Health Care Enforcement & Investigations

In a decision issued late last week, the First Circuit has adopted a deferential standard for review of government decisions to seek dismissal of whistleblower lawsuits brought under the False Claims Act (FCA). The court held that so long as the government explains its decision and provides the whistleblower with an opportunity to respond, the government’s motion must be granted absent evidence of collusion or unconstitutionality. This decision deepens a circuit split on the applicable standard under the FCA when the whistleblower objects to a government motion for dismissal.

On January 19, 2022, the Office of Inspector General for the Department of Health and Human Services (OIG) issued a favorable Advisory Opinion regarding an online retailer’s proposal to make its discount programs available to Medicaid beneficiaries. Currently, lower-income individuals are eligible for the retailer’s discount programs based on their enrollment in a number of assistance programs (e.g. Supplemental Security Income, Supplemental Nutrition Assistance Program), and the retailer proposes Medicaid enrollment as another category of eligibility.

While the Office of the National Coordinator for Health Information Technology (ONC) issued the 21st Century Cures Act; Interoperability, Information Blocking, and the ONC Health IT Certification Program (Information Blocking Final Rule) back in May 2020, many entities are still parsing out compliance strategies and seeking additional regulatory guidance to understand how the rule will be enforced. Broadly-speaking, information blocking is a practice that is likely to interfere with, prevent, or discourage access, exchange, or use of electronic health information (EHI). For example, a health system might require patient written consent before sharing the patient’s EHI with unaffiliated providers. Another example of information blocking is that a health IT developer might charge a fee to a health care provider to perform an export of EHI so that the provider can switch to a different health IT platform.

Over the past year, the demand for health care via telehealth has continued to skyrocket as a result of the COVID-19 pandemic and the public’s increased comfort with obtaining health care goods and services virtually. Join Ellen Janos, Karen Lovitch, Kate Stewart and Alex Hecht as they demystify the current status of laws and regulations, untangle the web of legislation before Congress related to the expansion of telehealth services, discuss recent enforcement activity, and look ahead to trends we see on the horizon.  

On November 22, 2021, the Office of Inspector General for the Department of Health and Human Services (OIG) posted a negative Advisory Opinion regarding a proposed joint venture (JV) for the provision of therapy services (Proposed Arrangement) between an existing therapy services provider (Therapy Services Provider) and the owner of long-term care facilities (LTC Owner). This Advisory Opinion is yet another example of OIG guidance reiterating its view that joint ventures formed between entities in the position to provide health care items or services and entities in the position to refer business can present risk under the federal Anti-Kickback Statute (AKS).

For the first time since April 2013, the Department of Health and Human Services’ Office of Inspector General (OIG) revised the Provider Self-Disclosure Protocol (SDP) on November 8, 2021. The SDP allows providers and other entities to voluntarily disclose and resolve instances of potential fraud involving federal health care programs, including potential overpayments and Anti-Kickback Statute (AKS) violations. The OIG originally published the SDP in 1998, and has since modified the SDP several times generally to make the SDP a more appealing option for providers and other health care entities.

The U.S. Department of Justice (DOJ) recently announced its latest national enforcement action related to health care fraud (National Enforcement Action) in which DOJ filed criminal charges against 142 defendants. The National Enforcement Action, which alleges losses of $1.4 billion due to false or fraudulent billings, follows similar DOJ “take downs” over the last several years in that it focuses on telemedicine providers and the opioid crisis. This post provides five takeaways from the National Enforcement Action.

On September 15, 2021, the Office of Inspector General for the Department of Health and Human Services (OIG) issued a favorable Advisory Opinion regarding a hospital’s proposal to implement a program through which patients who experience complications after specific joint replacement procedures can receive free items and services to treat the complications. The OIG likened the program to a warranty for joint replacement procedures.

Physician judgment and medical necessity increasingly are a focus of fraud and abuse enforcement actions, with statistical analysis of procedure volumes used to flag potential cases. Last week, the Atlantic published this recent article discussing a significant 2018 decision of the Tenth Circuit Court of Appeals in United States ex rel. Polukoff v. St. Mark’s Hospital, et al., No. 17-4014 (10th Cir. Jul. 9, 2018), in which the court held that a physician’s medical judgment concerning medical necessity of a particular treatment for two specific cardiac conditions could be “false or fraudulent” under the federal False Claims Act (FCA). Our colleague, Brian Dunphy, covered the 2018 decision on this blog here. The Tenth Circuit ultimately held that a “doctor’s certification to the government that a procedure is ‘reasonable and necessary’ is ‘false’ under the FCA if the procedure was not reasonable and necessary under the government’s definition of the phrase.”

Earlier this week, a bipartisan group of Senators led by Senator Chuck Grassley (R-Iowa) introduced two pieces of proposed legislation, one of which would amend the existing False Claims Act (FCA) and the other of which would amend the Program Fraud Civil Remedies Act of 1986 (the PFCRA) to create the Administrative False Claims Act of 2021 (AFCA). The AFCA would focus on smaller claims than does the FCA. Senator Grassley described the bills as being intended to “help recoup even more money by clarifying confusion after the Escobar case” and as being needed more than ever “to fight the significant amounts of fraud we are already seeing” related to the trillions of dollars Congress has appropriated for COVID relief.

During a recent panel discussion hosted virtually by the American Bar Association, attorneys from the Department of Justice (DOJ) and certain U.S. Attorneys’ Offices known for health care fraud enforcement provided valuable insight into key areas of health care fraud enforcement, including opioid-related enforcement, kickbacks to providers involving speaker programs, and allegations involving electronic medical records (EMR) vendors.  The panel also addressed the role of private equity funds as owners and operators of companies under investigation and provided observations and recommendations about effective compliance programs and their role in resolving health care fraud matters.

In its first exercise of a newly granted authority, the Federal Trade Commission (FTC or the Commission) on April 15, 2021 charged a St. Louis-based chiropractor and his company (the Defendants) with violating the COVID-19 Consumer Protection Act (the COVID-19 Act) and the Federal Trade Commission Act (FTC Act).  The Commission’s allegations focus on the deceptive marketing of products containing Vitamin D and Zinc as being scientifically proven to treat or prevent COVID-19 and as being equally as effective as or more effective than currently available COVID-19 vaccines.

On Friday, March 26, 2021, the Department of Justice (DOJ) announced an update on its efforts to combat COVID-19 related fraud.  Since Congress first responded to the coronavirus pandemic by passing $2.2 trillion in relief through the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, DOJ has pursued civil and criminal actions primarily targeting (1) fraudulent COVID-19 related tests or treatments, and (2) abuse of the CARES Act’s popular Paycheck Protection Program (PPP).  Friday’s announcement revealed that DOJ is also ramping up its efforts to prosecute fraud on the CARES Act’s Economic Injury Disaster Loan (EIDL) and Unemployment Insurance (UI) initiatives. 

On February 24, 2021, DOJ’s Criminal Division Fraud Section published its annual year-end summary. The Fraud Section focuses on prosecuting white-collar crime. The report summarizes enforcement activity in the past year and discusses notable cases from the Fraud Section’s three litigation units: (1) the Health Care Fraud (HCF) Unit; (2) the Foreign Corrupt Practices Act (FCPA) Unit; and (3) the Market Integrity and Major Frauds (MIMF) Unit. In summarizing the Fraud Section’s main achievements from 2020, the report also provides valuable insights on what lies ahead for the Fraud Section in 2021. This post focuses on the health care enforcement portion of the Fraud Section’s report.

As our readers know, we have long been closely watching False Claims Act (FCA) cases across the country alleging the submission of false claims based on the lack of medical necessity, particularly as a possible circuit split seemed to be developing with respect to requiring “objective falsity” to allege such FCA violations.  And we have likewise been waiting to see if the issue will be decided by the Supreme Court.  On February 22, 2021, we got an answer – at least for now – when the Supreme Court denied a petition for certiorari in RollinsNelson LTC Corp. et al v. U.S. ex rel. Winters, a FCA case out of the Ninth Circuit in which the defendant was accused of submitting claims to Medicare for medically unnecessary hospital admissions (which we have been following since last year).

In our annual webinar, Mintz’s Health Care Enforcement Defense team reviewed the key policy developments, settlements, and court decisions from 2020 and assessed their likely impact in 2021 and beyond.

Despite the threat of COVID-19 paralyzing much of the country in 2020, government health care fraud enforcement continued even though the Department of Justice (DOJ) had the added burden of pursuing COVID-19 related fraud. Mintz’s Health Care Enforcement Defense team has reviewed the key policy issues, statistics, settlements, and court decisions from 2020, and in this report we reflect on those developments and also predict the trends in health care enforcement in 2021 and beyond.

With a notably sharply worded opinion, the Fifth Circuit recently vacated over $4.3 million in penalties levied against the University of Texas M.D. Anderson Cancer Center (M.D. Anderson) by the Department of Health and Human Services (HHS) for a series of alleged HIPAA violations. The case stems from three separate incidents that occurred between 2012 and 2013. In two instances, M.D. Anderson workforce members lost unencrypted protected health information (PHI), while the third incident involved the theft of a faculty member’s laptop also containing unencrypted PHI. On appeal, the Fifth Circuit concluded that HHS’s civil monetary penalties order against M.D. Anderson was arbitrary, capricious, and contrary to law, vacating the penalties and pointedly criticizing the agency’s actions and arguments in this matter.

Beyond its harsh words for HHS, this opinion is notable for calling into question some longstanding HHS enforcement practices and interpretations of the HIPAA regulations. The opinion also makes clear that regulated entities should check the math when HHS levies a fine. Although limited in its precedential authority, the Fifth Circuit’s opinion, at the very least, gives HIPAA-regulated entities some new food for thought if faced with an HHS enforcement action.

In the midst of the pandemic emergency, the Department of Health and Human Services Office of Inspector General (OIG) issued a stern warning about in-person educational programs for health care professionals (HCPs), known as “speaker programs.” The OIG’s Special Fraud Alert (Alert) highlights what it deems the “inherent fraud and abuse risks” associated with the offer, payment, solicitation, or receipt of remuneration related to speaker programs by pharmaceutical and medical device companies. The OIG expressed that is skeptical of the educational value of such programs, and thus the Alert sends a clear signal that such programs will undergo intense scrutiny under the federal Anti-Kickback Statute (AKS). OIG is using the pandemic as an opportunity to caution the pharmaceutical and medical device industry to limit or eliminate in-person speaker programs once such programs are able to resume.

On October 29, 2020, the Department of Justice (DOJ) announced the first publicly-available settlement involving alleged violations of CMS’s Open Payments Program, otherwise known as the Sunshine Act. The $9.2 million settlement resolved allegations that Minnesota-based medical device manufacturer Medtronic USA Inc. violated (i) the Anti-Kickback Statute (AKS) and the False Claims Act (FCA) by paying kickbacks to a South Dakota neurosurgeon, Wilson Asfora, M.D., and (ii) the Open Payments reporting requirements by failing to accurately report payments it made to Asfora to the Centers for Medicare & Medicaid (CMS). While this settlement is the first public enforcement action involving Open Payments violations, more enforcement actions may be expected in the near future.