Fraud & Abuse

On November 13 and November 18, the federal district court handed down separate rulings on summary judgment motions in a Florida Stark Law case that many consider the new Tuomey–U.S. ex rel. Baklid-Kunz v. Halifax Medical Center. In the first decision, the Court granted the U.S. partial summary judgment on the Stark violation with respect to compensation paid to certain medical oncologists employed by the hospital. In the second decision, the Court denied the hospital’s motion for summary judgment with respect to certain neurosurgeons employed by the hospital. Both decisions tee up important hospital/physician employment issues for trial.

The case stems from a qui tam False Claims Act lawsuit filed in 2009 in which Elin Baklid-Kunz, the former compliance officer, made allegations regarding Halifax Hospital Medical Center (“Halifax Hospital”) and Halifax Staffing, Inc. (“Halifax Staffing”) (collectively, “Halifax”). The compliance officer alleged that Halifax:

  1. Had financial relationships with physicians that did not meet a Stark exception, and as a result the physicians inappropriately referred Medicare services to Halifax; and
  2. Inappropriately billed other services to Medicare.

The Department of Justice chose to intervene in the lawsuit in 2011 with respect to the Stark Law issues. Halifax filed a Motion for Summary Judgment and the U.S. filed a Motion for Partial Summary Judgment with respect to the Stark Law issues.

Ruling on the Government’s Motion for Partial Summary Judgment

Two different compensation arrangements were the subject of these decisions. In the first decision, the Court considered the Government’s motion for partial summary judgment with respect to compensation paid to the medical oncologist employed by Halifax and the resulting designated health service referrals from those physicians. The alleged Stark violations were the result of employment agreements entered into with six medical oncologists in 2005 that provided for an incentive bonus pool equal to 15% of the “operating margin for the Medial Oncology program” of the Hospital. Even though the physicians were permitted to divide that pool among themselves as they determined, which they did based on individual production, the Hospital admitted that the pool included revenue from services that were not personally performed by the medical oncologists, such as fees related to the administration of chemotherapy.

When was the last time you thought about your compliance program? As we know, an effective compliance program is important for healthcare companies. It’s also important to review your compliance program periodically and update it according to the latest guidance. OIG guidance and recent Corporate Integrity Agreements (CIAs) are informative about what the OIG is…

Husch Blackwell attorney Joe Geraci weighed in on recent guidance provided by HHS related to whether the federal anti-kickback statute applies to patients who purchase subsidized health insurance products on the new state or federal healthcare exchanges.  Specifically, the anti-kickback regulations apply to “federal healthcare programs” that are defined to include the following:

Any plan

…

On August 20, the Fifth Circuit Court of Appeals rejected a whistleblower claim by a former employee of Cardinal Health, Inc., affirming dismissal of the former employee’s complaint, which alleged that Cardinal Health sold hospitals run by the U.S. Department of Veterans Affairs defective medical equipment, in violation of the False Claims Act (FCA).

Before her termination from Cardinal Health, the plaintiff marketed Cardinal Health’s “Signature pump”—an electronic device that regulates the rate at which intravenous fluids flow into patients—to various hospitals, including hospitals run by the VA.  The plaintiff alleged that the Signature pump had a dangerous defect, causing air bubbles to accumulate and be released into a patient’s intravenous fluids flow, potentially resulting in serious injury or death.

The plaintiff claimed that she became aware of the defect in late 2000 and discussed it with a Cardinal Health area manager in early 2001.  In mid-2001, Cardinal Health suspended shipment of the Signature pump for three months and undertook a review of the possible defect.  Cardinal Health terminated the plaintiff at the end of the three-month review period.  Cardinal Health suspended production and sale of the Signature pump for independent reasons in 2006.

“Implied False Certification” Theory of FCA Product Liability

The crux of the plaintiff’s FCA claim was that Cardinal Health falsely certified to the VA that the Signature pump was in compliance with the warranty of merchantability in the parties’ contract each time it requested payment from the VA for the pumps—a so-called “implied false certification” theory.

On June 14ththe Governor signed into law SB 1803. It amends Chapter 531 by limiting the Texas Health and Human Services Office of Inspector General’s (HHSC-OIG) ability to implement payment holds, improving providers’ rights to expedited appeals before the State Office of Administrative Hearings, redefining the liability for hearing costs, creating new requirements…

On May 18th2013 HHS gave state Medicaid Fraud Control Units (State Attorney General MFCUs) more power to data mine for patterns of overpayments, waste, fraud or abuse. They expect these new resources to have an almost 7 to 1  return on investment to the United States government.  Providers should expect to see more…

Are you worried about audits and investigations at your post-acute care facility?  If not, you may need to be.  Husch Blackwell attorneys Brian Bewley and Barb Miltenberger weighed in on this issue in Report on Medicare Compliance.  The article discusses audits and investigations at post-acute care facilities and Bewley points out that home health and hospice…

The jury in the Tuomey case (U.S. ex rel. Drakeford v. Tuomey Healthcare Systems, Inc.) returned a verdict in favor of the government yesterday, May 8, 2013.  As is well known, this is the re-trial of a case centered on a series of employment agreements that Tuomey Healthcare entered to allegedly capture referrals…

More and more judges are rejecting settlements negotiated between federal regulators and companies accused of corporate fraud. Two recent examples illustrate this trend.

1. WakeMed

In January of 2013, a judge in North Carolina rejected a settlement reached between the Department of Justice and WakeMed Health and Hospitals, an 870-bed hospital system. WakeMed was accused…

Cyber security is on everyone’s mind.  President Obama signed an executive order in February aimed at increasing protection of our nation’s critical infrastructure, while HHS released its new HIPAA mega rule in January (effective in March) in an effort to strengthen the security of electronic health records.  As providers work to update their HIPAA policies…