Bass Berry & Sims recently secured dismissals on behalf of healthcare providers in three separate False Claims Act (FCA) qui tam lawsuits in a matter of a week’s time.
Supreme Court Review of Key FCA Issues
For the February 2023 issue of the American Bar Association’s (ABA) Health Lawyer, the flagship publication of the ABA Health Law Section, I authored an article entitled “Recent False Claims Act Developments at the Supreme Court.”
DOJ Releases Annual Civil Fraud Recovery Statistics and Results
On February 7, the Department of Justice (DOJ) released its annual report of civil fraud recoveries for the prior fiscal year, along with its accompanying press release highlighting its civil enforcement efforts. Our top ten observations from DOJ’s release include:
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Expanded Focus on Cybersecurity Activities by DOJ with Civil Cyber-Fraud Initiative
We recently authored an article for ABA Health eSource, published by the American Bar Association’s Health Law Section, that details the expanded focus on cybersecurity activities by the Department of Justice (DOJ) with the Civil Cyber-Fraud initiative.
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First False Claims Act Settlement under DOJ’s Cyber-Fraud Initiative
On March 8, the Department of Justice (DOJ) announced the first settlement under its Civil Cyber-Fraud Initiative, as Comprehensive Health Services, LLC (CHS), a global medical services provider, agreed to pay $930,000 in part to resolve False Claims Act (FCA) allegations regarding cyber fraud. The government alleged that CHS contracted with the State Department to provide a secure electronic medical record (EMR) system to store patients’ medical records and submitted claims for the costs of this work, but failed to disclose that it had not consistently stored patients’ medical records on a secure EMR system.
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Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements
Improper billing for electro-acupuncture using a “P-Stim” device (or peri-auricular stimulation device) has been the subject of two False Claims Act (FCA) settlements already in 2021, following a trend of such enforcement actions within the past year.
Each of the recent settlements, detailed further below, involve providers billing federal healthcare programs for acupuncture using P-Stim devices under HCPCS Code L8649. Unlike P-Stim devices, though, which are attached to the ears of a patient using needles and adhesives without surgery or anesthesia, HCPCS Code L8649 applies to a product that is surgically implanted into a patient using anesthesia. Medicare, TRICARE and the Federal Employees Health Benefit Program (FEHBP) do not reimburse for acupuncture devices like P-Stim, nor do they reimburse for P-Stim as a neurostimulator or an implantation of neurostimulator electrodes. In addition to P-Stim, the brand names for these devices include ANSiStim, E-pulse, Stivax and NeuroStim.
Notably, none of these enforcement actions originated from qui tam whistleblowers but rather were the product of affirmative government investigations by the U.S. Department of Justice, U.S. Attorneys’ Offices, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and CMS’s Center for Program Integrity. These settlements—coming from different jurisdictions and concerning different types of providers and practices—demonstrate the government’s ongoing, nationwide effort to investigate the improper billing of electro-acupuncture devices:
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Healthcare Fraud Enforcement in Long-Term Care Industry
We wrote an article examining recent enforcement actions by the government within the long-term care industry for McKnight’s Long-Term Care News. In the article, we point out that “recent cases reinforce the notion that long-term care providers should pay particular attention to the government’s efforts to police arrangements and business practices that implicate the
FCA Settlement Regarding Provision of Hyperbaric Oxygen Therapy
In June 2018, Healogics, Inc., the nation’s largest provider of advanced chronic wound care services, agreed to pay to up to $22.51 million to resolve False Claims Act (FCA) allegations that, from 2010 to 2015, it caused wound care centers to submit claims to Medicare for medically unnecessary and unreasonable hyperbaric oxygen (HBO) therapy. Healogics manages almost 700 hospital-based wound care centers where HBO therapy is provided. HBO therapy is a modality wherein a patient’s full body is enclosed in a pressurized chamber and exposed to high concentrations of oxygen. Medicare covers the therapy only when used to treat certain conditions (e.g., diabetic foot ulcers) and only when administered in certain circumstances (e.g., after no measurable signs of healing for prior 30 days of treatment with standard wound therapy).
Pursuant to the settlement agreement, Healogics paid $17.5 million and could pay an additional $5.01 million if its earnings exceed certain levels over the next five years. Healogics also agreed to enter into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) as part of the resolution.
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Relax, Sixth Circuit Opinion Indicates Rule 9(b) Pleading Requirement Still Has Bite
A recent Sixth Circuit opinion in U.S. ex rel. Hirt v. Walgreen Co. should come as welcome news for FCA defendants concerned about the implications of the Sixth Circuit’s application last year, for the first time, of a “relaxed” standard for pleading false claims under Rule 9(b) in U.S. ex rel. Prather v. Brookdale Senior Living Communities, Inc.
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Escobar Forestalls Government’s Allegations in Intervened Case
On July 18, 2016, the United States District Court for the Northern District of California issued one of the first post-Escobar decisions addressing a motion to dismiss FCA allegations on grounds that the complaint did not satisfy Rule 9(b)’s pleading standard. In the intervened case, the United States alleged that diagnostic sleep studies were performed in locations that violated federal law and/or were performed by technicians who were not licensed or certified. The United States proceeded on multiple FCA theories (including factual falsity, express false certification, fraud in the inducement, and implied false certification).
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