Thursday, March 31, 2011

Another study about doctor conflicts

Pharmalot is reporting about  "another study has found a conflict of interest among doctors. This time, conflicts were reported by 56 percent of 498 docs who helped write 17 guidelines for the American Heart Association and American College of Cardiology between 2003 through 2008, according to the study published today in the Archives of Internal Medicine (see the abstract). And this finding matters because these panels typically wield considerable influence."

We've seen these situations.  Clinical Practice Guidelines are key to the practice of medicine because they set the standard of care.  All physicians want to meet the standard of care.  What most physicians and certainly patients don't know is that the CPGs are often unduly influenced by industry money, distorting research, medicine, and the sound practice of medicine.  

Meet Professor Malcolm K. Sparrow

Prof. Sparrow
I'm currently reading Professor Malcolm K. Sparrow's book, A License to Steal, How Fraud Bleeds America's Health Care System.  I highly recommend it for those who want to learn how health care fraud is committed.  Professor Sparrow teaches Regulatory and Enforcement Strategy, and Analytic Methods, at Harvard's John F. Kennedy School of Government.  Somebody should give Professor Sparrow a medal.

Click here for ordering information.  

Click here for more information about Prof. Sparrow.

Wednesday, March 30, 2011

13 Legal Issues for Hospitals

Becker's Hospital review talks about 13 legal issues for hospitals and health Systems given today's legal climate.  Click here.

Tuesday, March 29, 2011

OIG gives green light to hospital patient transports to physician offices

Hospitals may be allowed to provide patient transport services to and from nearby physician offices, according to a new HHS' Office of the Inspector General advisory opinion. The opinion acknowledges that the transport services could potentially violate the Anti-Kickback Statue, but OIG officials stated they would not pursue sanctions as a result.
However, there are a few caveats to the policy. The OIG requires that the hospital make the service available to all patients, not just Medicare or Medicaid patients. Also, the hospital must use a "hospital-owned, wheelchair-accessible van containing basic safety equipment," driven by a trained, licensed EMT. The hospital must not use high-dollar transport options like limousines, and only offer the service in a limited local area.

Click here for the advisory opinion.

Government wasting millions by not going generic

HealthWatch has an article today highlighting the fact that "states and the federal government could have saved as much as $329 million in 2009 if they'd more often paid for generic drugs for Medicaid beneficiaries, according to a new report by Alex Brill of the conservative American Enterprise Institute.  The report found that Medicaid paid about $1.5 billion for 20 popular drugs that have generic equivalents - overpaying by about 20 percent over the $1.17 billion of their generic equivalents.  The report adds that, with healthcare reform adding 16 million people to Medicaid and many drugs losing patent protection, the potential for savings is greater than ever."

Tethys and the Air Force team up--is this the Air Force's mission?

Fierce Medical Device is reporting that “Tethys Bioscience and the U.S. Air Force are collaborating to study the impact of the PreDx test in helping prevent Type 2 diabetes among the service's retirees and dependents. . . .  The study will assess the correlation between receiving comprehensive and individualized information about disease risk and the motivation to adopt a healthier lifestyle. . . .  'Our collaboration with the U.S. Air Force provides an optimal setting in which to prospectively demonstrate the value of PreDx DRS in enabling physicians and patients to determine what behavioral and dietary changes can be most effective in preempting disease in high risk individuals,' Tethys Chairman and CEO Mickey Urdea explains in a statement."

I'm very leery of medical device and product manufacturers "teaming up" with the military to do research (especially on a drug for diabetes).  Is this the Air Force's mission?  Last time I checked there was kinetic military action going on over the skies of Libya.  

Why should taxpayers fund research for Tethys.  I sure would like to see those CRDAs

HHS-OIG state enforcement actions page updated

Click here for updates from HHS-OIG about recent state enforcement actions.  

One wonders, though, if we are just picking the low hanging fruit.  If we really wanted to get serious about health care fraud, then every US Attorney's Office would have squads of fraud examiners, investigators, and paralegals.  


Monday, March 28, 2011

DoJ investigating BCBS

The Wall Street Journal is reporting that the "U.S. Justice Department is widening a probe of Blue Cross Blue Shield health insurance plans in several states, examining whether they are effectively raising health-insurance premiums by striking agreements with hospitals that stifle competition from rival insurers."

News Flash: 4th Cir. Rules (seal provision of the False Claims Act is constiutional)

The Fourth Circuit just ruled in ACLU v. Holder that the False Claims Act's seal provision is constitutional.  The opinion is below.  Judge Gregory filed a dissent.  I predict the ACLU will request en banc hearing, lose, and then request cert. to the SCOTUS.

ACLU v. Holder

"The British Are Coming" . . . to the Alamo City

It's being reported here in San Antonio that "British officials, looking to bolster economic development in the United Kingdom, say they are impressed with the growth of San Antonio’s bioscience industry and are now actively pursuing opportunities here.  That includes courting local businesses, particularly medical device companies, that may be ripe for international expansion."

Medicaid by the numbers ($406 Billion in FY 2010)

Below is the first report from the Medicaid and CHIP Payment and Access Commission (MACPAC).  Created by The Children's Health Insurance Program Reauthorization Act of 2009, MACPAC is a non-partisan agency with the sole purpose of reporting on Medicaid and CHIP programs.  According to the commission, this report will serve as a framework for future reporting to Congress on the two programs. 

Bottom line: taxapyers spent $406 Billion on Medicaid in FY 2010.

MACPAC March2011 Web

Sunday, March 27, 2011

Perhaps Someone Should Mess With Texas

The New York Times has an article about the topic of regional differences in the cost of health care procedures in various parts of Texas.  The Times states the "cost of common medical procedures paid for by Medicaid . . . varies dramatically by hospital and region, according to a Texas Tribune analysis of claims by and payments to hundreds of hospitals statewide." 

Click here for my earlier postings on this subject.

Here is a table that accompanied the Times story. 

Saturday, March 26, 2011

Miss San Antonio wins court battle -- Medicaid Fraud an issue in the trial

Carloline Harrgard Flores is on the left
We know our priorities here in South Texas.  In a rocket-docket, a Bexar County jury reinstated Dominque Ramierez as "Ms. San Antonio" after the "Miss Bexar County Organization, Inc." striped her of her crown.  The San Antonio Express News reports  "ousted beauty queen Domonique Ramirez retrieved her title and crown Thursday under a national media spotlight after a lawsuit jury unanimously decided the pageant organization that fired her had breached her contract.  'I don't have any choice but to reinstate Miss Ramirez as Miss San Antonio 2011,' state District Judge Barbara Hanson Nellermoe told the parties after shaking each departing juror's hand."

So what's the Medicaid fraud angle here?  As reported by the Express News, it turns out that "pageant executive director Caroline Haggard Flores, had served federal prison time for tax evasion and Medicaid fraud, and Ramirez's attorneys repeatedly reminded jurors of it during the weeklong trial." 

Where else in the world would you have the combination of a beauty queen trial and Medicaid fraud!  Congrats to Ms. Ramierez and her attorneys (good lawyers).  (To be clear, Ms. Ramierez (once again Ms. San Antonio) is not a Medicaid fraudster.)  This goes to show you that Medicaid fraud can come back to bite fraudsters in unimaginable ways.   

Here is a background news story:

Photo from San Express News
Video from (San Antonio)

More Senators speaking out against the Health Care Bill

Read today's The Hill article where it quotes Sen. Bob McDonnell (R. Va.) stating the Health Care Bill  “shifts billions in unfunded mandates onto state governments . . . .”

From my perspective as a health care fraud fighter, the Bill included some useful tools (e.g., the Physician Payment Sunshine Law).  However, it has yet to be seen whether the Bill will actually bend the Medicare cost curve down.  And most people now forecast the States' Medicaid budgets are going to grow substantially--a real problem.  

So even with more enforcement tools, I predict that the total amount of fraud (in total dollars) will actually increase over time.  Bad news for taxpayers and the fiscal soundness of the States.

Friday, March 25, 2011

U.S. pharma companies have billions stashed abroad

Bloomberg is reporting that some U.S. pharma companies have billions of dollars stashed abroad.  Also click here.  Click here for a poster from the article.

CMS seeking industry input into implementing the Physician Payment Sunshine Law

FDA Law Blog has an update about the status of implementing the Physician Payment Sunshine Law.  Here is an excerpt:

[D]rug and device manufacturers and other stakeholders had an opportunity to provide comments to CMS during an Open Door Forum teleconference on how the physician payment sunshine provisions of the Patient Protection and Affordable Care Act ("ACA") should be implemented.  As explained in our memo summarizing the drug and device provisions of the ACA, section 6002 of that statute requires each manufacturer of a covered drug, device, biological, or medical supply that is operating in the U.S. or its territories or  possessions annually to electronically report information on payments or other transfers of value made during the prior year to physicians and teaching hospitals.  The first report must be submitted by March 31, 2013 for payments made in calendar year 2012. 

Terumo unit to pay the feds $35 million (FDA compliance issues)

FierceMedicalDevice is reporting that "a U.S. unit of Tokyo-based Terumo has agreed to the terms of a consent decree with the FDA regarding quality system improvements at an Ann Arbor, MI facility. Terumo Cardiovascular Systems also has agreed to pay the federal government $35 million in disgorgement of profits from past sales." 

Click here for the FDA press release.

Thursday, March 24, 2011

Healthcare workers still afraid to blow the whistle

FierceHealthCare is discussing a new study that shows "healthcare workers remain hesitant to speak up when doctors make mistakes or take dangerous shortcuts."

South Carolina jury finds J&J falsely marketed Risperdal is reporting that a South Carolina "jury decided that Johnson & Johnson and a subsidiary violated South Carolina’s Unfair Trade Practices Act, but the company will wait until damages are determined next month before it decides whether to appeal the jury’s decision.  Circuit Judge Roger Couch is scheduled to decide after hearings April 18-19 how much J&J will pay in penalties to the state related to the marketing of the antipsychotic drug Risperdal."

Judgment Day (Exactech, Inc. sales director and rep. pay the price for kickbacks) is reporting "a former sales director for Exactech Inc. lands five years' probation and $56,000 in fines after pleading guilty to a kickbacks scheme with orthopedic surgeons.  A former sales rep for Exactech Inc. avoided prison but landed five years' probation and $56,000 in fines after pleading guilty to setting up a kickbacks scheme to encourage orthopedic surgeons to use the company's hip and knee implants."

Wednesday, March 23, 2011

News Flash: Stevens indictment dismissed -- but Govt can refile

Bad news for the Government.  The indictment against Lauren Stevens, former General Counsel at GSK, was just dismissed.

Good news for the Government:  It was dismissed without prejudice to re-file.  

Interesting news:  The court is asking the parties if they want to keep their April 2011 trial date, which seems to suggest that the  Government might re-indict Stevens in just a few days.

Here is the court's decision (I have yet to digest it all):
 2011.03.23 Memorandum Opinion

Here is the court's scheduling order:
2011.03.23 Scheduling Memorandum

State medical boards giving bad docs a pass?

"State medical boards have failed to discipline 55 percent of the nation’s doctors who were sanctioned by the hospitals where they worked," according to a Washington Post story (click here).  The Post story is based upon a study from Public Citizen (click here for the story).  

While Public Citizen may be out there on some issues, this is a significant problem in Texas.  In 2004, the Texas Legislature enacted massive "tort reform," which has made it nearly impossible for a harmed patient to sue a negligent doctor (and all medical providers).  With the court house doors closed, many patients have turned to the state medical boards in an attempt to hold bad doctors accountable.   Now the question is whether those boards are doing their jobs. 

Ethics survey of docs (2 out of 10 docs put money before patient welfare)

The New York Times health blog is reporting that "a new study of thousands of doctors found that just 8 of 10 strongly agreed that they should put patient welfare before their own financial interests. And 4 of 10 did not think they needed to inform their patients about any financial conflicts of interest with pharmaceutical companies."  The report is below.


Tuesday, March 22, 2011

CMS Hotline not so hot is reporting "the Centers for Medicare and Medicaid Services needs to improve the way its staff and contractor staff process complaints from its waste, fraud and abuse hotline. At the same time, it also needs to upgrade its information systems for processing those complaints, the Department of Health and Human Services Office of the Inspector General said in a review of the effectiveness of the hotline (1-800-HHS-TIPS).  Long timeframes and inefficient processes have delayed starting work on many complaints, the OIG reported.  For 58 percent of complaints, the contractors started work within 30 days of CMS's receipt of the complaints from OIG.  However, for 29 percent of complaints, contractors took more than four months to start work."

A number of my whistleblower clients attempted to stop the fraud by calling government hotlines.  But in almost every hotline report, no action was taken, nor was the whistleblower even contacted.  Government hotlines seem like big black holes.  

Here is the OIG report:
OIG - Processing of Hotline tips

Top Pharma Blogs

Here is a link to the top 10 U.S. Pharma blogs.

Click here for the top 5 U.K. Pharma blogs.

Slides for my Fed. Bar Assn. presentation

Below are my slides for my presentation today to the San Antonio chapter of the Federal Bar Assn., Government Contracts Committee. 
Hargrove (FBA -- San Antonio Mar 2011)

5th Circuit rules on reverse false claim (the law firm of Kelley Drye & Warren, LLP) has a good analysis about a recent 5th Cir. decision addressing the theory of "reverse false claims" under the False Claims Act (pre-FERA):

In United States v. Caremark, Inc., Case Nos. 09-50727 and 09-51053, the Fifth Circuit held that a pharmacy benefits manager may be found liable under Section 3729(a)(7) of the federal FCA under a theory of “indirect reverse false claims.”  In 1999, a former employee of pharmacy benefit manager, Caremark, Inc., filed a qui tam suit on behalf of the United States, Arkansas, California, Florida, Illinois, Louisiana, Tennessee and Texas. The complaint alleged that Caremark had improperly denied reimbursement requests for patients that were eligible for dual coverage under the private health plan administered by Caremark as well as under Medicaid. Although states generally receive at least 50% of their funding from the federal government for Medicaid expenditures, federal regulations also require the states to seek reimbursement from private insurers for dual-eligible patients and do not provide for federal funding in such instances. Thus, Caremark’s rejection of coverage to otherwise eligible patients allegedly caused the federal and state governments to pay claims that should have been paid by Caremark. The United States and the various states intervened in this action in 2005 and 2006.
Because the alleged false statements were premised on Caremark’s denial of coverage rather than on the submission of any claim for reimbursement, the Fifth Circuit viewed the conduct in question as a “reverse” false claim. Moreover, because the alleged false statements were not made directly to the federal government but rather to state Medicaid agencies, the court characterized this as an “indirect” reverse false claim.  The Fifth Circuit then held that if the government is able to prove that Caremark knowingly made false statements to the states knowing that these statements could cause the states to impair their obligation to the federal government, Caremark will be liable under Section 3729(a)(7).  The Fifth Circuit's decision reversed the district court's holding that Caremark did not have any obligation to the federal government for denials of reimbursement requests that Caremark submitted to state Medicaid agencies. 

Here is the 5th Cir. opinion:

U.S. v. Carmark (5th Cir. 2011)                                                                                                   

Unreturned overpayments are now "false claims"

Many qui tam lawyers are unaware that, under the Affordable Care Act, an "overpayment" that is not returned within 60 days is now considered a "false claim" for the purposes of the False Claims Act.  Click here to read §6402 of the Affordable Care Act.

Monday, March 21, 2011

Is a relator authorized to amend his qui tam complaint using Government subpoeaned records?

FCA Alert has a succinct analysis about whether a relator may amend his complaint using records obtained by the Government while the case was under seal.  A district court in Mass. will soon decide the issue.  A court in the S.D. of Tex. has previously ruled in the affirmative.  Stay tuned because this is a big issue in False Claims Act practice. 

1 out of 4 in America receive Medicaid and CHIP

"Medicaid and the Children’s Health Insurance Program provided health benefits to nearly 75 million people last year – or nearly one in four people – according to the inaugural report of the Medicaid and CHIP Payment and Access Commission (MACPAC)."  (Click here for the story from  Click here for the MACPAC report.    

Medicaid and CHIP, while important, are busting the States' budgets, and the fiscal crisis is only going to get worse.  See my earlier post about what is happening in Texas.

Texas has updated its Medicaid stats

Click here for a link for the number of beneficiaries enrolled in the Texas Medicaid program.  Texas has over 1/2 million kids enrolled in CHIP.

U.S. Hospitals billed $1.2 Trillion in 2008!

U.S. hospitals billed nearly $1.2 trillion in total charges in 2008 for inpatient hospitalizations, according to a report from the Agency for Healthcare Research and Quality.  The report, titled "The National Hospital Bill: The Most Expensive Conditions by Payer, 2008," revealed hospital care accounted for the largest portion of U.S. healthcare spending in 2008 at 31 percent. The $1.2 trillion in charges involved 39.9 million hospital stays, excluding hospital outpatient care, emergency care for patients not admitted or physician fees for admissions.  

Medicare and Medicaid bore responsibility for 60 percent of the national hospital bill. Private insurance was billed for 32.2 percent and uninsured patients accounted for 4.1 percent of the national bill.

Five conditions accounted for more than one-fifth of the total charges. These top five conditions were: pregnancy and delivery, blood infection, coronary artery disease, newborn infants and osteoarthritis. 

What I found most remarkable was that #7 on the list was "Complication of device, implant or graft" for a total of $37,159 million!

Here is the report:


Another Healthcare CEO Busted for Kickbacks

Becker's Hospital Review is reporting that "the former CEO and COO of Tri-Lakes Medical Center in Batesville, Miss., has been accused of involvement in kickbacks and bribery conspiracy, among other federal charges . . . .  Raymond L. Shoemaker of Tupleo, Miss., has been charged with conspiracy to commit and committing healthcare fraud, making false claims to the FBI in connection with a federal investigation, making false statements to the U.S. Department of Agriculture in connection with a loan, embezzlement from the medical center and receiving kickbacks for nursing services."

HHS-OIG Reporting Guilarate Sisters Captured -- OIG Fugitives

Clara Guilarte and Caridad Guilarte

Sisters Clara and Caridad Guilarte were captured in Colombia on March 13, 2011. 

Along with previously captured co-conspirator Reynel Betancourt, the Guilartes allegedly defrauded Medicare of nearly $4.3 million (and submitted $9.1 million in false and fraudulent claims), according to a Federal indictment. 

The Guilartes operated the Dearborn Medical and Rehabilitation Center (DMRC), an infusion therapy clinic in Michigan, where Betancourt was an employee.

All three fugitives allegedly committed health care fraud, conspiracy, and money laundering. The trio allegedly recruited and paid cash and other inducements to Medicare beneficiaries to visit DMRC and sign forms indicating that they received legitimate medical services, including injections and infusions of expensive medications, although the services allegedly were never provided. 

All three are originally from Cuba: Clara Guilarte is a U.S. citizen, and Caridad Guilarte and Betancourt are permanent U.S. residents.

Zimmer scores sole-source $13.4 Million DoD Contract is reporting that "Zimmer Holdings has signed a deal with the Defense Department that could run through 2015. The company will be awarded 'a maximum $13,475,000 fixed-price with economic price adjustment, sole-source, indefinite-delivery/indefinite-quantity contract for orthopedic implantation products," according to a DoD statement on contracts. The services involved are the Army, Navy, Air Force and Marine Corps. The contract runs for one year with an option for four one-year options through March 31, 2015.'"  (emphasis added).

Click here for the DoD contract (scroll down).  The Defense Logistics Agency Troop Support, Philadelphia, Pa., is the contracting activity (SPM2DE-11-D-7232).

Hmmmmm . . . I thought the days of DoD sole-source contracts were over.   Anybody have the scoop on this?  Let's hope our troops get the best and taxpayers don't get ripped off.

HHS wants to give states fed money for data mining

The Health and Human Services Department has proposed that state Medicaid agencies be able to use federal funds to help pay for uncovering fraud through the screening and analysis of Medicaid claims data.  

While it sounds high tech and cool, I'm not so sure it will work.  The most effective fraud schemes we've uncovered would have never been detected through data mining, at least not with the data mining protocols currently being used (and it's my understanding the ones under development).  That's because the really clever fraudsters know how to game the system over time.  They fly just under the radar.  Almost every health care fraud case I'm aware of has been broken by an insider.

Remember,  our 3rd-party, electronic reimbursement payment system is based upon the honesty of the person submitting a bill.  With a $1 Trillion appropriation, it just takes a few dishonest "providers" to cause serious harm to the fiscal integrity of Medicare and Medicaid. 

Click here for a news story.

Click here for the announcement in the Federal Register.


Sunday, March 20, 2011

California intervenes in qui tam case against BMS (lots of kickbacks alleged)

"Insurance Commissioner Dave Jones today announced his intervention in a "qui tam" (whistleblower) lawsuit against Bristol Myers-Squibb (BMS), one of the largest pharmaceutical companies in the U.S. The lawsuit is the largest health insurance fraud case ever pursued by a California state agency."  Click here for the press release.  The qui tam lawsuit is below. Click here for the LA Times story.

I know Mychal Wilson well.  He is a former BMS rep. and is now a qui tam lawyer. 

Congrats to attorneys Charles Siegel and Loren Jacobson, both of whom I've worked with and who are outstanding lawyers.  


Update on the prosecution of former GSK counsel Lauren Stevens

Pharmalot has an update on a new development of the prosecution of former GSK in-house counsel Lauren Stevens.   Click here.  Is she going to walk?

Useful link that summarizes relevant ACA sections

Here is a link that gives helpful summaries of the relevant sections of the Affordable Care Act.  (From the Ohio law firm of Bricker & Eckler).

Thursday, March 17, 2011

DoJ puts FOIA online

DoJ has created a new FOIA site.  Click here for  Qui tam practitioners and whistleblowers be aware, however, that a FOIA request can trigger a public disclosure.

Wednesday, March 16, 2011

Webinar for compliance with the Physician Payments Sunshine Act

IBM has a webinar today for compliance guidance under the Physician Payments Sunshine Act.  "Less than a year remains before aggregate-spend legislation becomes a reality throughout the healthcare industry.   Beginning in 2012, pharmaceutical, biotechnology and medical products companies will be required to monitor promotional spending as never before."

Docs told to get ready for tough Medicare anti-fraud campaign

American Medical News is reporting that "Medicare gears up for strict anti-fraud campaign--improper payments hit $48 billion in 2010, but physicians are considered low risk." 

Here is an excerpt: "Federal officials visited Capitol Hill this month to promote plans for tough new anti-fraud measures for Medicare, targeting the estimated tens of billions of dollars in improper payments the program makes each year."

"Fraud Prevention for Dummie Docs"

This has been around for some time, but this HHS-OIG handout for physicians  shows them how to avoid committing heath care fraud.  It's so easy to read even my fifth grader could understand it.  Hence, there should be no more playing dumb by docs about the rules (yes, it's illegal to take $ from DME providers in exchange for Medicare referrals).

A Road Map for New Physicians - Avoiding Medicare and Medicaid Fraud and Abuse (2)                                                                                                   

Tuesday, March 15, 2011

Another pharmacy data mining lawsuit

Reuters is reporting that "a lawsuit filed in California this week accuses national drug-store chain Walgreen Co. of unlawfully selling medical information gleaned from patient prescriptions, another front in the battle over personal information.  Unlike suits that focus on patient privacy [see the post below], the plaintiffs accuse Walgreen of depriving them of the commercial value of their own prescription information."

Pharmacy data - mining (consumers sue to protect their privacy)

I've blogged recently about how pharma data-mining companies buy and sell patient pharmacy data.  We've seen situations in our off-label cases where pharma companies buy this data to determine if its off-label marketing efforts are bearing fruit.  But some consumer groups are seeking to put an end to pharma data mining; expect to see more of this type of litigation. 

CVS Pharmacy raked in millions by selling consumers' confidential prescription information to some of the nation's largest pharmaceutical manufacturers, according to a class action Monday.  "Not content with the receipt of the substantial funds generated from the performance of pharmacy services, defendants instead chose to generate additional sources of revenue from the confidential prescription information entrusted by consumers to defendants," the complaint in Philadelphia County Court states.  Arthur Steinberg and the Philadelphia Federation of Teachers Health and Welfare Fund filed the suit on behalf of other consumers who have received unsolicited communications after CVS allegedly sold customers' private information to Eli Lilly and Co., Merck, AstraZeneca, Bayer, and other drug manufacturers.

Monday, March 14, 2011

Houston woman given 41 months for DME Medicare fraud

On Friday, Helen Etinfoh, the former owner and operator of a Houston durable medical equipment company was sentenced to 41 months in prison in connection with a $3 million power wheelchair fraud scheme.  Click here for the DoJ press release.

Houston has become a hotbed of health care fraud.  Fortunately for taxpayers, though, the US Attorney's Office in Houston is one of the best in the country (many talented lawyers and investigators).   Earlier in May of 2009, DoJ and HHS announced  the deployment of a Strike Force team to Houston.  (Medicare Fraud Strike Forces fight Medicare fraud on a targeted local level.)

New IRS Whistleblower Regs. (IRS can disclose tax info to the whistleblower)

The IRS just released final regulations regarding disclosure of return information by the Treasury Department in connection with written contracts among the IRS, whistleblowers and, if applicable, their legal representatives (TD 9516).  The new IRS Whistleblower Office may determine during the course of an investigation that it needs the assistance of a whistleblower or the whistleblower’s legal representative and may determine that it has to disclose returns or return information in order for the whistleblower to be able to render assistance.  Such disclosures are authorized for tax administration purposes by IRC §6103(n).

The final regulations describe the circumstances under which officers and employees of the Treasury Department may disclose return information to whistleblowers and, if applicable, their legal representatives, in connection with written contracts for services relating to the detection of violations of the internal revenue laws or related statutes.

The regulations specify that disclosures “shall be made only to the extent the IRS deems it necessary in connection with the reasonable or proper performance of the contract.”  However, the regulations also say that “[d]isclosures may include, but are not limited to, disclosures to accomplish properly any purpose or activity of the nature described in section 6103(k)(6) and the regulations thereunder.” Section 6103(k)(6) authorizes disclosures for investigative purposes.
The regulations forbid the whistleblower from further disclosing or otherwise using the disclosed return information and subject them to civil and criminal penalties.  The regulations also require whistleblowers to comply with any other safeguards the IRS may prescribe.

The feds recovered over $4 Billion in 2010 from health care fraudsters is reporting on the the significant recoveries ($4B) by the feds from health care fraudsters (story below).  But in relation to the entire government health care budget ($1T), and considering the Government concedes that at least 10% of the Medicare budget is lost through of fraud, the recoveries in FY 2010 are a drop in the bucket.  Some good work yes (kudos to OIG, DoJ, DCIS, NAMFCU, AGs, and others), but $4B out of $1T is like you and I saving for the kids college by looking for loose change in the couch.  Also keep in mind, most of the recoveries were due to whistleblowers,      
A new report shows that the federal government recovered more than $4 billion in Fiscal Year (FY) 2010 from health care fraud prosecutions and settlements – the largest annual amount ever recovered in health care fraud cases.  The federal government pointed to the expansion of Medicare Fraud Strike Force teams as one reason for the increased recovery.  In FY 2010, the total number of cities with strike force prosecution teams was increased to seven, all of which have teams of investigators and prosecutors dedicated to fighting fraud.  The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers.   Strike force enforcement accomplishments in all seven cities during FY 2010 include:
  • 140 indictments involving charges filed against 284 defendants who collectively billed the Medicare program more than $590 million;
  • 217 guilty pleas negotiated and 19 jury trials litigated, winning guilty verdicts against 23 defendants; and
  • 146 defendants were sentenced to prison during the fiscal year, averaging more than 40 months of incarceration.
Including strike force matters, federal prosecutors opened 1,116 criminal health care fraud investigations as of the end of FY 2010, and filed criminal charges in 488 cases involving 931 defendants.   A total of 726 defendants were convicted for health care fraud-related crimes during the year.

In addition to these criminal enforcement successes, 2010 was a record year for recoveries obtained in civil health care matters brought under the False Claims Act—more than $2.5 billion, which was the largest in the history of the Department of Justice, according to the government.

Sunday, March 13, 2011

Medline to pay $85 million to settle qui tam kickback case

Reuters is reporting that Medline "will pay $85 million to settle a whistleblower lawsuit accusing it of paying fraudulent kickbacks to hospitals and companies such as HCA Inc and HealthSouth Corp that buy supplies paid for by Medicare and Medicaid. Medline Industries Inc will pay the sum to the United States, which will then pay $23.4 million to the whistleblower.”

The DoJ chose to not intervene in this case.

Orthofix (Rule 9(b) and express certification issues) (the law firm of Kelley Drye Warren, LLP) has an excellent analysis of a recent DME qui tam case (U.S. ex rel. Bierman v. Orthofix) addressing legal issues that are very important to the qui tam bar (click here).  Whistleblowers often have just a few pieces of thefraud jigsaw puzzle.  Yet the law requires them to plead their qui tam cases with particularity, which is a high burden considering that people don't openly commit fraud and go to great lengths to cover their tracks.  That presents a problem when filing a qui tam lawsuit that will survive scrutiny by a federal judge.

Below is the's post (again, well done).  At the very end I post the whistleblower's amended qui tam complaint and the judge's order denying Orthofix's motion to dismiss.

On December 8, 2010, in United States ex rel. Bierman v. Orthofix International, N.V. et al., Civil Action Nos. 05-10557-EFH, 08-11336-JLT, 2010 WL 4973635 (D. Mass.), a District of Massachusetts court denied several medical device manufacturers’ motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b) for reimbursement-related false claims under the False Claims Act associated with the sale versus rental of certain bone growth stimulators.

The relator, a co-owner of a business that provides medical billing and related services to health care providers, filed a qui tam complaint under seal in the District of Massachusetts in March 2005 against four medical device companies that manufacture and supply bone growth stimulators that are reimbursed by Medicare.  The qui tam complaint was amended in December 2007, unsealed in April 2009, and amended again in June 2010.  The government did not intervene in the suit.

According to the court, one such Medicare regulation is Supplier Standard Regulation Number 5 which requires a supplier to “advise beneficiaries that they may either rent or purchase inexpensive or routinely purchased durable medical equipment.”  42 C.F.R. § 424.57(c)(5).  The court rejected the defendants’ argument that no falsity occurred because the certification contained in the Medicare Enrollment Application is too broad to constitute an express certification of compliance with Supplier Standard Regulation Number 5 and held:

[A] supplier violates the FCA if it certifies compliance with applicable conditions of participation by Medicare, knowing at the time of certification that it would not abide by Supplier Standard Regulation Number 5….[T]he allegations with respect to this theory can serve as both a violation of section 3729(a)(1) and 3729(a)(2).  The false express certification constitutes both a false claim for payment under section 3729(a)(1) and a false statement made to get a false claim paid under section 3729(a)(2).

Here is the qui tam relator's amended complaint:
US Ex. Rel. Bierman v. Orthofix (2nd Complaint)                                                                                                   
Here is the judge's order denying Orthofix's motion to dismiss:
US Ex. Rel. Bierman v. Orthofix (Order)                                                                                                   


Saturday, March 12, 2011

BBC Pill Poppers Series

Good Saturday afternoon.  Just lit the grill for a family Texas-BBQ. 

Check out this BBC series about "pills."

Over 1,300 sealed qui tam cases on file

In a joint letter to Senators Charles Grassley (R-IA) and Patrick Leahy (D-VT), DoJ Assistant Attorney General Ronald Weich and Assistant HHS Secretary Jim Esquea detailed the scope of False Claims Act cases under seal.  There are currently 1,341 qui tam cases under investigation.  Of these cases, 885 involve health care fraud.  A total of 180 qui tam cases are under seal that allege pharmaceutical pricing or marketing violations.  An additional 80 cases involve hospital fraud.  The letter is below.

DOJ HHS Joint Letter to Grassley 1                                                                                                   

Generics on the legal attack against Big Pharma's patents reports 
Big Pharma faces a host of well-known problems, most notably that its blockbuster drugs are coming off patent at the same time that its pipeline of new drugs has turned into a drip. But the leading pharmaceutical companies like Novartis (NVS), Merck (MRK, Fortune 500) and Bayer are also battling another costly headache -- legal challenges to their existing patents are increasing with the rapidity of a centrifuge.
The drug industry probably employs more high-powered lawyers than any other industry on the planet.  There is litigation all over the place (off-label, False Claims Act, Average Wholesale Price litigation, misbranding, personal injury, FDA compliance, patent litigation, and the list goes on). 

Friday, March 11, 2011

The Jersey Boys v. AstraZeneca (Score one for Jersey)

The State of New Jersey just announced that it "has entered into a $68.5 million, multi-state settlement agreement with pharmaceutical manufacturer AstraZeneca that resolves allegations the company deceptively marketed its anti-psychotic drug Seroquel."  Click here for the press release, which has the settlement docs.  Jersey is starting to grow on me. 

J&J Consent Decree With the FDA

Pharmalot is reporting "After months of serious manufacturing problems, Johnson & Johnson has entered into a consent decree with the FDA for three separate facilities that have been responsible for most product recalls over the past year. Moreover, two execs - McNeil Consumer Healthcare vp of quality Veronica Cruz and the vp of operations for OTC products, Hakan Erdemir - were also named as civil defendants."

Here is the consent decree: