Health Care

As in years past, the False Claims Act (FCA) remained a powerful health care enforcement tool in 2018, and FCA investigations and litigation persisted, fueled mainly by hundreds of lawsuits filed annually by relators, including 645 new qui tam actions initiated in FY 2018.

Last year, as we previously discussed, there were two significant Department of Justice (DOJ) policy developments that are applicable to False Claims Act (FCA) litigation: (1) the “Granston Memo” (issued by DOJ Civil Fraud Director Michael Granston), which set forth direction for DOJ’s exercise of its authority to dismiss declined qui tam FCA cases; and (2) the “Brand Memo” (issued by Associate Attorney General Rachel Brand), which instructed DOJ’s FCA litigators not to use any sub-regulatory guidance to create legal obligations. 

Criminal healthcare enforcement in 2018 once again focused heavily on opioids, targeting manufacturers, prescribers, dispensers and those who contribute to the addiction epidemic, and on prosecution of individuals for a variety of offenses.  In addition, the DOJ announced some expected policy changes related to the way it investigates and prosecutes corporations as well as the restrictions placed on corporations after resolution of government charges.  We will address each of these issues in this post and will attempt to forecast what we expect to occur in the coming year.

In 2018, the volume of False Claims Act (FCA) litigation remained high, and health care-related qui tam (i.e., whistleblower) cases continued to lead the way. Using data compiled in the Mintz Health Care Qui Tam Database (which is described further below), this post analyzes the trends in cases unsealed in 2018. To evaluate long-term trends, we examined the annual Department of Justice (DOJ) compilation of FCA cases. Together these data sets show that health care cases continue to make up a large majority of all whistleblower cases brought under the FCA, and almost two-thirds of those cases were brought by current or former employees, mostly against large pharmaceutical companies, physicians, and hospitals.

Nearly one year ago, on January 25, 2018, the Department of Justice’s (DOJ) Regulatory Reform Task Force issued a memorandum entitled “Limiting Use of Agency Guidance Documents In Affirmative Civil Enforcement Cases.”  Many refer to this memorandum as the “Brand Memo” because it was authored by Associate Attorney General Rachel Brand.  The Brand Memo implemented the prohibition previously issued by U.S. Attorney General Jeff Sessions in November 2017 against, in part, DOJ using guidance documents issued by other agencies “to create binding standards by which [DOJ] will determine compliance with existing statutory or regulatory requirements” (the “Sessions Memo”).

The partial government shutdown is on its 17th day with no end in sight. In this week's preview, we discuss how reaching a solution is challenging for both sides and implications for legislating going forward. We also cover some of the latest polling on health care issues, which may offer a preview into messaging in this space over the next two years.

Today, we’re looking back at HIPAA and other privacy and security developments in 2018.  This past year saw continued HIPAA enforcement (including the largest ever fine for a HIPAA breach), reminders from the OCR on best practices for HIPAA compliance, and updates to state and international privacy and security laws.  We’ll also look ahead to 2019, which could bring several significant changes to HIPAA, such as reducing the burdens for sharing patient information in order to promote care coordination and better patient outcomes.

The Federal Courts gave the America Hospital Association and 340B covered entities a late Christmas present and in doing so may have dealt a blow to the Trump Administration’s initiatives aimed at controlling or reducing drug prices.


On December 27, 2018, Judge Rudolph Contreras granted the American Hospital Association’s Motion for a Permanent Injunction over CMS’ Medicare Part B reimbursement cut for 340B hospitals. As I have previously written, the vehicle for that reimbursement cut was the 2018 Outpatient Prospective Payment System (OPPS) rule, and CMS’ existing authority to adjust OPPS drug reimbursement.

As 2019 quickly approaches, we would like to take a few moments to reflect on the past year of Food and Drug Administration activities and certain big ticket items that made news in 2018. As the Magic 8-Ball would say: “signs point to yes” that everything on the list below will continue to be major areas of focus for both FDA and the U.S. Congress next year and into the foreseeable future.

As the year draws to a close, it’s clear that 2018 was another record year for private equity investment in health care.  In its report on the top health industry issues of 2019, PWC’s Healthcare Research Institute recently highlighted the continued prevalence of private equity in health care transactions, and predicted even more private equity investment in the coming year. Below is an overview of the current and expected trends, as well as a few key considerations for private equity deals in the health care space.

Along with most of us, last January DOJ set its own goals for 2018: new policies related to False Claims Act (“FCA”) enforcement. One such “resolution” for 2018 was the DOJ Civil Fraud section’s instruction to its attorneys and all AUSAs handling FCA cases to routinely consider whether declined qui tam actions should be dismissed under the Department’s authority in Section 3730(c)(2)(A) of the FCA, which it had rarely used from 1986 through 2017. Known as the “Granston Memo” (which we discuss here) and now codified in the Justice Manual, the central theme of the instruction is that seeking dismissal of qui tam actions may be in the government’s interest to “preserve limited resources and avoid adverse precedent.” We are now seeing the first evidence of DOJ following through on that resolution.

On December 10-11, 2018, FDA hosted a public workshop, Medical Device Servicing and Remanufacturing Activities, as part of its effort to develop a draft guidance that will distinguish servicing activities from remanufacturing. FDA expressed intent to develop a draft guidance on this topic as part of its May 15, 2018 report to Congress on the quality, safety, and effectiveness of medical device servicing. This post provides some observations about areas of agreement among stakeholders and FDA’s perspective on servicing versus remanufacturing.

The U.S. Food and Drug Administration (FDA) is exploring the development of a new regulatory approach for software as a medical device (SaMD) that the agency believes will promote innovation while still assuring device safety and effectiveness. SaMD is software used for a medical purpose that is not part of a hardware medical device. The new approach is known familiarly as Pre-Cert and relies on a company being certified by FDA as having a culture of quality and organizational excellence.

This week, Congress is in session for what should be the last week of the 115th Congress. However, the spending fight that has been raging since the last continuing resolution is no closer to being wrapped up than it was a month ago. Additionally, we watch to see if the IMPROVE Act can be finalized this week.

On Friday, December 14th, Judge O’Connor, a Texas Federal District Court Judge, ruled on the case Texas vs. Azar. As background, Texas vs. Azar was filed by 20 Republican state attorneys general and governors. The plaintiffs challenge the constitutionality of the individual mandate in the Affordable Care Act (ACA) and argue that since the individual mandate has been repealed, or more technically zeroed out, the rest of the ACA must be struck down. They argue that the individual mandate cannot be severed from the ACA given its key structural role in the law. The Department of Justice agreed with some, but not all parts, of this argument, and sixteen states and DC are defending the ACA.

Read about the 11th Circuit's denial of Blue Cross Blue Shield’s appeal of a ruling that its allegedly restrictive practices must be analyzed under the per se standard.

On December 11, 2018, the House of Representatives passed the IMPROVE Act in a vote of 400-11. The bill is currently moving to the Senate. Our summary of the major provisions of the IMPROVE Act can be found...

In his typical forceful style on December 11, 2018, U.S. Food and Drug Administration (FDA) Commissioner Scott Gottlieb announced several big pieces of policy news affecting the nascent biosimilar market. The Commissioner’s statement broadly relates to FDA’s “actions to advance the biosimilars policy framework” and is a well-articulated hodgepodge of FDA regulatory, drug pricing, industry competition, and patent thicket complaints, which Dr. Gottlieb is becoming famous for in his written and oral presentations. 

As of December 2018, 37 states (including D.C.) have adopted Medicaid expansion. Of the remaining 14 states, some are considering expanding Medicaid. States with recent activity relating to Medicaid expansion include: Florida, Idaho, Maine, Missouri, Nebraska, New Hampshire, North Carolina, and Utah. States continue to explore different opportunities as it relates to Medicaid expansion. 

It has been a busy few weeks for HIPAA enforcement. On Tuesday, the Office for Civil Rights announced its third resolution of a HIPAA breach in as many weeks. In this latest matter, OCR announced that Pagosa Springs Medical Center (PSMC), a critical access hospital in Colorado, has agreed to both pay $111,400 to the Office for Civil Rights (OCR) as well as adopt a comprehensive, two-year corrective action plan (CAP) to address and settle potential HIPAA violations.