Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

Several agencies besides HHS have recently issued regulations on ACA various provisions, including the following:

• The Occupational Safety and Health Administration (OSHA) has published an interim final rule with comment period that protects employees against retaliation by an employer for reporting alleged violations of various insurance provisions under Title I of the Act or for receiving a tax credit or cost-sharing reduction as a result of participating in an Exchange. The interim final rule is effective February 27, 2013; comments will be accepted through April 29, 2013. OSHA also has released a fact sheet about filing whistleblower complaints under the Affordable Care Act.
• The Internal Revenue Service published proposed regulations on March 4, 2013 implementing the ACA’s annual fee on covered entities engaged in the business of providing health insurance. The IRS estimates that the aggregate fee amount for all covered entities will be $8 billion for calendar year 2014, increasing thereafter. A public hearing on the proposal is scheduled for June 21, 2013.
• The Office of Personnel Management (OPM) published a final rule on March 11 setting forth requirements for multistate insurance plans that will be offered on state health insurance exchanges beginning in January 2014. Under the ACA, health insurance issuers will offer at least two multi-State plans (MSPs) on each of the Exchanges through contracts with OPM.

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The Department of Justice recently announced that it secured a record $4.9 billion in settlements and judgments in civil fraud cases in FY 2012, including health care fraud recoveries totaling more than $3 billion. The Department notes that some of the largest recoveries during the year – representing nearly $2 billion -- involved false claims for drugs and medical devices under federally insured health programs (with an additional $745 million returned to state Medicaid programs). The Department also reports that in FY 2012, a record 647 qui tam/whistleblower suits were filed and a record $3.3 billion was recovered in such suits.

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A new Government Accountability Office (GAO) report breaks down the provider types most frequently involved with Medicare, Medicaid, and Children’s Health Insurance Program fraud cases in 2010.  Highlights include the following: 

• Medical facilities (including medical centers, clinics, or practices) and DME suppliers were the most-frequent subjects of criminal health care fraud investigations, comprising about 40% of subjects. Of the 7,848 subjects associated with criminal cases, about 1,100 were charged and 85% of those charged were found guilty or pled guilty or no contest. 
• Hospitals and medical facilities were the most-frequent subjects investigated in civil health fraud cases (38% of 2,339 subjects), but more than half of the subjects of civil cases were not pursued for various reasons. In 2010, 88% of subjects investigated in civil cases were investigated in qui tam cases. Of these, 52% cases were either voluntarily dismissed by the relator (34%) or were declined by the US Attorney’s Offices or the Department of Justice’s Civil Division (18%).
• Almost 2,200 individuals and entities were excluded from federal programs for health care fraud convictions and other reasons (including license revocation and program-related convictions). About 60% of excluded individuals were in the nursing profession. 
• Based on data from 10 state Medicaid Fraud Control Units (MFCU), over 40% of the 2,742 subjects investigated for health care fraud in Medicaid and CHIP in 2010 were home health care providers and health care practitioners. Civil health care fraud cases pursued by these MFCUs in 2010 resulted in judgments and settlements totaling nearly $829 million, with pharmaceutical manufacturers paying more than 60% of that amount.

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Reed Smith’s Life Sciences Legal Update blog discusses a recent decision by the United States District Court for the Southern District of Ohio that may make it much harder for qui tam relators to rely upon stolen medical records or patient information in False Claims Act ("FCA") whistleblower actions. In the decision, Cabotage v. Ohio Hospital for Psychiatry, No. 11-cv-50 (S.D. Ohio July 27, 2012), the district court held that a registered nurse was not permitted to support her allegations of FCA violations by relying on confidential protected health information that she surreptitiously removed from the hospital where she was employed.

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Reed Smith's Global Regulatory Enforcement Law Blog recently featured a post on the Fifth Circuit’s ruling in United States ex rel. Little v. Shell Exploration & Production Co., in which the Court held that government employees are entitled to bring qui tam actions under the False Claims Act (FCA) – even if their federal job function is to investigate fraud on behalf of the government.

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This post was written by Matthew R. Sheldon and Alexander Y. Thomas.

The Second Circuit Court of Appeals is reviewing a lower court decision disqualifying a former in-house attorney from acting as a False Claims Act qui tam relator against his former employer. The relator was formerly general counsel to Unilab, a subsidiary of Quest Diagnostics Inc. The qui tam suit alleged that Unilab violated the Federal Health Care Anti-Kickback Act by engaging in a fraudulent scheme to increase medical testing referrals under the Medicare and Medicaid programs. To read the full post on Reed Smith's Global Regulatory Enforcement Law Blog, click here.

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This post was written by Scot T. Hasselman.

In response to a letter dated December 17, 2010, the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) have outlined statistics associated with health care fraud prosecutions.  In the letter, dated January 24, 2011, DOJ and HHS detail criminal and civil prosecutions for health care fraud.  Among the highlights:

• As of January 4, 2011, there were 1,341 FCA cases under seal. Of those, 885 cases allege health care fraud. Of those 180 involve pharmaceutical pricing or marketing, and 80 cases involve hospitals.
• Since the end of fiscal year 2006 (October 1, 2006) DOJ has resolved 716 cases (541 in qui tam cases and 175 in direct actions). In addition, 1,244 qui tam cases have been declined. The average length of time a case is under seal is 13 months (during the same period of time).
• DOJ has intervened in 22.20 percent of qui tam cases in the past five years.

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The U.S. Department of Justice (DOJ) recovered $3 billion in False Claims Act civil settlements and judgments in fiscal year (FY) 2010 – a record $2.5 billion of which involved health care fraud recoveries -- the DOJ announced November 22, 2010. Most of the FY 2010 settlements and judgments (over $2.3 billion) were recovered in qui tam (whistleblower) lawsuits, resulting in $385 million in awards to relators. The largest FY 2010 False Claims Act recoveries involved the pharmaceutical and medical device industries, which accounted for $1.6 billion in settlements. 

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This post was written by Karl A. Thallner, Jr., Carol C. Loepere, Debra A. McCurdy, Brad M. Rostolsky, Jacqueline B. Penrod, and Amie E. Schaadt.

On February 17, 2009, President Obama signed into law H.R. 1, the American Recovery and Reinvestment Act (the “ARRA”). The sweeping $790 billion economic stimulus package includes a number of health care policy provisions. Reed Smith's Health Care Memorandum summarizes the major health policy provisions of the Act.

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