On December 20, 2019, the U.S. Court of Appeals for the Third Circuit granted in part a petition for rehearing filed by the University of Pittsburgh Medical Center (UPMC) in a False Claims Act (FCA) case that has generated considerable attention among hospitals and health systems due to its treatment of commonplace, productivity-based physician compensation models.  Ultimately, the Third Circuit vacated its original September 17, 2019 decision and issued a revised opinion reversing its holding that the relators could establish a problematic indirect compensation arrangement simply by alleging the employed neurosurgeons’ pay for personally performed services correlated with the volume or value of their referrals to UPMC’s facilities for the corresponding hospital services.

As discussed in our October 14 post, U.S. ex rel. Bookwalter v. UPMC involved employment arrangements between UPMC’s subsidiary physician practice entities and various neurosurgeons pursuant to which the physicians earned base salaries and potential incentive bonuses tied to their personally performed work relative value units (wRVUs).  The Third Circuit previously held – in reliance on a controversial construction of the Stark Law’s “volume or value” test – that the relators pleaded facts sufficient to demonstrate the surgeons’ compensation both varied with and took into account the volume or value of their designated health service referrals to UPMC’s hospitals, thereby creating an impermissible indirect compensation arrangement.

Continue Reading Update: Third Circuit Allows Allegations of Improper Compensation under the Stark Law to Proceed, but Reverses Controversial “Varies with Volume or Value” Reasoning

In two prior posts [Government Files Amended FCA Complaint Against Private Equity Firm and its Portfolio Company and DOJ Intervention in Healthcare Fraud Case Highlights Potential Risks for Private Equity Firms], we wrote about the Department of Justice’s (DOJ) decision to intervene in a False Claims Act (FCA) case against a compounding pharmacy and its private equity backer.

The case, Medrano v. Diabetic Care Rx, LLC, was the first time we had seen the DOJ name a private equity firm in a FCA case involving allegations of wrongdoing by one of its portfolio companies, and we noted that this should be a wake-up call to private equity firms who are actively engaged in the management and control of healthcare companies in which they invest.

The alarm rang once again in September 2019, as the DOJ announced that it reached a $21.36 million settlement with Patient Care America (PCA), the compounding pharmacy at issue in the case, two of the company’s executives and, most notably, the private equity firm Riordan, Lewis & Haden Inc. (RLH) that managed PCA on behalf of its investors.  The settlement was reached on ability to pay grounds.

Continue Reading Private Equity Firm Settles FCA Case

Bass, Berry & Sims and the Tennessee Hospital Association invite you to join us for a complimentary day-long CLE program featuring leading government officials, industry experts and experienced counsel as we discuss the most significant fraud and abuse issues currently facing the healthcare industry. Our panelists will cover topics including:

  • Year in Review: Looking Back on Healthcare Fraud Issues in 2019
  • Medicaid Enforcement Update
  • Enforcement Considerations for a Value-Based World
  • Managed Care Enforcement
  • A View from the U.S. Attorney’s Offices
  • DOJ Cooperation Guidance
  • When the News Gets Out: Crisis Management for Investigations
  • HR Implications of FCA Investigations
  • Settlement Considerations for Enforcement Matters
  • Effectively Managing Internal Investigations

Continue Reading Join Us | Nashville Healthcare Fraud Conference | December 5, 2019

Please join us as we present a complimentary CLE webinar providing timely and practical guidance for healthcare industry executives.

The discussion will highlight the following:

  • Recent regulatory developments, including enforcement activities.
  • Proposed and final rules by OIG and CMS.
  • Published OIG advisory opinions.
  • Additional regulatory pronouncements likely to have material impact on the industry.

The webinar will provide an overview of recent fraud and abuse cases and settlements as well as proactive compliance measures to consider in light of enforcement trends.

WEBINAR DETAILS

Title: Healthcare Update: All Things Regulatory + Fraud & Abuse

Date: Thursday, November 14, 2019  Time: 12:00 PM Central Standard Time

Webinar approved for one hour General Tennessee CLE credit. Certificate of completion available upon request.

Who Should Attend?

  • Outside and in-house counsel
  • Healthcare compliance officers
  • Healthcare and life sciences executives

For additional information, email lauren.parkhurst@bassberry.com.

We recently outlined the significant proposed changes to the Stark Law that the Centers for Medicare & Medicaid Services (CMS) released on October 9.  The analysis was written for the American Health Lawyers Association’s (AHLA) Fraud and Abuse Practice Group and co-authored by Dickinson Wright attorney Rose Willis. In the article, the authors summarized the Proposed Rule, including:

  1. Changes related to a value-based care delivery model – With the ongoing shift from the traditional fee-for-service model to value-based payment and delivery model, the Proposed Rule addresses three new exceptions to the Stark Law focused on the value-based model. Continue Reading CMS Proposed Rule Adds Exceptions to Stark Law and Provides Additional Guidance and Clarification

The U.S. Court of Appeals for the Third Circuit recently issued a False Claims Act (FCA) decision calling into question productivity-based physician compensation structures under the Stark Law, in reliance on a controversial interpretation of the Stark Law’s “volume or value” standard.

The case, U.S. ex rel. Bookwalter v. UPMC, involved employment arrangements between the University of Pittsburgh Medical Center’s (UPMC) subsidiary physician practice entities and neurosurgeons who performed procedures at UPMC’s affiliated hospitals.  The decision is significant for hospitals and health systems in that the Third Circuit’s holding is contrary to guidance promulgated by the Centers for Medicare & Medicaid (CMS) and appears to call into question a common compensation methodology used by health systems to compensate physicians.

Continue Reading Third Circuit Holds Allegations of Improper Compensation Methodologies under the Stark Law Survive Motion to Dismiss

Earlier this month, the Eleventh Circuit Court partially affirmed a lower court’s decision in United States vs. Aseracare, stating that disagreements between doctors related to a patient’s prognosis does not qualify as hospice fraud under the False Claims Act (FCA).

Earlier in the year, I discussed the case with with Hospice News stating, “Settlements involving allegations about medical necessity of hospice services continued to dominate enforcement actions this last year. Hospice organizations should be particularly mindful of the patients they are accepting and ensure that the appropriate documentation is retained.” The publication repurposed the quote for the September 2019 article.

The full article, “Court: Difference of Opinion is Not Hospice Fraud,” was published by Hospice News on September 11, 2019, and is available online.

On July 19, 2019, Myriad Genetics disclosed a $9.1 million settlement agreement to resolve a False Claims Act (FCA) qui tam lawsuit alleging that it engaged in a scheme to fraudulently bill Medicare for certain hereditary cancer tests.

Notably, the qui tam relator in the case was not a Myriad corporate insider, but rather a medical director for Palmetto GBA, the Medicare Administrative Contractor (MAC) responsible for overseeing the program through which Myriad’s tests are covered by Medicare.  In this way, the settlement illustrates the often overlooked risk that individuals other than conventional corporate whistleblowers—including even government employees or employees of government administrative contractors—may serve as FCA relators.

Continue Reading Myriad Genetics Settlement Illustrates FCA Risks Posed by Government and Other Non-Traditional Relators

On July 5, 2019, the D.C. Circuit Court of Appeals affirmed dismissal of a qui tam lawsuit against several chemical manufacturers that set forth a unusual theory of liability: the relator alleged that the manufacturers violated the False Claims Act (FCA) by failing to self-report information about the dangers of their chemicals under the Environmental Protection Agency’s (EPA) voluntary Compliance Audit Program.

According to the relator, the manufacturers should have self-disclosed certain information to the EPA, who in turn would have assessed civil penalties under the Toxic Substances Control Act.  By failing to do so, the relator alleged that the defendant manufacturers concealed their obligations to transfer property (the risk information) and money (the unassessed penalties) to the government.

Continue Reading Failure to Voluntarily Self-Report is a “Non-starter” under the FCA

In addition to the United States Department of Justice’s recently issued guidelines related to cooperation in FCA enforcement actions, the Department of Justice (DOJ)’s Criminal Division recently revised its guidance pertaining to assessment of corporate compliance programs.  The revised guidance will inform DOJ’s approach to criminal investigations, charging decisions, plea agreements, and sentencing in cases involving alleged corporate noncompliance or wrongdoing.

DOJ previously published guidance on its evaluation of corporate compliance programs in 2017.  As with the previous version, the revised guidance eschews a “rigid formula” for assessing compliance programs.

Continue Reading DOJ Asks “Fundamental Questions” of Corporate Compliance Programs