This blog highlights a recently unsealed qui tam case brought by relator GNGH2, Inc against 15 entities that allegedly operated nursing homes in the Bronx, New York and in Florida and various health care staffing agencies. 

The Supreme Court recently denied petitions for writs of certiorari in three closely watched cases where parties asked the Court to clarify the heightened pleading standard governing fraud allegations under the False Claims Act (FCA). The heightened pleading requirements of Federal Rule of Civil Procedure 9(b) require that, for allegations of fraud (which include FCA claims), “a party must state with particularity the circumstances constituting fraud or mistake.” Among other things, a cause of action for “false claims” must allege the defendants submitted false claims, or caused false claims to be submitted, to the government. The crux of the issue petitioners asked the Court to address is whether, to meet Rule 9(b)’s requirements for FCA causes of action, relators must allege in the complaint specific details of false claims allegedly submitted to the government for payment. This issue typically arises in qui tam cases under the FCA after the government declines to intervene.  

A new California law (AB 1278) will require physicians and their employers to provide patients with several forms of notices about the Open Payments database, starting January 1, 2023. The law is intended to increase patients’ awareness of the Open Payments database so they can make informed decisions about drugs and devices prescribed by their physician. This blog post provides an overview of the Open Payments Program, what exactly California's AB 1278 entails, and the implications of the law come January 2023 and January 2024. 

There were so many interesting and significant developments related to the various missions of the U.S. Food and Drug Administration (FDA) during the last week or so of September 2022 that we decided to create a summary roundup for our readers! 

Nurse and health care professional staffing shortages during the COVID-19 pandemic resulted in a significant increase in the use of temporary health care professional staffing. Shortages have also lead to the increase in the use of travel nurses, causing state lawmakers to prioritize regulation of health care staffing agencies. This post provides an overview of recently enacted and proposed state legislation requiring licensure or registration of health care staffing companies and/or nursing pools.. 

Health care stakeholders across the industry are keeping close tabs on whether the current COVID-19 public health emergency declaration will be extended past October 13, 2022 and whether the various non-permanent flexibilities around telehealth services will correspondingly be extended. However, earlier this summer, increased oversight of medications prescribed via telehealth visits came to the surface as a consideration against the numerous benefits of the increased availability of telehealth services during the COVID-19 public health emergency.

It is no secret that the 340B program is fraught with controversy and is facing many challenges. The saga continued this summer with a unanimous Supreme Court decision finding that the Centers for Medicare & Medicaid Services’ (CMS) payment cuts to 340B hospitals under the 2018 Outpatient Prospective Payment System (OPPS) were illegal. Simultaneously, the fight between manufacturers, contract pharmacies, and the Health Resources and Services Administration (HRSA) continued. Currently, 18 pharmaceutical manufacturers now either refuse or restrict contract pharmacies’ access to 340B drugs and multiple cases on this issue are working through the courts.

While the IRA is expansive, it does not include all current drug pricing reform proposals. We will continue to monitor lawmakers’ efforts to curb drug costs and the response from the pharmaceutical industry.

Pharmacies have long been a focus of enforcement actions brought by the Department of Justice (DOJ) and Department of Health and Human Services Office of Inspector General (OIG). This summer has been no exception, with DOJ and OIG bringing a number of fraud cases against pharmacies and pharmacists. Although many enforcement actions under the False Claims Act (FCA) continue to focus on illegal kickback arrangements, this summer we observed substantial developments in the enforcement landscape concerning Controlled Substances Act (CSA) prosecutions. We also saw enforcement actions brought against pharmacies for allegedly falsifying prior authorization information and providing more insulin than the pharmacy billed to payors.

Medicaid Best Price Value Based Purchasing Rules Took Effect July 1, 2022

On August 19, 2022, the Departments of Health and Human Services, Treasury and Labor (the "Departments") issued final rules (the “Final Rules”) incorporating comments received on the interim rules issued in July and October 2021, clarifying some of the requirements set forth in Title I of Division BB of the Consolidated Appropriations Act, 2021 (the "Act") and the interim rules and accounting for relevant federal court rulings. In particular, the Final Rules primarily address three distinct but related topics: (1) eliminating the “rebuttable presumption standard,” (2) adding new rules regarding “downcoding,” and (3) reminding the arbitrators of their written requirements.  In this post Mintz attorneys Mark Aspis and Alden Bianchi discuss the implication of the Final rules which will be effective on October 25, 2022.

In early May, a subsidiary of Johnson & Johnson (“J&J”) that operates copay assistance programs for J&J’s pharmaceutical companies brought suit against Save On SP, LLC, (“SaveOnSP”), a company that operates copay maximizer programs on behalf of insurers and PBMs. J&J’s complaint, which alleges one count of tortious interference and a second count of deceptive trade practices, is one of the most high-profile and closely watched legal actions that a pharmaceutical manufacturer has taken against a copay maximizer program.

OCR Provides Post-Dobbs Guidance on Non-Discrimination to Pharmacies

This summer—alongside concerns spanning from scorching temperatures and travel delays, to inflation and an unpredictable stock market—regulators continued to scrutinize drug prices and brainstorm various ways to combat them. However, despite the complex system and wide array of entities that make up the US pharmaceutical supply chain, regulators continued to try tackling the issue of high drug costs by directing their ire at one of two entities: pharmaceutical manufacturers or PBMs. Pharmaceutical manufacturers are squarely in the crosshairs of the Inflation Reduction Act (IRA), which was signed into law on August 16, 2022, and among other things, gives Medicare the authority to negotiate prices of certain drugs directly with manufacturers, and requires manufacturers to pay Medicare an “inflation rebate” if the prices for certain drugs rise faster than inflation. 

The Food and Drug Administration (FDA) issued a guidance on development and emergency use authorization of diagnostic and serological tests for the monkeypox virus following the Secretary of the Department of Health and Human Service’s declaration of a public health emergency under Section 564 of the Food, Drug and Cosmetic Act on August 9, 2022. Subsequently, the Secretary declared on September 7 that in vitro diagnostics for monkeypox were needed to respond to the public health emergency, and the FDA released its guidance on the same day. The monkeypox test guidance describes the agency’s general expectations and approach for test development and validation, as well as the EUA request process.

This post is the third and final installment of our blog series on the proposed regulations published by the New York State Office of Medicaid Inspector General (OMIG). The proposed regulations would repeal the current Part 521 - Provider Compliance Programs of Title 18 of the New York Codes, Rules and Regulations in its entirety and establish new requirements for providers to detect and prevent fraud, waste, and abuse in the Medicaid Program under a new Part 521: Fraud, Waste, and Abuse Prevention (Part 521). If enacted, the proposed rules would implement changes related to Medicaid provider compliance programs, Medicaid managed care organization (MMCO) fraud, waste, and abuse prevention, and Medicaid providers’ “obligation to report, return, and explain Medicaid overpayments through OMIG’s Self-Disclosure Program.”

The Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) has been busy over the past month announcing new enforcement actions and settlement agreements related to violations of the Privacy Rule implemented under the Health Insurance Portability and Accountability Act (HIPAA). OCR’s latest actions offer a reminder for HIPAA Covered Entities that Privacy Rule enforcement activity can come in a variety of types and sizes.

On September 15, 2022, the Department of Justice (DOJ) announced a $7.9 million settlement with generic manufacturer Akorn Operating Company LLC (Akorn) to resolve allegations that Akorn caused the submission of over-the-counter (OTC) drugs to Medicare Part D in violation of the False Claims Act (FCA).  Because Medicare Part D only covers prescription drugs, the pertinent drugs were not eligible for Medicare reimbursement. The conduct at issue under this settlement is a relatively novel basis for FCA liability, but we may see similar government enforcement actions in the future as the federal government actively encourages drug manufacturers to “switch” prescription drugs to OTC status in order to enhance their accessibility and reduce costs. This blog post provides an overview and analysis of the settlement. 

Various COVID relief programs pumped $5 trillion into the economy, incredibly quickly, and with relatively minimal vetting. Within that enormous and necessary set of economic stimulus packages was likely the greatest amount of fraud committed on the government in the shortest amount of time in history. This article takes a look at the various issues facing government agencies as they attempt to investigate allegations of PPP fraud related to pandemic-era applications and the role of the Pandemic Response Accountability Committee in coordinating and overseeing these investigations.

A spurt of letters from California Attorney General, Rob Bonta, to leaders of hospitals and other health care facilities sent on August 31, 2022 signaled the kickoff of a government probe into bias in health care algorithms that contribute to material health care decisions. This blog post highlights the California Office of the Attorney General’s initiative to address disparities in health care and what this probe may mean for the use algorithms and AI in health care.