EEOC Settles GINA Claim Against Employer That Solicited Family Medical Histories

The Equal Employment Opportunity Commission has made emerging issues in employment discrimination law one of its national enforcement priorities. Last week, the EEOC settled a lawsuit brought against a California seed and fertilizer provider, alleging that the employer required applicants to submit to pre-employment medical examinations that included solicitation of family medical histories.

Under the Genetic Information Non-Discrimination Act, employers cannot require applicants or employees to disclose family medical histories as a condition of employment. The EEOC claimed that the defendant refused to hire at least one applicant after he revealed that family members had suffered from a medical condition. In addition to violating GINA, the EEOC alleged that the pre-employment examination was in violation of the Americans with Disabilities Act, because the employer screened applicants based on medical conditions that were unrelated to the requirements of the job. The employer agreed to pay $187,500 and to adopt measures intended to prevent use of such medical examinations as a screening tool in its hiring.

Most employers and medical providers that conduct pre-employment examinations are aware of these requirements, and have deleted requests for family medical histories from their exams. In addition to complying with GINA, employers should periodically review their post-offer, pre-hire examination procedures to make sure that medical grounds used to exclude an applicant from employment are clearly and directly related to their essential job functions. If the exclusion is based on a possible ADA disability, the employer needs to fully explore available reasonable accommodations before making a final decision to reject the applicant.

Jonathan Crotty has been a successful counselor and problem solver for large and small employers in the Carolinas and beyond for over 20 years. He heads Parker Poe’s Employment and Benefits practice group and represents employers in all aspects of the employment relationship, from hiring to discharge.

Jonathan Crotty

Jonathan Crotty

Jonathan Crotty has been a successful counselor and problem solver for large and small employers in the Carolinas and beyond for over 20 years. He heads Parker Poe’s Employment and Benefits practice group and represents employers in all aspects of the employment relationship, from hiring to discharge. Mr. Crotty provides guidance to employers as they navigate the complex array of laws and regulations applicable to the employment relationship, including employment discrimination laws, OSHA compliance, FMLA, and wage and hour matters. If employers face legal or administrative claims resulting from their employees and employment practices, he defends and resolves those disputes in line with the client’s goals and expectations.

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New FDA Cybersecurity Guidance for Medical Device Manufacturers

Last month, the U.S. Food and Drug Administration issued its final guidance, “Content of Premarket Submissions for Management of Cybersecurity in Medical Devices.”  Those guidelines make non-binding recommendations on the cybersecurity issues medical device manufacturers should consider in developing new devices.  The guidelines also address the processes medical device manufacturers should follow in evaluating and seeking to mitigate cybersecurity risks and the documentation they should submit to the FDA in seeking approval of new devices.

The FDA’s guidance is in response to the growing recognition that the connectivity medical devices have through the internet, networks and USB ports makes them vulnerable.  While that connectivity improves patient care, it also creates cybersecurity risks, including the risk of patient harm.

The FDA’s guidance is relevant not only to the manufacturers of new medical devices, but also to hospitals and others which currently use medical devices that have internet, network or other connectivity.  The guidelines expressly state that they do not create “legally enforceable responsibilities.”  However, they may well contribute to the establishment of a standard of care for such users in evaluating the security of current devices and whether software updates and other risk mitigation measures are recommended for such devices.

A copy of the Cyber Security Guidance issued by the FDA can be found here.

Steve Hunting

Steve Hunting

Steve has successfully guided health care providers, electric utilities and other clients through complex information technology, transmission, generation and other commercial projects and contract negotiations for more than 25 years. His experience as in-house counsel helps him provide seasoned, practical advice and have a better understanding of the daily challenges his clients face. His objective is to help his clients achieve their business goals effectively and efficiently.

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Proposed Mega Rule Abandoned Under the 340B program

In very broad terms, the 340B program allows some safety-net health care providers to provide qualifying patients with affordable prescription drugs. In January, the Office of Pharmacy Affairs (OPA) of the Health Resources and Services Administration (HRSA) announced its intent to issue a proposed regulation for notice and comment by June. OPA stated that the proposed regulation would cover (i) the definition of an eligible patient under the 340B program, (ii) hospital and off-site facilities eligibility criteria, and (iii) compliance requirements for contract pharmacy arrangements.   Because of the proposed breathe of the rule, it was nicknamed the “Mega Rule”.

2014 has already been a big year for the 340B program. Developments this year have included ongoing developments in a lawsuit brought by members of the drug industry regarding 340B pricing on orphan drugs, ongoing audits of 340B covered entities and an Office of Inspector General report/OPA letter placing 340B providers on notice to monitor closely for potential diversion and duplicate discounts of drugs purchased under the program.  The 340B program has also been the target for criticism by the drug industry and lawmakers.

Last week, HRSA announced that the proposed Mega Rule has been abandoned. Instead, HRSA will be publishing interpretive guidance next year (2015).

Joy Hord

Joy Hord

Joy Hord focuses her practice on regulatory and compliance matters specifically related to the health care industry. Her clients include hospitals, physicians, pharmacies and other health care providers. Ms. Hord also has significant experience representing health care professionals and organizations with business law and transactional issues, such as mergers, acquisitions and joint ventures. Ms. Hord leads Parker Poe’s Health Care Practice, which includes attorneys from the firm’s North Carolina and South Carolina offices.

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Health Care Companies Beware: Prosecutors Focus on Conduct Alleged in FCA Lawsuits

On September 17, 2014, during a speech at the Taxpayers Against Fraud Education Fund Conference in Washington, D.C., Assistant Attorney General for the Criminal Division of the Department of Justice (DOJ)  Leslie Caldwell  highlighted the fact that the DOJ “will be stepping up [its] use of” False Claims Act (“FCA”) lawsuits against health care companies, corporate health care entities, and their employees.

Ms. Caldwell specifically stated that the DOJ would be “committing more resources” to scrutinizing FCA complaints for evidence of criminal wrongdoing.  According to Ms. Caldwell, the DOJ has recently implemented a procedure that “all new qui tam complaints are shared by the Civil Division with the Criminal Division as soon as the cases are filed.”  The Criminal Division would then review these lawsuits for criminal conduct.

This news is especially relevant to the healthcare industry, one of the three industries specifically highlighted by Ms. Caldwell as targets of increased scrutiny through FCA lawsuits.  Ms. Caldwell touted the successes of the Department’s Medicare Fraud Strike Force and announced her intention to increase prosecutions of corporations involved in healthcare fraud.  She further noted that the Strike Force averaged sentences of over four years of incarceration per individual in criminal cases, signaling that the DOJ has determined that monetary fines are not the only resolution to cases that involve fraudulent conduct.

With the DOJ’s increased scrutiny of FCA complaints for evidence of criminal misconduct, healthcare providers and related entities must continually evaluate their policies and procedures with respect to governmental health care programs, including current and prospective financial relationships with referring entities, to ensure that existing structures and relationships are compliant with current regulations, including Stark and Anti-Kickback laws.

If contacted by any governmental entity, through subpoena or otherwise, a company’s initial response may prove critical and have a profound impact on the investigation. Immediate analysis of all potential options and responses, including negotiation with the government, is vital to the ultimate success of the company’s dealings and the resulting costs of involvement. Preparation of a planned response and proactive collection and preservation of documents and materials are essential in these inquiries.

Partnership with experienced counsel in anticipation of, or in the wake of contact, from the DOJ is vital. The attorneys at Parker Poe Adams & Bernstein LLP have substantial experience in representing companies before the Department of Justice and other government authorities.  For more information please contact Brian Cromwell at (704) 335-9511,, or Joy Hord at (704) 335-9848,

Brian Cromwell

Brian Cromwell

Brian Cromwell counsels clients on white collar criminal defense, environmental crimes defense, health care fraud defense, internal investigations and SEC enforcement issues. Mr. Cromwell also advises corporate and individual clients under investigation by consumer protection agencies including the Consumer Financial Protection Bureau (“CFPB”) and Federal Trade Commission (“FTC”). Mr. Cromwell is admitted to the United States Court of Appeals for the Fourth Circuit, and the United States District Court for the Western, Middle and Eastern Districts of North Carolina.

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The Game Plan for Health Care Enforcement: Office of Inspector General Releases 2015 Work Plan

The Office of Inspector General (“OIG”) within the federal Department of Health and Human Services (“HHS”) is charged with protecting the integrity of HHS programs by combating fraud, abuse and waste.  On October 31, 2014, the OIG released its Work Plan for fiscal year 2015.  The Work Plan highlights the projects and issues that OIG intends to prioritize in 2015.

According to the Work Plan, the OIG will continue to emphasize oversight of Medicare and Medicaid payments, emerging payment models, IT systems security vulnerabilities (particularly in health insurance marketplaces), quality of care and access in Medicare and Medicaid, and public health and human services programs.  The Work Plan indicates that the OIG is also considering new work in the areas of food, drug and medical device supply chain integrity, electronic data security, health information technology and emergency preparedness and response.

Within these broad categories of focus, the Work Plan highlights many specific initiatives.  Many of these are ongoing projects, while others are new to this year’s Work Plan.

Some notable new initiatives include review of:

  • Hospital wage data used to calculate Medicare payments
  • Factors contributing to adverse and temporary harm events for Medicare beneficiaries receiving care in long-term care hospitals, determination of preventability of those events, and estimation of the costs to Medicare
  • Medicare payments to independent clinical laboratories to determine labs’ compliance with selected billing requirements, with the goal of identifying those that routinely submit improper claims and recovering overpayments
  • Medicaid beneficiary transfers from group homes and nursing facilities to hospital emergency rooms, with a particular focus on potential quality issues raised by high transfer rates
  • Managed care organization payments for services after beneficiaries’ deaths and for ineligible beneficiaries

The Work Plan also continues a number of initiatives from prior years.  These focus areas span the healthcare provider industry – including hospitals, nursing homes, physician practices and other providers, hospices, long-term care providers, home health, ambulatory surgery centers, end-stage renal disease facilities, ambulance providers and others.  The following are a few notable initiatives relevant to various industry segments:


  • Impact of the “two midnight” rule on inpatient and outpatient billing
  • Compliance with provider-based status criteria
  • Provider-based versus free-standing clinic payment rates
  • Reimbursement for swing-bed services at critical access hospitals, as compared to the same level of care provided at traditional skilled nursing facilities
  • Duplicate or excessive graduate medical education payments
  • Outpatient evaluation and management services billed at the new patient rate, rather than the established patient rate
  • Oversight of pharmaceutical compounding
  • Review of medical staff candidate credentialing

Nursing Homes

  • Billing for high level therapy when beneficiary characteristics remain largely unchanged
  • Questionable billing patterns for Part B services during stays not paid under Part A
  • Oversight of state agency verification of correction plans for deficiencies identified during recertification surveys
  • Hospitalization of residents for conditions manageable or preventable in the nursing home setting


  • Review of extent of hospice services rendered to beneficiaries resident in assisted living facilities, including length of stay, levels of care and common terminal illnesses
  • Appropriateness of hospice general inpatient care

Home Health

  • Compliance with prospective payment system requirements, including documentation requirements
  • Employment of individuals with criminal convictions

Medical Equipment

  • Competitive bidding and post-award audit
  • Power Mobility Devices, including rental v. lump sum payments, medical necessity and face-to-face examination requirements
  • Lower limb prosthetic billing practices
  • Medical necessity of nebulizer machines and related drugs
  • Diabetic testing supplies, including medical necessity, frequency and other requirements

Ambulatory Surgery Centers (“ASC”)

  • Review of Medicare’s methodology for ASC payment rates
  • Review of disparity between payments to ASCs and hospital outpatient departments for similar surgical procedures

End-Stage Renal Disease Facilities

  • Medicare payments under prospective payment system

Ambulance Providers

  • Questionable billing, including medical necessity, level of transport and transports billed but not conducted
  • Analysis of Part B data to identify vulnerabilities, inefficiencies and fraud trends

Physicians and Other Providers

  • Place-of-service coding errors by physicians
  • Payments for personally performed anesthesia services (and incorrect service code modifiers)
  • Questionable billing for chiropractic services
  • Inappropriate billing by opthalmologists
  • Medical necessity of high-cost diagnostic radiology tests
  • Documentation and medical necessity of outpatient physical therapy services
  • High utilization of sleep testing procedures

The foregoing are just a few of the many initiatives outlined in the Work Plan.  Download the full Work Plan here:

Amanda Hayes

Amanda Hayes

Amanda Hayes counsels clients in connection with mergers and acquisitions, divestitures and other business matters, with a particular focus on the health care industry. She regularly serves as lead counsel on acquisitions and divestitures, guiding the client through deal structuring, due diligence, drafting, negotiation and closing. In addition to health care, Ms. Hayes’ mergers and acquisition experience includes a variety of industries, such as manufacturing, retail, automotive, contract research, environmental remediation, engineering and construction supply.

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Behavioral Managed Care Organizations Do Not Have Unbridled Discretion – Providers Have Rights

Here is a common scenario:  A behavioral healthcare provider has committed substantial resources into developing specialized behavioral healthcare services in the counties managed by a Managed Care Organization (“MCO”) under the Medicaid Waiver Program.  The provider has a contract with the MCO to provide these services and has a good quality track record.  Unexpectedly, the provider receives a letter from the MCO stating that the provider’s contract is being terminated – either because the provider’s contact is ending by its terms or because the MCO has decided to terminate the provider’s contract with 30 or 60 days’ notice.  Question:  Does the provider shut down its operations and transition its consumers, or does the provider have other options?

The simple answer: There are other options.  Although some MCOs in North Carolina believe that the concept of a “closed network” allows them to eliminate providers when they choose to do so, there are many cases in which providers have successfully challenged those MCOs’ decisions.

Under North Carolina’s Medicaid laws, providers that receive adverse determinations from the Department’s contractors, including MCOs, have the right to a contested case hearing under the Administrative Procedure Act.  N.C. Gen. Stat. § 108C-12.  The venue for these hearings is the Office of Administrative Hearings (“OAH”).  Administrative Law Judges (“ALJs”) with OAH have presided over dozens of cases by providers challenging adverse decisions of MCOs.  Adverse determinations made by MCOs can be reversed when those determinations violate law, are erroneous, arbitrary and capricious, or failed to use proper procedure.  N.C. Gen. Stat. § 150B-23(a). Some MCOs are completely ignoring the specific procedures that must be followed under State and federal law and regulations before deciding to eliminate a provider from their networks.

In numerous appeals to OAH that have been filed by providers, MCOs have argued unsuccessfully that the provisions in their contracts with providers or the law allowing them to operating “closed networks” permits them to terminate providers with no appeal rights.  In one of those cases in which attorneys at Parker Poe represented the provider, the ALJ reversed the decision terminating the provider and the MCO appealed to Superior Court on the issue of whether the provider had the right to challenge the MCO’s decision.  The Superior Court recognized the provider’s right to challenge the MCO’s decision.  Yelverton’s Enrichment Services, Inc. v. PBH, 13 CVS 11337 (March 11, 2014).

In the Yelverton’s case, the Honorable Donald W. Stephens, Senior Resident Superior Court Judge in Wake County, concluded that contract provisions cannot override or negate the protections provided under North Carolina law, specifically the appeal rights set forth in North Carolina’s Medicaid law.  In cases brought by providers since Judge Stephens’ decision, Administrative Law Judges have cited and relied upon that decision and have concluded that providers have the right to challenge an MCO’s decision to terminate or not renew a provider’s contract, notwithstanding the language in the provider’s contract.

Renee Montgomery

Renee Montgomery

Renee Montgomery focuses her practice in the health law area and has extensive experience in regulatory and administrative law. For more than 25 years, Ms. Montgomery has represented health care providers and other organizations in administrative proceedings and litigation matters. Ms. Montgomery frequently lectures on health law and administrative law issues.

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