While the government is writing checks to companies to cope with recent pandemic losses, it simultaneously updated its internal guidance for scrutinizing a company’s corporate compliance program.  Earlier this week, the Department of Justice (DOJ) issued to prosecutors an update to its guidance document for the “Evaluation of Corporate Compliance Programs.”  DOJ counsel has long considered the existence and adequacy of a company’s corporate compliance program when determining whether, and to what extent, charges should be brought against that company, as well as how investigations should be resolved.

This guidance document, originally published in 2017, assists government counsel with that evaluation process.  While primarily intended for use in the criminal context, the same guidance could undoubtedly be considered during a civil investigation against a company, such as in a False Claims Act investigation.  The guidance document and its updates are excellent resources for a company to use in the company’s ongoing evaluation of its compliance program.

Purposefully tailoring the compliance program to your company.  Many DOJ updates reinforce the notion that a company should create a corporate compliance program that is tailored to that specific company, based upon its evaluation of its particular risks and anecdotes.  For instance, the update clarifies that government counsel should consider “the company’s size, industry, geographic footprint, regulatory landscape, and other factors, both internal and external to the company’s operations, that might impact its compliance program.”  And when evaluating whether the compliance program is well designed for a particular company, government counsel is directed “to understand why the company has chosen to set up the compliance program the way that it has, and why and how the company’s compliance program has evolved over time.”

Continue Reading DOJ Updates Guidance for Evaluating Corporate Compliance Programs as a Record Number of Companies are Receiving Federal Funding

On May 6, the U.S. District Court for the District of South Carolina entered final judgment dismissing with prejudice a relator’s qui tam False Claims Act (FCA) suit against the defendant wholesale pharmacy. The relator, a former pharmacist who worked for the defendant, alleged that the defendant submitted false claims to government healthcare programs in connection with prescription medications dispensed for use at nursing homes and assisted living facilities. The relator alleged a scheme in which the defendant manually filled “thousands” of prescriptions with less-expensive generic medications while billing for more-expensive alternative medications stocked in its automated dispensing system.

A qui tam complaint containing similar allegations filed against Omnicare Inc. in the U.S. District Court for the District of New Jersey resulted in an $8 million settlement in 2017. In this lawsuit, however, the defendant, represented by Bass, Berry & Sims and others, obtained full dismissal with prejudice of the relator’s FCA and retaliation claims.

Continue Reading Qui Tam Complaint Against Pharmacy Dismissed for Lack of Particularity

On February 25, the U.S. District Court for the Western District of Tennessee dismissed a relator’s qui tam False Claims Act (FCA) suit alleging that the defendants had continued the “exact scheme” previously alleged in U.S. ex rel. Deming v. Jackson-Madison Cty. Gen. Hosp., et al. involving allegations of medically unnecessary cardiac testing and procedures.

The defendants in U.S. ex rel. Maur v. Cmty. Health Sys., Inc., et al., represented by Bass, Berry & Sims and others, moved to dismiss the relator’s action on two grounds.  First, the defendants argued that the FCA’s public disclosure bar prohibited the relator’s action as the lawsuit raised substantially the same allegations as those publicly disclosed in the Deming action and subsequent press releases related to that lawsuit.  Second, the defendants maintained that the relator had failed to plead any FCA claims with the requisite particularity under Federal Rule of Civil Procedure 9(b).  The district court granted the defendants’ motions and dismissed the relator’s action on both grounds.

Continue Reading Public Disclosure Bar and Pleading Deficiencies Doom Tennessee FCA Case

As developments related to COVID-19 continue to unfold, Bass, Berry & Sims attorneys are monitoring the situation and providing guidance through a series of video chats entitled, “COVID-19 Compliance Conversations.”

In this episode, Lindsey Fetzer and John Kelly provide a brief overview of compliance considerations related to conducting internal investigations remotely. Watch the video to hear their take on the current state of government enforcement, as well as tips and tricks for staying proactive in anticipation of future investigations that result from the COVID-19 pandemic.

View our other video in this series:

COVID-19 Compliance Conversations – Episode I

COVID-19 Compliance Conversations – Episode II

COVID-19 Compliance Conversations – Episode IV

COVID-19 Compliance Conversations – Episode V

This is the second post of a two-part discussion of recent developments related to the materiality standard set forth by the Supreme Court in Universal Health Services v. U.S. ex rel. Escobar.  Read our previous post, which covered appellate court decisions and key decisions related to government knowledge and payment.

Courts Take Differing Approaches to the Significance of Government Intervention Decisions

In assessing the False Claims Act’s (FCA) materiality element, courts have increasingly taken divergent approaches to analyze the significance of the government’s decision about whether to intervene in a qui tam action.

In several 2019 decisions, district courts held that the government’s decision to intervene in a qui tam action was relevant – even if not dispositive – to the materiality analysis under Escobar.  In U.S. ex rel. Longo v. Wheeling Hospital, Inc., for instance, the U.S. District Court for the Northern District of West Virginia found that the government’s decision to intervene in the very qui tam action before it “strongly militate[d] in favor of materiality.”  And in U.S. ex rel. Arnstein v. Teva Pharmaceuticals USA, Inc., the U.S. District Court for the Southern District of New York explained that the government’s decision to intervene in “a factually similar case” in the same district “provide[d] strong evidence that AKS [Anti-Kickback Statute] violations were material to the Government’s payment decisions,” even though the government had not intervened in the case before the court.

Continue Reading <em>Escobar</em>’s “Rigorous” Materiality Standard: Recent Developments – Part Two

Despite the mounting pressures on healthcare entities related to the COVID-19 (coronavirus) pandemic and recent announcements of regulatory waivers and flexibility in particular areas, regulators are still showing interest in the enforcement of federal requirements for life safety and emergency and infectious disease control preparedness for long-term care facilities.

OIG Medicaid Nursing Home Life Safety and Emergency Preparedness Reviews

On March 23, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) updated its Work Plan in response to the COVID-19 pandemic. Please see this post for more information about all of the OIG Work Plan updates. One of the areas that the OIG Office of Audit Services will focus on is Medicaid Nursing Home Life Safety and Emergency Preparedness Reviews.

OIG’s rationale for focusing on this is, in part, because the patient population in long-term care (LTC) facilities is especially vulnerable to COVID-19 and other disease outbreaks. The focus of the audit is LTC facilities’ compliance with federal requirements for life safety and emergency preparedness, as well as 2019 Centers for Medicare & Medicaid Services (CMS) expanded guidance on emerging infectious disease control.

Continue Reading Increased Oversight of Long-Term Care Facilities Related to COVID-19

The financial relief programs enacted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act stand ready to provide crucial financial support to people and businesses impacted by the novel coronavirus (COVID-19) pandemic and the resulting economic downturn.   These new federal programs recognize the scale of the challenges presented by the COVID-19 outbreak.

While decisions made by companies seeking CARES Act or similar relief may not be scrutinized today, we are likely to see a wave of COVD-19-related criminal and civil enforcement actions in the coming months and years.  Impacted individuals and businesses should remember that the urgent need for relief does not eliminate the importance of compliance or the likelihood of significant regulatory oversight in the future.

More specifically, applicants for CARES Act relief must certify or attest to certain facts relevant to their eligibility to participate in the CARES Act’s various programs.  Because false certifications or attestations potentially expose an applicant to liability under the federal False Claims Act (FCA), it is critical that impacted individuals and entities take reasonable steps to ensure the accuracy of information and certifications contained in any applications for federal aid.

Continue Reading The CARES Act and Risk of FCA Exposure

As the impact of the COVID-19 pandemic continues to spread, the federal government is preparing to take unprecedented action to curb its effects on the nation’s health and economy by freeing up federal dollars for private businesses, manufacturers and healthcare entities of all types. But, those receiving these dollars, directly or indirectly, should continue to monitor updates to and maintain compliance with all applicable laws and regulations as this unprecedented economic response comes with heightened scrutiny and potential enforcement and regulatory risk.

DOJ Prioritizes COVID-19 Wrongdoing

On March 16, the United States Attorney General issued a memorandum to all U.S. Attorneys prioritizing the detection, investigation and prosecution of wrongdoing “related to the current pandemic.”  Attorney General Barr also issued a press release on March 20 urging the public to report suspected fraud schemes related to COVID-19. Among the schemes, Attorney General Barr encouraged the public to report were any medical providers “fraudulently bill[ing]” tests and procedures.

Continue Reading COVID-19 and the False Claims Act

On March 23, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) updated its Work Plan in response to the COVID-19 pandemic.  The OIG Work Plan sets forth planned or ongoing agency evaluations, audits and inspections.

The March 2020 updates to OIG’s Work Plan related to COVID-19 include the following:

1. COVID-19 Hospital Response. As hospitals face a surge in patients due to the COVID-19 pandemic, OIG recognizes its role in helping hospitals effectively manage this public health emergency.  OIG’s Office of Evaluation and Inspections will conduct a study to gain insight from hospital administrators on hospital needs and concerns regarding diagnosing and treating COVID-19 patients and other emergency preparedness and response issues, including the availability of personal protective equipment (PPE) for hospital staff.  The study will involve interviews of hospital administrators from approximately 400 hospitals of various types, sizes and locations across the country, including rural and critical access hospitals. HHS operating and staff divisions will use the study results to tailor their support of hospitals facing the COVID-19 pandemic.

Continue Reading HHS OIG Releases Five Work Plan Updates Related to COVID-19

As the impact of the COVID-19 pandemic continues to spread, the federal government is preparing to take unprecedented action to curb its effects on the nation’s health and economy by freeing up federal dollars for private businesses, manufacturers, and healthcare entities of all types. But, those receiving these dollars, directly or indirectly, should continue to monitor updates to and maintain compliance with all applicable laws and regulations as this unprecedented economic response comes with heightened scrutiny.

In an internal memo on March 16, Attorney General William Barr stated that the U.S. Department of Justice (DOJ) would remain vigilant in its efforts to combat fraud related to the COVID-19 crisis and directed all U.S. Attorneys to prioritize the detection, investigation, and prosecution of illegal conduct related to the pandemic. On March 19, Deputy Attorney General Jeffrey Rosen directed the U.S. Attorney in each federal district to appoint a Coronavirus Fraud Coordinator to serve as legal counsel on coronavirus-related matters, direct the prosecution of coronavirus-related crimes, and to conduct outreach and awareness.

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