Physician Practices Beware: Scam Email Disguised as Communication from Office of Civil Rights Regarding HIPAA Audit

Receiving an email that your practice has been identified for participating in the HIPAA Privacy, Security, and Breach Rules Audit Program is enough to raise anyone’s blood pressure. The likely response is to open the email immediately, determine the scope of the audit, and mobilize a team to prepare for the response.Read More

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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OIG Releases 2017 Work Plan

On November 10, 2016, the Office of Inspector General (“the OIG”) of the U.S. Department of Health and Human Services (“DHHS”) released its 2017 Work Plan.  Published annually and updated throughout the year, the Work Plan identifies the OIG’s key areas of focus as it carries out its mission of protecting the integrity of programs within DHHS.  The OIG is charged with ensuring the integrity of more than 100 programs administered by DHHS, including those within the Centers for Medicare and Medicaid Services, Center for Disease Control and Prevention, the Food and Drug Administration, and the National Institute of Health. The OIG Work Plan summarizes the OIG’s current activities – comprised of both new and revised activities — along with information regarding previously identified activities that have been completed, postponed, or cancelled.

The Work Plan highlights new and continuing priorities applicable to various provider types, including hospitals, nursing homes, hospices, home health, clinical laboratories, physicians and other health professionals, medical equipment suppliers and manufacturers, pharmaceutical manufacturers and other providers and suppliers.

The 2017 Work Plan is available here.

The following is a sampling of some of the new and ongoing efforts highlighted in the Work Plan:

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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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U.S. Supreme Court Rules in Favor of Implied Certification Using a Fact-Intensive Materiality Standard

The legal landscape for False Claim Act (“FCA”) cases recently shifted when the United States Supreme Court announced its decision in Universal Health Services, Inc. v. U.S. ex rel Escobar, No. 15-7, 2016 WL 3317565 (U.S. June 16, 2016) (“Escobar”).  Whistleblowers (also known as relators) and health care providers alike have been eagerly awaiting this decision.  Although each side hoped for a bright-line ruling, what they got was something of a mixed bag.  In Escobar, the Court resolved a split in the U.S. Circuit Courts of Appeals over the application of the “implied certification theory” of False Claims Act liability.Read More

Annette K. Ebright & James C. Lesnett Jr.

Annette Ebright is a litigator practicing in the areas of Complex Civil Litigation, Government Investigations, White Collar Criminal Defense and Criminal and Regulatory Compliance. Jamie Lesnett focuses his practice on complex business litigation and government investigations. Mr. Lesnett has extensive experience litigating complex business disputes in federal and state courts throughout the United States, including litigation involving contract disputes, business torts, unfair competition and trade secret misappropriation.

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False Claims Act Update: A Statistical Review of 2015 and Key Events for 2016

2015 proved to be another banner year for the federal government as it relates to False Claims Act (FCA) recovery.  In 2015, the DOJ recovered $3.583 billion in FCA actions, the fourth year in a row that such recoveries have exceeded $3.5 billion.  As in the past,  the majority of these recoveries were related to healthcare and defense-related government contracts (respectively, $1.9 billion and $1.1 billion).

Perhaps the most notable conclusions to be drawn from the DOJ’s recent report, however, relate to the role of whistleblowers in bringing and prosecuting FCA claims.  As the Department of Justice noted: “Most (FCA) actions are filed under the Act’s whistleblower, or qui tam, provisions that allow individuals to file lawsuits alleging false claims on behalf of the government.  If the government prevails in the action, the whistleblower, also known as the relator, receives up to 30 percent of the recovery.”  In 2015, the government recovered $2.9 billion from whistleblower-initiated lawsuits, and whistleblowers received a record-setting $597 million for their share.

Even more notable is the fact that in 2015, for the first time, whistleblower recoveries in cases where the government declined to intervene ($334.6 million) exceeded whistleblower recoveries in cases where the government intervened ($262.9 million) – e.g., the government made a formal appearance in the case and took the lead in litigating it.  This statistic is contrary to a prior commonly held belief that a government decision not to intervene was the “kiss of death” to the relator’s chances for recovery, and reflects the growing sophistication of the FCA plaintiff’s bar.  Notably, the total amount recovered in declined cases during 2015 ($1.149 billion) exceeded the amount recovered in declined cases for all prior years combined (approximately $1 billion during 1987-2014), and it remains to be seen whether 2015 is an outlier year for whistleblower recoveries.

Looking ahead, 2016 promises several notable developments relating to the False Claims Act:

•    Increased Civil Penalties – Due to the recent passage of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, the per claim civil penalties for the FCA (currently $5,500 to $11,000) will be adjusted to account for inflation by August 1, 2016, and again on January 15 of each subsequent year.  Agencies are allowed some discretion in reducing the penalty adjustment so long as certain procedures are followed and the Office of Management and Budget consents.

•    Anticipated Supreme Court Decision – In order to resolve a long-standing split among the Federal Circuit courts, the U.S. Supreme Court has granted certiorari in U.S. ex rel. Escobar v. Universal Health Services (1st Cir. 2015).  The issues to be resolved focus on whether the “implied certification” theory of FCA liability – which establishes an FCA violation for presenting a claim to the government while in violation of a legal/contractual obligation, regardless of whether the claimant has expressly verified their compliance with that obligation – is valid.  If so, the Court will be presented with the question of whether implied certification requires that the legal or contractual obligation that was not complied with to expressly state that it is a condition of payment.  A ruling that implied certification need not be based on an express condition of payment arguably opens the door wide to a variety of FCA claims that have been since been denied by several circuits. Therefore, this decision will be closely watched.

•    Fourth Circuit to Rule on Extrapolation in FCA cases – The Fourth Circuit Court of Appeals will hear an appeal in U.S. ex rel. Michaels et al. v. Agape Senior Community, Inc. (D.S.C. 2015)  regarding, among other issues, the reliance on statistical sampling to prove liability and damages.  The District court in Michaels held that while some cases may be suited for statistical sampling, the fact intensive nature of the claims before it rendered sampling unreliable.  Given the extent to which whistleblowers (and the government) rely upon statistical sampling in healthcare cases and the conflicting way in which lower courts have treated this methodology, this case may ultimately end up at the Supreme Court as well .

Given the potential liability associated with the False Claims Act (i.e., treble damages and significant statutory fines) and the growing likelihood of success for whistleblower-initiated lawsuits, health care providers should take care that their internal compliance programs are well-designed and that  internal reports and complaints are promptly investigated.

If you are interested in learning more about the False Claims Act or believe you may be the subject of a FCA investigation please feel free to contact a member of our health care practice group.

Eric Cottrell

Eric Cottrell

Eric Cottrell leads the firm’s Antitrust, Business Torts & White Collar Practice Group. He is a seasoned litigator in both civil and criminal matters and has been lead counsel in multiple jury trials. He divides his practice between white collar criminal matters and commercial litigation. Mr. Cottrell is also a member of the Public Company Growth & Compliance group.

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Two New Exceptions to Stark to Become Effective in the New Year

Starting January 1, 2016, physicians and certain health care organizations will be able to take advantage of two new exceptions to the physician self-referral law (commonly referred to as the “Stark Law”).  Stark contains two broad restrictions.  First, it prohibits physicians from making referrals of certain designated health services (“DHS”) payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless an exception applies.  Second, Stark prohibits those entities from billing for the referred services.

The two new Stark exceptions, when satisfied, will permit (1) remuneration from a hospital, federally-qualified health center (“FQHC”) or rural health clinic (“RHC”) to a physician to assist the physician to compensate certain non-physician practitioners (“NPPs”) who will provide primary care or mental health services in the geographic area served by the hospital, FQHC or RHC (the “NPP Recruitment Exception”) and (2) arrangements in which physicians (or physician organizations) and hospitals may use one another’s space, equipment, personnel, items, supplies or services to provide services on a time-sharing basis (the “Timeshare Arrangements Exception”).

In announcing the new exceptions, CMS recognized several important policy considerations, many of which relate to increasing access to care.  CMS noted NPPs’ increased role in health care delivery in light of health coverage expansion under the Affordable Care Act and the looming shortage of primary care physicians.  Also, in a victory for mental health providers, CMS was persuaded to include clinical psychologists and clinical social workers within the definition of NPP and to add mental health care services to the scope of permissible services that may be provided by NPPs engaged under the NPP Recruitment Exception.  (The exception, as initially proposed by CMS, included only physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives and restricted their services to primary care.)  The Timeshare Arrangements Exception reflects a similar acknowledgment that time-sharing may increase access to specialists in rural areas that cannot support a specialist on a full-time basis.

Both the NPP Recruitment Exception and the Timeshare Arrangements Exception include several elements that must be strictly satisfied in order for the arrangement to qualify for protection.  Health care organizations and physicians interested in learning more about the new exceptions, or whether arrangements they are considering might qualify, should feel free to contact Parker Poe.

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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Parker Poe Hosts Health Care Symposium on Supreme Court Decisions


Raleigh, NC –  On July 16, 2015, Parker Poe hosted a Health Care Symposium co-sponsored by the North Carolina Society of Health Care Attorneys, the Federal Bar Association’s Health Law Section, and the Federal Bar Association’s Eastern North Carolina Chapter.

The Symposium was a review of the United States Supreme Court’s decisions impacting health care in the 2015 term. Panelists reviewed the Court’s opinions and their legal and practical implications. The Symposium was designed for health care providers, lawyers, policy makers, and others interested in health law and policy.

Matt Wolfe, an attorney  in Parker Poe’s Raleigh office, moderated the Symposium’s panels.  Matt was joined by Kimberly Cogdell Boies of NCCU Law; Catherine Dunham, Elon Law; Mark Hall, Wake Forest Law; Joan Krause, UNC Law; Jane Perkins, National Health Law Project; Barak Richman, Duke Law; Richard Saver, UNC Law; and Don Taylor, Duke Public Policy. Click here for a link to the video of the session.

If you would like further information about topics discussed, please contact Matt Wolfe at 919-835-4647 or mattwolfe@parkerpoe.com.

Matt Wolfe

Matt Wolfe

Matt Wolfe concentrates his practice in the areas of administrative litigation, government relations, and other regulatory matters. Matt formulates comprehensive political and public relations strategies on a broad range of federal and state policies. He drafts and monitors legislation, intervenes directly with legislative, executive, and local officials, and appears before state and federal executive agencies. Within his administrative litigation practice, Matt advises and counsels health care providers subject to federal and state regulatory actions.

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Are You in Compliance? Effect of Exclusion from Participation in Medicare and Medicaid

The Office of Inspector General’s (“OIG”) recent release of OIG Advisory Opinion No. 15-02 is an important reminder that providers must be vigilant in complying with prohibitions against receiving payment for items or services provided by excluded individuals or entities.

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Wendy Wright

Wendy Wright

Wendy Wright focuses her practice on resolving legal, regulatory and business issues affecting professionals and organizations in the health care industry. Her clients include hospitals, physician groups and other health care providers.

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OIG Releases Joint Guidance for Health Care Boards

Yesterday, the Office of Inspector General (“OIG”) published “Practical Guidance for Health Care Governing Boards on Compliance Oversight.”  The guide is intended as an educational resource for the boards of healthcare entities of all sizes and is the result of a unique collaboration between the OIG and a number of private health care trade organizations.   Topics covered by the guide include:

  • expectation of the board with respect to compliance functions;
  • appropriate relationships between audit, compliance, and legal departments within the organization;
  • establishing expectations regarding reporting to the board;
  • identifying and auditing potential risk areas; and
  • encouraging a culture of compliance.

The guide can be found here.

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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False Claims Act – 2014 Year in Review

 

 

The False Claims Act (FCA) imposes liability on individuals and companies who defraud or submit false claims to the federal government. The FCA allows the federal government to seek treble damages, civil penalties and attorney’s fees for violations of the Act. Further, the FCA contains qui tam, or whistleblower, provisions which award whistleblowers up to 30% of the amount recovered by the federal government. FCA suits and recoveries have exploded in recent years. The federal government reports that FCA recoveries have topped $22 billion since 2009. Accordingly, the FCA is widely considered the fastest growing area of federal litigation and has been described as the “government’s most potent civil weapon in addressing fraud.”

Historically, FCA claims have targeted the health care industry, and 2014 was no exception. According to the Department of Justice, more than 60% of new matters were health care related, and 2014 health care-related recoveries exceeded $2.3 billion. This is the fifth straight year the federal government has recovered more than $2 billion from companies in the health care industry.

Pharmaceutical companies accounted for a substantial part of the $2.3 billion recovered from the health care industry in 2014. For example, Johnson & Johnson and two of its subsidiaries paid $1.1 billion to resolve FCA claims involving allegations it violated the Anti-Kickback Statute by making improper payments to physicians and a pharmaceutical provider and engaged in off-label marketing of three prescription drugs.

The federal government also focused on hospitals, nursing homes, home health and hospice agencies and physician practices in 2014. For example, one large hospital chain paid more than $98 million dollars to resolve allegations it improperly billed Medicare, Medicaid and TRICARE for inpatient services which could have been provided in a less costly setting. A large nursing home provider paid $3.75 million to resolve allegations that it billed Medicare for unnecessary rehabilitation services. A Tennessee-based home health agency paid over $25 million relating to allegations that it upcoded services provided unnecessary care.

Given the risk and devastating effect that an FCA allegation can have, health care providers should take internal reports of misconduct seriously. Although whistleblowers have a great financial incentive to report alleged misconduct to the government, studies show that most whistleblowers report their conduct internally before going to the government. Emphasizing the your compliance plan and conducting timely internal investigation when internal reports of misconduct are made by staff or patients may defuse a FCA suit before it begins.

James C. Lesnett, Jr. and Eric H. Cottrell have substantial experience investigating and litigating FCA issues.  They have also successfully helped clients avoid FCA litigation through direct pre-trial settlement negotiations with governmental authorities.

Robb Leandro

Robb Leandro

Robb Leandro assists his client with a broad range of legal issues relating to health care, administrative law and public policy. His legal practice focuses on helping health care providers navigate the minefield of regulations that they face in their practices. Robb routinely assists his clients with issues including Medicaid and Medicare regulations; Medicaid and Medicare audits; Certificate of Need Applications and litigation; licensure, surveys, and certification issues; and HIPAA and privacy laws. Robb also provides counsel to health care providers with complex government contract procurement issues.

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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, briancromwell@parkerpoe.com, or Joy Hord at (704) 335-9848, joyhord@parkerpoe.com.

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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