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Supreme Court Declines to Weigh in on False Claims Act Pleading Requirements

October 25, 2022 | Blog | By Brian Dunphy, Laurence Freedman, Ashley Markson

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.  
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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. 
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In a significant win for False Claims Act (FCA) defendants, the Eighth Circuit recently reversed a district court decision that defendants violated the FCA premised on violations of the Anti-Kickback Statute (AKS). The Eighth Circuit adopted a stricter but-for causation standard for FCA claims based on AKS violations, holding that, in order to prevail on these claims, the government must prove that FCA defendants would not have submitted claims for particular items or services to Medicare or Medicaid absent the illegal kickbacks.
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Disclosing known or suspected fraud to regulators can have its benefits.  As reported in a previous post, the Department of Justice (DOJ) issued policy guidance in 2019 on providing credit in False Claims Act (FCA) settlements to corporations for “disclosure, cooperation, and remediation” (the Policy Guidance).  Since then, the industry has been watching to see how  DOJ implements this Policy Guidance. 

Two settlements announced earlier this month seem to demonstrate that DOJ is applying the Policy Guidance in resolving FCA cases.  Although the facts of these two settlements differ significantly, they highlight the benefits of self-disclosure, cooperation with the government in its investigation, and proactive efforts to remediate non-compliance.
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Last week, the Department of Justice (DOJ) announced another significant takedown that it described as “build[ing] on the success of the May 2021 COVID-19 Enforcement Action.”  As part of this enforcement effort, criminal charges were announced against 21 defendants across the country for their alleged involvement in various COVID-19 related fraud schemes that resulted in over $149 million in “COVID-19 related false billings to federal programs and theft from federally-funded pandemic assistance programs.” 
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The Office of Inspector General for the Department of Health and Human Services (OIG) recently issued another favorable Advisory Opinion on patient incentives (e.g. gift cards or cash equivalents) given as part of patients’ treatment plans. Though the OIG reiterated its concern that cash and cash equivalents given to patients can present substantial fraud and abuse risks, the OIG concluded that the arrangement presented a minimal level of risk.
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Health care providers, health information networks, health information exchanges, and health IT developers of certified health IT will want to take note of the information blocking claim submission trends recently published by the Office of the National Coordinator for Health Information Technology (ONC).
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Webinar Recording: Health Care Enforcement Year in Review & 2022 Outlook

February 16, 2022 | Webinar | By Grady Campion, Randy Jones, Samantha Kingsbury, Karen Lovitch, Kevin McGinty

In our annual webinar, Mintz’s Health Care Enforcement Defense team reviewed the key health care fraud enforcement developments and trends from 2021, assessed their likely impact in 2022, and provided recommendations to avoid government scrutiny.
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In our annual Health Care Enforcement Year in Review & Outlook report, we examine the data and explore health care enforcement trends and likely targets of government scrutiny for 2022 and beyond.
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False Claims Act Settlements and Judgments Exceed $5.6 Billion in Fiscal Year 2021

February 2, 2022 | Blog | By Laurence Freedman, Jane Haviland

The Department of Justice announced in a February 1, 2022 press release (Press Release) that it obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims in the fiscal year ending September 30, 2021 (FY2021) – the second largest annual total recovery in False Claims Act (FCA) history.
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In a decision issued late last week, the First Circuit has adopted a deferential standard for review of government decisions to seek dismissal of whistleblower lawsuits brought under the False Claims Act (FCA). The court held that so long as the government explains its decision and provides the whistleblower with an opportunity to respond, the government’s motion must be granted absent evidence of collusion or unconstitutionality. This decision deepens a circuit split on the applicable standard under the FCA when the whistleblower objects to a government motion for dismissal.
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OIG Approves Online Retailer’s Discount Program

January 25, 2022 | Blog | By Rachel Yount

On January 19, 2022, the Office of Inspector General for the Department of Health and Human Services (OIG) issued a favorable Advisory Opinion regarding an online retailer’s proposal to make its discount programs available to Medicaid beneficiaries. Currently, lower-income individuals are eligible for the retailer’s discount programs based on their enrollment in a number of assistance programs (e.g. Supplemental Security Income, Supplemental Nutrition Assistance Program), and the retailer proposes Medicaid enrollment as another category of eligibility.
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Information Blocking Rule: Key Considerations for 2022

December 29, 2021 | Blog | By Pat Ouellette

While the Office of the National Coordinator for Health Information Technology (ONC) issued the 21st Century Cures Act; Interoperability, Information Blocking, and the ONC Health IT Certification Program (Information Blocking Final Rule) back in May 2020, many entities are still parsing out compliance strategies and seeking additional regulatory guidance to understand how the rule will be enforced. Broadly-speaking, information blocking is a practice that is likely to interfere with, prevent, or discourage access, exchange, or use of electronic health information (EHI). For example, a health system might require patient written consent before sharing the patient’s EHI with unaffiliated providers. Another example of information blocking is that a health IT developer might charge a fee to a health care provider to perform an export of EHI so that the provider can switch to a different health IT platform.
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Webinar Recording: Telehealth Regulation & Enforcement: 2021 Year in Review & 2022 Outlook

December 7, 2021 | Webinar | By Alexander Hecht, Ellen Janos, Karen Lovitch, Kate Stewart

Over the past year, the demand for health care via telehealth has continued to skyrocket as a result of the COVID-19 pandemic and the public’s increased comfort with obtaining health care goods and services virtually. Join Ellen Janos, Karen Lovitch, Kate Stewart and Alex Hecht as they demystify the current status of laws and regulations, untangle the web of legislation before Congress related to the expansion of telehealth services, discuss recent enforcement activity, and look ahead to trends we see on the horizon.  
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On November 22, 2021, the Office of Inspector General for the Department of Health and Human Services (OIG) posted a negative Advisory Opinion regarding a proposed joint venture (JV) for the provision of therapy services (Proposed Arrangement) between an existing therapy services provider (Therapy Services Provider) and the owner of long-term care facilities (LTC Owner). This Advisory Opinion is yet another example of OIG guidance reiterating its view that joint ventures formed between entities in the position to provide health care items or services and entities in the position to refer business can present risk under the federal Anti-Kickback Statute (AKS).
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OIG Revises and Renames the Provider Self-Disclosure Protocol

November 10, 2021 | Blog | By Karen Lovitch, Rachel Yount

For the first time since April 2013, the Department of Health and Human Services’ Office of Inspector General (OIG) revised the Provider Self-Disclosure Protocol (SDP) on November 8, 2021. The SDP allows providers and other entities to voluntarily disclose and resolve instances of potential fraud involving federal health care programs, including potential overpayments and Anti-Kickback Statute (AKS) violations. The OIG originally published the SDP in 1998, and has since modified the SDP several times generally to make the SDP a more appealing option for providers and other health care entities.
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The U.S. Department of Justice (DOJ) recently announced its latest national enforcement action related to health care fraud (National Enforcement Action) in which DOJ filed criminal charges against 142 defendants. The National Enforcement Action, which alleges losses of $1.4 billion due to false or fraudulent billings, follows similar DOJ “take downs” over the last several years in that it focuses on telemedicine providers and the opioid crisis. This post provides five takeaways from the National Enforcement Action.
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On September 15, 2021, the Office of Inspector General for the Department of Health and Human Services (OIG) issued a favorable Advisory Opinion regarding a hospital’s proposal to implement a program through which patients who experience complications after specific joint replacement procedures can receive free items and services to treat the complications. The OIG likened the program to a warranty for joint replacement procedures.
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Physician judgment and medical necessity increasingly are a focus of fraud and abuse enforcement actions, with statistical analysis of procedure volumes used to flag potential cases. Last week, the Atlantic published this recent article discussing a significant 2018 decision of the Tenth Circuit Court of Appeals in United States ex rel. Polukoff v. St. Mark’s Hospital, et al., No. 17-4014 (10th Cir. Jul. 9, 2018), in which the court held that a physician’s medical judgment concerning medical necessity of a particular treatment for two specific cardiac conditions could be “false or fraudulent” under the federal False Claims Act (FCA). Our colleague, Brian Dunphy, covered the 2018 decision on this blog here. The Tenth Circuit ultimately held that a “doctor’s certification to the government that a procedure is ‘reasonable and necessary’ is ‘false’ under the FCA if the procedure was not reasonable and necessary under the government’s definition of the phrase.”
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Senator Grassley and Others Propose Amendments to the False Claims Act

August 2, 2021 | Blog | By Samantha Kingsbury, Brian Dunphy, Laurence Freedman

Earlier this week, a bipartisan group of Senators led by Senator Chuck Grassley (R-Iowa) introduced two pieces of proposed legislation, one of which would amend the existing False Claims Act (FCA) and the other of which would amend the Program Fraud Civil Remedies Act of 1986 (the PFCRA) to create the Administrative False Claims Act of 2021 (AFCA). The AFCA would focus on smaller claims than does the FCA. Senator Grassley described the bills as being intended to “help recoup even more money by clarifying confusion after the Escobar case” and as being needed more than ever “to fight the significant amounts of fraud we are already seeing” related to the trillions of dollars Congress has appropriated for COVID relief.
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