of Justice recently filed suit against Anthem, Inc. (Anthem) alleging that the Medicare Advantage Organization (MAO) violated the False Claims Act when it knowingly failed to delete inaccurate diagnosis codes submitted to the Centers for Medicare and Medicaid Services (CMS) for risk adjustment purposes. As predicated in our 2020 outlook post, we continue to see enforcement activity and ongoing litigation against Medicare Advantage plans. Notably, this trend is referenced in SDNY’s complaint, alleging that the government has “sought to enforce” data accuracy in the risk adjustment system by “actively pursuing legal remedies against [] MAOs that have knowingly submitted inaccurate and untruthful diagnosis data to CMS[.]” The complaint provides four examples of settlements obtained from 2012-2019 against MAOs and healthcare providers who, purportedly like Anthem, submitted inaccurate diagnosis codes to CMS or allegedly failed to delete unsupported diagnosis codes.

The Ninth Circuit Court of Appeals recently allowed a False Claims Act (FCA) case based on an alleged lack of medical necessity to proceed, rejecting the lower court's decision that subjective medical opinions about the necessity of hospitalization cannot be "objectively false." The Ninth Circuit joins several other circuits (including the Third Circuit, which recently issued the Druding decision that we posted about a few weeks ago) in reaching this decision, which has been a rapidly evolving area of FCA law.

The Health Resources and Services Administration (HRSA) recently published guidance regarding the evolving impact of COVID-19 on 340B stakeholders. This new guidance is one part of the U.S. Department of Health and Human Services’ broader effort to maximize regulatory flexibility for health care providers scrambling to meet patient needs during the COVID-19 crisis. While HRSA’s new guidance begins by acknowledging “it is appropriate to take into account the realities of the COVID-19,” HRSA offers little in the way of substantive relief when it comes to 340B. Long on generalities and short on specifics, HRSA merely advises entities to ensure they “have policies and procedures in place to address the proper dispensing of 340B drugs.”

In response to the nationwide COVID-19 emergency, state boards of pharmacy across the country are authorizing waivers of specific provisions of pharmacy laws and implementing policies to address potential staffing shortages and emergency dispensing of pharmaceuticals. Here's a high-level overview of the various actions being taken by state boards of pharmacy.

Yesterday, we blogged on how scammers are trying to monetize on the COVID-19 health crisis for their personal gain. Though the U.S. Food & Drug Administration (FDA) issued a consumer update yesterday saying that there is still no approved vaccine or drug to prevent or treat this disease, companies have continued to market products that claim to prevent, treat, or even cure COVID-19 in an attempt to “help” or profit from distressed, vulnerable Americans. While the FDA is working tirelessly to review possible vaccines, treatments, and cures, Americans should avoid endangering their health or lives by self-medicating. Per the FDA, self-medicating with any new product on the shelf (real or virtual) could not only lead to adverse effects but also could interfere with crucial medications. We are closely monitoring whether Congress will take specific actions on these increasingly prevalent issues in the context of the COVID-19 pandemic.

As many of our readers know, the AseraCare case was closely watched over the last several years because of its significance to efforts by the Department of Justice (DOJ) to allege that submission of claims for services lacking “medical necessity” violate the False Claims Act (FCA) as well as to efforts by providers to defend such cases. On Wednesday, we learned that the AseraCare case has reached its dramatic conclusion with an agreement to resolve $200 million in alleged damages for the agreed amount, as reported by AseraCare, of $1 million.

Like many states, Massachusetts is considering drug pricing transparency legislation. The legislation would require pharmaceutical manufacturers to disclose certain pricing information.  Governor Charlie Baker has proposed legislation which would expand upon current reporting requirements for drug manufacturers in Massachusetts, and the Massachusetts Senate passed legislation which includes drug price transparency requirements and increased regulatory oversight of the pharmaceutical industry in Massachusetts. 

This week, the U.S. Department for Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) released a proposed rule (the Medicare and Medicaid Programs: Contract Year 2021 and 2022 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicaid Program, Medicare Cost Plan Program and Programs of All-Inclusive Care for the Elderly), the 2021 Medicare Advantage and Part D Advance Notice of Methodological Changes for Medicare Advantage Capitation Rates and Part C and Part D Payment Policies (Part II), and multiple Health Plan Management System (HPMS) memos and notices covering topics including Medicare Advantage (MA) benefits, Medicare Part D bidding, and suspension of its Past Performance Review Methodology.