On November 15, 2019, Sutter Health (“Sutter”) and Sacramento Cardiovascular Surgeons Medical Group Inc. (“Sacramento”) agreed to pay a total of $46 million to resolve FCA claims based on whistleblower allegations made by a former Sutter compliance officer that Sutter provided kickbacks to Sacramento physicians in exchange for referring patients to Sutter. The settlement also resolved Stark Law allegations relating to above fair market value payments made by certain of Sutter’s hospitals to Sacramento physicians. The underlying FCA complaint was filed in 2014 by a former Sutter compliance officer. The settlement only resolves some of the fraud allegations included in the former compliance officer’s complaint.
On November 20, 2019, the US Attorney’s Office for the District of Massachusetts announced that The Assistance Fund (“TAF”), an independent charity patient assistance program (“PAP”), agreed to settle allegations that it violated the False Claims Act and agreed to pay $4 million to the government. That amount was calculated on an ability to pay basis. TAF is the third charity to settle in this ongoing, industry-wide investigation led by the District of Massachusetts. To date, the government has collected approximately $10 million from charity PAPs and over $800 million from eight drug manufacturers.
As we reported here, the Supreme Court in Azar v. Allina Health Services, 139 S. Ct. 1804 (2019) held that the Medicare Act expressly requires HHS to engage in notice-and-comment rulemaking prior to adopting any “substantive legal standard.” One court recently relied on Allina to conclude that FCA claims premised on a CMS rule articulated in payment manuals must fail because the rule constitutes a “substantive legal standard” that did not go through notice-and-comment rulemaking. Polansky v. Executive Health Resources, Inc., No. 12-4239, 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019). (more…)
In a landmark decision that could have significance for any False Claims Act case in the Medicare context, the Eastern District of Pennsylvania recently held that Medicare reimbursement criteria must be established through notice-and-comment rulemaking if they are to be the basis of a viable FCA suit. Polansky v. Executive Health Resources, Inc., No. 12-4239, 2019 WL 5790061 (E.D. Pa. Nov. 5, 2019). Because the relator was relying on a reimbursement policy that was found solely in a CMS manual, the Eastern District held that the relator’s claims failed “as a matter of law.”