A few weeks ago, the U.S. Court of Appeals for the Fourth Circuit answered a critical inquiry in the False Claims Act (“FCA”) context: does a defendant violate the FCA when its reading of the regulation is objectively reasonable and there is no government guidance discouraging or rejecting that interpretation? Answering in the negative in a 2-1 decision, the court affirmed the dismissal of the case and injected into FCA cases the requisite state of mind (i.e., scienter) for violating a regulation as set out in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S. Ct. 2201 (2007) by the U.S. Supreme Court. United States ex rel. Sheldon v. Allergan Sales, LLC, 24 F.4th 340, 347–48 (4th Cir. 2022). In doing so, the Fourth Circuit joined the ranks of five other circuit courts that had considered the issue. Disturbed by the exceedingly complex Medicaid rules at issue that were open to varying interpretations and the constitutional implications of “the veritable thicket of Medicaid regulations, “labyrinthine reporting requirements,” and “the most completely impenetrable texts within human experience,” the Fourth Circuit placed the onus on the government “to indicate a way through the maze.” Id. at 344, 350, 352 (internal quotations and citations omitted).Continue reading…
False Claims Act
ACA, Affordable Care Act, False Claims Act, Final Rule, Fraud and Abuse / No Comments
After four years and 200 comments, CMS finalized the much‑awaited “60‑Day Rule” for reporting and repaying Medicare Part A and B overpayments (CMS issued a Final Rule related to Medicare part C and D overpayments in the May 23, 2014 Federal Register, 79 FR 29844, and will address Medicaid overpayments in future rulemaking). The 60-Day Rule is part of CMS’s efforts to reduce fraud, waste, and abuse in the Medicare program.
Section 6402(d) of the Affordable Care Act (ACA), created section 1128J(d) of the Social Security Act (codified at 42 U.S.C. 1320a-7k(d)), requiring a person or entity who has received an overpayment to report and return the overpayment to the appropriate entity by the later of: (1) 60 days after the date on which the overpayment was “identified”; or (2) the date any corresponding cost report is due (if applicable). Importantly, the ACA also made reporting and repaying overpayments within 60 days an “obligation” under the False Claims Act (FCA), and therefore subject to FCA liability. Proof of specific intent to defraud the government is not required for a person or entity to be liable under the 60-Day Rule.
The Final Rule slightly relaxes some of the onerous requirements in the 2012 Proposed Rule:
Six Year Lookback Period: CMS responded to numerous comments and concerns that the proposed 10-year look back period for identifying overpayments was too long. The 60-Day Rule changed the lookback period to 6 years, consistent with the statutory limitations for the FCA.
Definition of Identify: CMS acknowledged the numerous comments submitted on what it means to “identify” an overpayment and said, “We agree and have revised the language … to clarify that part of identification is quantifying the amount, which requires a reasonably diligent investigation.” According to CMS, “[t]he Final Rule clarifies that a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” CMS warned Medicare providers and suppliers not to use the “ostrich defense”; reasonable diligence includes both proactive compliance activities conducted in good faith by qualified individuals, and good faith investigation of credible information conducted in a timely manner by qualified individuals. Quantification of the amount of the overpayment may be determined using statistical sampling and extrapolation methodologies.
How to Report and Return Overpayments: The Final Rule states that providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments.
The Final 60-Day Rule is available at: https://federalregister.gov/a/2016-02789. By way of comparison, the February 16, 2012 Proposed Rule is available at: https://www.gpo.gov/fdsys/pkg/FR-2012-02-16/pdf/2012-3642.pdf
To learn more about reporting or making repayments under the Final Rule, please contact Ryan Blaney, Dana Petrillo or any member of Cozen O’Connor’s Health Law team.
Anti-Kickback, False Claims Act, Healthcare, Medicaid, Medical Assistance, Medicare, OIG, Whistleblower / No Comments
For those of us who work in the privacy and security space this past week has been a whirlwind with focus on the ramifications of the European Court of Justice (ECJ) decision invalidating the EU-U.S. Safe Harbor Agreement. Much has been written on the EU-U.S. Safe Harbor Agreement and much more will be written in the coming weeks. See Cozen O’Connor’s Cyber Law Monitor recent blog post, The End of Safe Harbor – What Does it Mean? However, the ECJ decision was not the only news on safe harbor last week. The U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) issued their thoughts on data arrangements and safe harbor, albeit a much different safe harbor than the EU-U.S. Safe Harbor Agreement. Healthcare providers and health IT vendors should pay close attention to OIG’s Alert. See October 6, 2015 OIG Alert.
OIG issued the Alert during National Health IT Week and described it as a “Policy Reminder” on Information Blocking and the Federal Anti-Kickback Statute (42 U.S.C. 1320a-7b (b)). The Federal Anti-Kickback statute prohibits individuals and entities from knowingly and willfully offering, paying, soliciting, or receiving remuneration to induce or reward referrals of business reimbursable under any Federal health care program (“FHCP”). The Alert addresses a growing trend in the industry, arrangements involving the provision of software or information technology to a referral source. Although there is a safe harbor for electronic health records (“EHR”) arrangements it “must fit squarely in all safe harbor conditions to be protected.” 42 CFR § 1001.952(y).
In its alert, OIG focused on the parameters of the safe harbor exception that allows donors to enter into a wide variety of arrangements involving EHR software, IT, and training services, provided there are no restrictions to the use, compatibility, or interoperability of donated items or services. 42 CFR § 1001.952(y)(3). OIG provided guidance on this issue in 2013, explicitly stating that if the interoperability of an item or service is restricted by the donor or anyone acting on the donor’s behalf, including the recipient, then the donation violates the exemption and thus will be actionable under the Federal anti-kickback statute.
OIG’s Alert highlights practices outlined in its 2013 guidance that would be actionable under the Federal anti-kickback statute. For example, an agreement between a donor and a recipient to limit a competitor from interfacing with the donated items or services would be actionable. Even an agreement between a donor and an EHR technology vendor to charge non-recipient providers, non-recipient suppliers, or competitors’ high fees may be actionable.
OIG also provided an open invitation to whistleblowers to report fraud by urging persons with knowledge of violations of the safe harbor to be vigilant in reporting potential violations to their office. Violations will occur when donors engage in information blocking, which refers to practices that unreasonably block the sharing of electronic health information (EHI). OIG provided three criteria in a 2015 report for identifying practices that qualify as information blocking:
- Interference with the ability of authorized people to access, exchange, or otherwise use EHI.
- Knowledge, actual or expected under the circumstances, that the practice will be considered information blocking.
- No reasonable justification for limiting sharing of EHI.
If all three criteria are met, then the practice in question is considered information blocking.
For more information on this Alert, contact Ryan P. Blaney or any member of Cozen O’Connor’s Health Care team.
ACA, Affordable Care Act, False Claims Act, Medicaid, Medicare / No Comments
On August 3, 2015, a federal judge in the Southern District of New York ruled that the United States’ and state of New York’s complaints in intervention can move forward against a group of hospitals, under the federal False Claims Act (“FCA”) and New York’s FCA corollary. The hospitals allegedly failed to report and return Medicaid overpayments that were brought to their general attention over two years before all of the relevant repayments were made.
The judge’s opinion denying the defendants’ motions to dismiss in Kane v. Health First, et al. and U.S. v. Continuum Health Partners Inc. et. al., should be of particular note to providers because it contains extensive discussion and guidance as to how at least one federal judge interprets the Affordable Care Act’s (“ACA”) “60 day rule.” Specifically, the ACA’s rule requires any provider who receives an overpayment from Medicare or Medicaid to repay such overpayment within 60 days of the “date on which the overpayment was identified.” Further, retention of such an overpayment beyond the sixty-day period can result in liability under the FCA.
The United States Department of Justice (DOJ) recently announced the settlement of two qui tam whistleblower lawsuits against Omnicare Inc., the largest nursing home pharmaceutical and pharmacy services vendor in the nation. The suits alleged that Omnicare gave significant discounts to skilled nursing facilities in exchange for lucrative referrals and pharmacy provider contracts. This $124.24 million settlement is the largest ever in a “swapping” case brought under the Anti-Kickback Statute.
In addition to its size, this settlement is noteworthy because DOJ had initially declined to intervene in the underlying suits and relators pursued the claims independently. That go-it-alone decision was so resoundingly vindicated in Omnicare, it is likely that this case will encourage other whistleblowers to follow a similar course of action. Relators have long had the right to continue False Claims Act litigation without governmental participation. DOJ’s decision whether to intervene or not was traditionally (although not explicitly stated) viewed as a reflection of the strength of the whistleblower’s allegations. With the increase in whistleblower complaints, the limitations on the number of cases that DOJ can put resources on, statutory changes, the rise of a specialized qui tam bar, and big dollar victories like this may significantly increase the number of independent qui tam lawsuits. Continue reading…