On April 27, 2016, DOJ announced that Pfizer and its subsidiary Wyeth, LLC, agreed to pay $784.6 million to resolve allegations that Wyeth failed to disclose to federal and state healthcare programs discounts provided to hospitals for Proton Pump Inhibitors (PPIs), as required by its Medicaid Drug Rebate Agreement. DOJ alleged that this lack of disclosure led to states overpaying millions of dollars in reimbursements for PPIs.

Under Medicaid’s Drug Rebate Program, drug manufacturers must enter into a Medicaid Drug Rebate Agreement with HHS for their prescription drugs to be reimbursed by Medicaid. These agreements require manufacturers to pay rebates for drugs purchased by Medicaid. The amounts of the rebates are based on the Average Manufacturer Price, or the average price paid by wholesalers, and the Best Price, or the lowest price paid by any purchaser. These prices must be reported to CMS on a quarterly basis.

Continue Reading Pharma Companies Pay $784.6 Million to Settle FCA Claims

On March 31, 2016, the district court granted summary judgment for hospice provider AseraCare in a case alleging that it had submitted false claims to Medicare by certifying patients as eligible for service who did not have a prognosis of six months or less to live if their terminal illness ran its normal course. U.S. ex rel. Paradies v. AseraCare Inc., 2106 WL 1270521 (N.D. Ala. Mar. 31, 2016). In its opinion, the district court reiterated that “the submission of a false claim is the sine qua non of a False Claims Act violation,” and held a “contradiction based on clinical judgment or opinion alone cannot constitute falsity under the FCA as a matter of law.” The district court further explained that when hospice certifying physicians and medical experts “look at the very same medical records and disagree about whether the medical records support hospice eligibility, the opinion of one medical expert alone cannot prove falsity without further evidence of an objective falsehood.”

Continue Reading Failure to Establish Objective Falsity Dooms Government’s Hospice Case

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine the requirement that the conduct alleged to have resulted in a false claim must be material to the government’s decision to pay that claim and how courts have evaluated this issue in recent cases.

FCA claims should fail when the regulations allegedly violated are immaterial to the government’s decision to pay a claim. Where the theory of FCA liability turns on compliance with statutes and regulations in the healthcare context, courts continue to distinguish between regulations that are conditions of participation in the federal healthcare program and regulations that are conditions of payment, holding only violations of the latter can underpin FCA liability. As the Sixth Circuit has explained, violations of condition of participation are best addressed through administrative sanctions, not the “extraordinary remedies” of the FCA.  See U.S. ex rel. Hobbs v. MedQuest Assocs., 711 F.3d 707 (6th Cir. 2013).

Continue Reading FCA Deeper Dive: Materiality and the Government’s Decision To Pay

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government.  In the coming weeks, we will take a closer look at recent legal developments involving the FCA.  This week, we examine the requirement that a relator plead and prove that a defendant acted with the requisite level of knowledge to establish an FCA claim and evaluate how courts have evaluated this issue in recent cases.

Continue Reading FCA Deeper Dive: Meeting the FCA’s Intent Requirement

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering relators’ efforts to plead and prove falsity under the FCA by relying on a worthless services theory of liability.

The Seventh Circuit’s decision in U.S. ex rel. Absher v. Momence Meadows Nursing Center, Inc., 764 F.3d 699 (7th Cir. 2014), casts significant doubt on the “worthless services” theory of FCA liability. Following the Seventh Circuit’s ruling in Momence, courts have reaffirmed the high hurdle that relators must surmount in order to plead a “worthless services” claim under the FCA.

Continue Reading FCA Deeper Dive: Worthless Services as a Theory of Falsity

Healthcare_Fraud_2015Bass, Berry & Sims is pleased to provide its annual Healthcare Fraud and Abuse Review, which highlights significant enforcement trends and legal developments, discusses recent cases and settlements affecting the healthcare industry, and provides an outlook on what lies ahead in 2016.

During the previous year, Bass, Berry & Sims attorneys have represented virtually every type of provider in the healthcare industry in civil and criminal healthcare fraud investigations and related litigation. We have incorporated this experience into our Healthcare Fraud and Abuse Review for the benefit of our clients and friends and hope that the Review will be a valuable resource for healthcare providers facing complex compliance and fraud and abuse-related issues.

The Healthcare Fraud and Abuse Review offers a concise discussion and analysis of such topics as:

  • Noteworthy Healthcare Settlements
  • Issues to Watch
  • False Claims Act Update (“FCA”)
  • Stark Law/Anti-Kickback Statute Developments
  • Pharmaceutical and Medical Device Developments

Click here to view the Review.

The Sixth Circuit recently became the first appellate court to consider and reject FCA liability based on a healthcare provider’s alleged false attestation of compliance with the Health Information Technology for Economic and Clinical Health Act (HITECH) Act’s meaningful use objectives. U.S. ex rel. Sheldon v. Kettering Health Network, 2016 WL 861399 (6th Cir. March 7, 2016). The HITECH Act was designed to encourage the adoption of Electronic Health Record (EHR) technology by healthcare providers through the creation of incentive payments for eligible providers.  As a condition of receiving those incentive payments, the HITECH Act requires healthcare providers to meet meaningful use objectives and compliance measures concerning the adoption of EHR technology.

Continue Reading Sixth Circuit Affirms Dismissal of FCA Action Related to HITECH Meaningful Use Payments

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering the requirement that a relator plead and prove falsity to establish an FCA claim and evaluate the different theories of falsity that have emerged during the last several years.

Use of Statistical Sampling to Establish Falsity

Following last year’s landmark ruling in U.S. ex rel. Martin v. LifeCare Centers of America, Inc., 2014 U.S. Dist. LEXIS 142657 (E.D. Tenn. Sept. 29, 2014), statistical sampling has become an increasingly important issue in FCA cases. This year, decisions by the district court in U.S. ex rel. Paradies v. AseraCare, Inc., 2015 WL 8486874 (N.D. Ala. Nov. 3, 2015), reiterated this fact. AseraCare faced allegations that it falsely billed the government for hospice patients that failed to satisfy requirements that patients be terminally ill and have a life expectancy of six months or less. Anticipating lengthy trial testimony concerning the statistical sample of 233 claims, the district court bifurcated the trial for the FCA’s falsity element from trial for all other elements. In arriving at its novel decision, the district court rejected the government’s objections that bifurcation would result in juror confusion and duplicative evidence.

Continue Reading FCA Deeper Dive: Pleading and Proving Falsity under the FCA

The FCA continues to be the federal government’s primary civil enforcement tool for investigating allegations that healthcare providers or government contractors defrauded the federal government. In the coming weeks, we will take a closer look at recent legal developments involving the FCA. This week, we examine recent court decisions considering the level of specificity required of a relator under Rule 9(b) in pleading the alleged FCA fraud scheme.

While analyzing the circumstances of fraud is necessarily a case-by-case analysis, courts have applied decidedly different approaches to examining certain components of a fraudulent scheme, including the “who” and “when” requirements.

Continue Reading FCA Deeper Dive: Rule 9(b) and the Pleading of the Alleged Fraud Scheme

For the first time since August 2011, the Sixth Circuit examined the standard for pleading False Claims Act (FCA) violations with particularity under Federal Rule of Civil Procedure 9(b)—in particular, when the requirement that a relator plead an actual false claim submitted to the government can be “relaxed,” if at all. The case, U.S. ex rel. Eberhard v. Physicians Choice Laboratory Services, LLC (PCLS), No. 15-5691 (6th Cir. Feb. 23, 2016), involved allegations that PCLS, a medical testing services provider, submitted false claims to Medicare and Medicaid as a result of a purported scheme by PCLS to pay kickbacks—in the form of a commission on sales of PCLS products and services—to an independent sales force to induce them to solicit the referral of samples to PCLS for testing, in violation of the Anti-Kickback Statute. The relator, a former sales employee of PCLS, appealed the district court’s dismissal of his complaint for failure to plead any actual false claims submitted to the government with particularity under Rule 9(b), arguing that the district court should have applied a “relaxed” Rule 9(b) standard because of the relator’s purported “personal knowledge” of the false claims.

In affirming the district court’s ruling, the Sixth Circuit explained at the outset that unlike “some circuits hold[ing] that it is sufficient for a plaintiff to allege particular details of a scheme to submit false claims paired with reliable indicia that lead to a strong inference that claims were actually submitted, we have joined the Fourth, Eighth, and Eleventh Circuits in requiring ‘representative samples’ of the alleged fraudulent conduct.” Solely based on the relator’s failure to plead any false claims submitted in connection with the alleged kickback scheme, the Sixth Circuit ruled that the relator could not meet the pleading requirements of Rule 9(b).

Continue Reading No Time to Relax: Sixth Circuit Reviews Rule 9(b) Standard in FCA Case for First Time in Nearly Five Years

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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