By

Jaime L.M. Jones

21 January 2022

OIG Will Audit Hospitals for Compliance with Provider Relief Fund Balance Billing Rule

Yesterday HHS-OIG updated its Work Plan to add yet one more audit of potential misconduct relating to the COVID-19 pandemic.  This project, titled Hospital’s Compliance With the Provider Relief Fund Balance Billing Requirement for Out-of-Network Patients, focuses on compliance with a clause in the Provider Relief Fund Terms and Conditions that restricts balance billing for COVID-19 patients.  That clause states: [F]or all care for a presumptive or actual case of COVID-19, Recipient certifies that it will not seek to collect from the patient out-of-pocket expenses in an amount greater than what the patient would have otherwise been required to pay if the care had been provided by an in-network Recipient.” (more…)

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13 January 2022

Court Concludes Government Agencies Cannot Categorize Regulatory Violations as Material as a Matter of Law

On January 7, 2022, a district court in the Western District of Kentucky dismissed DOJ’s implied false certification theory relating to allegedly medically unnecessary genetic tests, holding that the prosecutors failed to adequately plead materiality.  In so holding, the court set forth a novel test for materiality that forecloses the government’s ability to argue that certain regulations are per se material based on the government’s characterization of them as conditions of payment.  Instead, plaintiffs must still plead “specific facts regarding the effect of a violation of that regulation” to survive dismissal. (more…)

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09 December 2021

Recent Settlement Illustrates Enforcement Risks Associated With Physician Roll-Ups

On December 2, 2021, the Department of Justice (“DOJ”) issued a press release announcing that Flower Mound Hospital Partners (“Flower Mound”), a partially physician-owned hospital, agreed to pay just over $18 million to resolve allegations that it had violated the False Claims Act by submitting claims that violated the Stark Law and the Anti-Kickback Statute. (more…)

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19 November 2021

Medicare Advantage Enforcement: DOJ Advances New Theories Based on Retrospective Chart Reviews

Over the past two months, DOJ has filed complaints-in-intervention in two FCA cases premised on allegedly fraudulent diagnosis codes submitted to CMS as a result of retrospective chart reviews.  These cases demonstrate how DOJ has begun to explore new legal theories that articulate a narrower view on the legality of retrospective chart reviews designed to add diagnosis codes. (more…)

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05 November 2021

DOJ Walks Back Recent Flexibilities for Corporate Resolutions

In a recent speech, Deputy Attorney General Lisa Monaco announced three important updates to how DOJ attorneys are to approach corporate resolutions (as discussed further here).  These changes depart from flexibilities offered by DOJ during the last administration.  While the remarks were made against the backdrop of the Deputy Attorney General’s criminal portfolio, these Department-wide policies apply with equal force to the Civil Division’s False Claims Act work.  It will be particularly important for companies in the middle of ongoing FCA investigations to reassess their strategies in light of these new policies.

(more…)

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27 October 2021

Allegations that Community Health Network Paid Doctors Above Fair Market Value and Rewarded Physician Referrals Survives Motion to Dismiss

This month the U.S. District Court for the Southern District of Indiana denied Community Health Network’s (“Community”) motion to dismiss the United States’ complaint-in-intervention alleging that Community submitted false claims based on underlying violations of the Stark Law. United States ex rel. Fischer v. Community Health Network, Inc., No. 14-cv-1215 (S.D. Ind.).  The complaint alleged that Community violated the Stark Law through physician compensation that exceeds fair market value (“FMV”) and is based on the volume or value of referrals.  The opinion is notable in concluding that even physician compensation at the 90th percentile of rates paid in the market can plausibly allege a financial relationship that is not FMV and thus violates the Stark Law.

(more…)

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15 October 2021

PE Investors – Even Minority – Exposed to False Claims Act Risk

As we have discussed in prior posts (here), private equity investors in the healthcare and life sciences industries increasingly face direct risk under the FCA where they actively manage portfolio companies accused of regulatory noncompliance leading to the submission of false claims.  In each of the cases discussed in these earlier actions the PE fund defendant was the sole or majority investor and DOJ and the courts relied on facts demonstrating that the funds were aware of and endorsed or otherwise participated directly in the underlying fraud. (more…)

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15 October 2021

Largest Settlement to Date Announced With a PE Investor to Resolve Claims that a Portfolio Company Healthcare Provider Violated the FCA

This week, in a case we previously reported on here, a PE fund and two executives agreed to pay $25M to resolve claims that they caused the submission by a portfolio company mental health center of false claims for services that were not rendered in compliance with various state law and contractual requirements. (more…)

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06 October 2021

What do the FDA’s expanded ‘intended use’ regulations mean for safe-harbored communications about new uses?

In advance of their webinar this Thursday, October 7, Coleen Klasmeier and Jaime Jones consider some of the effects of the final rule.

FDA’s final rule to amend its medical product ‘intended use’ regulations has now been in effect  since September 1. The changes which the final rule makes to the definition of intended use, as interpreted by FDA in the accompanying preambles, expand the types of evidence that are deemed relevant to determining whether a lawfully marketed drug or device has a new intended use and whether a product is intended for use as a drug or device. (more…)

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16 September 2021

District Court Rejects Anti-Kickback Statute Claim Due to “Conclusory” Assertions of Unlawful Intent

A court in the District of Maryland recently dismissed a declined qui tam action in which the relator, a bariatric surgeon, alleged that two medical device companies violated the AKS by providing surgeons with free advertising in exchange for physicians using the companies’ LAP-BAND medical devices in bariatric surgeries.  See United States ex rel. Fitzer v. Allergan, Inc., et al., 1:17-cv-00668-SAG (D. Md. Sept. 10, 2021).  The court’s decision granting defendants’ motions to dismiss is notable in its refusal to allow relator to proceed based on conclusory allegations that the defendants knew they were acting in violation of the AKS. (more…)

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