DOJ recently announced that it recovered over $2.8 billion from FCA cases in FY 2018. Although this number continues a multi-year downtrend in overall FCA recoveries, healthcare fraud remains a major DOJ focus, with $2.5 billion of the recoveries – 87.25%, the highest proportion in at least the past decade – coming from healthcare cases: (more…)
DOJ recently announced that it recovered over $4.7 billion in settlements and judgments from civil fraud cases in the fiscal year ending September 30, 2016. That recovery is significantly higher than the $3.5 billion that DOJ recovered in FY 2015. The FY 2016 amount is the third highest annual fraud recovery ever.
In a speech on Tuesday, September 27, 2016, Principal Deputy Associate Attorney General Bill Baer said that in the post-Yates world companies must provide early and material assistance to DOJ’s efforts to hold companies and individuals accountable for corporate wrongdoing – including by voluntarily disclosing information before they receive a subpoena – if they hope to receive cooperation credit. In doing so, Baer called out those banks caught up in DOJ’s enforcement focus on mortgage-backed securities. Baer claims those companies did not cooperate early enough and that DOJ thus rejected their requests for substantial cooperation credit, ultimately extracting billions of dollars in settlements. Baer thus made clear the importance of early cooperation: “little or no cooperation credit will be afforded in situations where the supposed cooperation occurs after the department has completed the bulk of its investigation.” In addition to cooperating early, companies also must provide specific information about any and all employees involved in wrongdoing and information that is unknown to DOJ and materially assists its investigation in order to obtain meaningful cooperation credit. At the same time, Baer described conduct that will not qualify a company for cooperation credit; specifically, simply producing information in response to a subpoena or CID and making a presentation to DOJ that seeks to limit or eliminate liability will not be viewed as cooperation. Indeed, Baer’s speech raises questions as to whether legitimate efforts to defend conduct under investigation may even disqualify a company that otherwise has been cooperative from receiving cooperation credit.
Baer’s speech can be accessed here.
DOJ recently announced that it recovered over $3.5 billion in settlements and judgments from civil fraud cases in the fiscal year ending September 30, 2015. That recovery falls well short of the $5.69 billion that DOJ recovered in FY 2014, though it is still the fourth-greatest annual fraud recovery ever.
Last week, the Department of Health and Human Services, Office of Inspector General (“OIG”) released its Fiscal Year 2016 (“FY2016”) Work Plan. This work plan offers manufacturers and providers insight into OIG’s priorities for the coming year, many of which are consistent with issues that have been raised in False Claims Act lawsuits. A number of OIG’s newly announced programs mirror current topics of intense debate in the healthcare industry, including pricing for brand name prescription drugs and controls over protected health information.
The Government Accountability Office (“GAO”) recently released a report, “Changes Needed to Improve CMS’s Recovery Audit Program Operations and Contractor Oversight,” criticizing CMS for failing to adequately oversee the Part D recovery audit contractor (“RAC”) program. The report reflects growing concern around potential overpayments under the Part D program, mirroring the wave of interest that first arose several years ago regarding potential overpayments under the Medicare Advantage (“MA”) Program. For a time, the MA program operated relatively unscathed by the groundswell of qui tam suits in the healthcare industry, but it is now in the midst of a widespread industry enforcement wave, and a number of plans and providers are facing FCA suits (as discussed here). The GAO’s report could portend more Part D Sponsors being future targets of similar scrutiny.
On September 19, the Office of Inspector General of the U.S. Department of Health and Human Services (OIG) issued a controversial report entitled Manufacturer Safeguards May Not Prevent Copayment Coupon Use for Part D Drugs, along with a companion Special Advisory Bulletin. The Report describes an OIG survey of pharmaceutical manufacturers’ use of copayment coupons and analyzes the safeguards manufacturers implement to guard against the use of coupons for drugs paid for by Medicare Part D beneficiaries. Each of the manufacturers surveyed provided notices to beneficiaries and/or pharmacies stating that their coupon and co-payment programs are invalid for use by Federal healthcare program beneficiaries. Nevertheless, OIG takes the position that failure to implement effective safeguards for compliance with eligibility requirements and other terms and conditions may be taken by the agency as reflecting an intent to use coupons to induce federally funded purchase of drugs in violation of the Anti-Kickback Statute and other fraud and abuse laws. These publications reflect another example of OIG’s emphasis on transparency as a way to reduce what it considers a source of fraud and abuse. However, OIG offers no concrete suggestions about how such a system might operate or be operationalized. In the meantime, these developments highlight certain AKS (and attendant FCA) risks that Part D plan sponsors, manufacturers, and participating pharmacies face.
For more detail on these developments, please see Sidley’s Global Life Sciences U.S. Healthcare Update titled “OIG Issues Report on Manufacturer-Sponsored Coupons and Companion Special Advisory Bulletin,” which can be found here.
On June 25, 2014, the U.S. Department of Health and Human Services’ Office of Inspector General (“OIG”) released a Special Fraud Alert addressing two increasingly common relationships between clinical laboratories and physicians that may raise fraud and abuse concerns—payments to referring physicians for (i) specimen collection and (ii) data submission/review for laboratory registries. This Special Fraud Alert is likely a response to the increasingly competitive nature of the clinical laboratory industry as a result of downward pressure on reimbursement, new health reform delivery structures and the influx of small esoteric laboratories offering limited, specialized test menus. In this environment the OIG is concerned that some laboratories may be taking steps to win business from referring physicians in potential violation of the Federal Anti-Kickback Statute. Arrangements that are the focus of Special Fraud Alerts are common targets for FCA claims. More information about the Special Fraud Alert and a link to the underlying document can be found here.
The National Chamber Litigation Center at the United States Chamber of Commerce has launched a False Claims Act Litigation Resource page. The page features the work the U.S. Chamber does regarding the FCA, and includes links to briefs that the NCLC has filed in various courts, Institute for Legal Reform publications and blog posts, and links to other FCA resources.
An April 14 article on Reuters.com titled “Lawyers start mining the Medicare data for clues to fraud” explains how plaintiffs’ lawyers are eagerly mining newly-released Medicare data showing provider-specific billings to support existing FCA claims and identify new ones. The article describes one example of how the data is being used to support healthcare cases based on violations of the Anti-Kickback Statute:
For example, if a lawyer were representing a pharmaceutical sales manager accusing his company of paying kickbacks to certain doctors, the data could point to other providers using the company’s products who could serve as witnesses or be added as defendants if the billings suggest wrongdoing.
“It could expand the case beyond a certain institution or provider to multiple institutions or providers,” said Chris Coffin, a Louisiana lawyer who represents whistleblowers.
Other lawyers said the data could produce leads for new lawsuits. When red flags emerge – a doctor bills Medicare an unusually high amount for a particular drug, say – lawyers could investigate what might explain the aberrant figure. That could turn up a possible fraud.
While the data may help relators add details to their pleadings, a strong argument can be made that claims based on the new Medicare data implicate the public disclosure bar. Thus, whether the release of this data ultimately helps or harms defendants remains to be seen, and is likely to depend on the stage of a particular case and the manner in which the information is being used.