The Department of Health and Human Services’ Office of Inspector General (OIG) will be lifting its long-standing refusal to accept requests for advisory opinions if the request describes a course of action that is “the same or substantially the same” as a course of action that is either under investigation by OIG, or is the subject of a proceeding involving a governmental agency. As of February 10, 2022, a new final rule issued by the OIG will do away with that restriction and allow entities to request an advisory opinion, even if the requested course of action is the same or substantially the same as one under investigation or is the subject of a proceeding involving a governmental agency. Previously, the OIG’s policy deliberately left unsettled many fraud-and-abuse issues implicated by pending investigations or litigation.
As the final rule points out, however, seeking clarity during a pending investigation or litigation will carry risk: the mere fact that a course of action is the subject of a qui tam case or under investigation “will weigh against the issuance of a favorable advisory opinion because such circumstances generally indicate that the arrangement does not present a sufficiently low risk of fraud and abuse.”
This warning seems to assume that all investigations and litigation have equal merit, which is certainly not the case with matters initiated by self-appointed whistle-blowers under the False Claims Act, who often bring cases with very little merit. Nevertheless, the new rule provides flexibility, and provides opportunities for the OIG to provide guidance to health care companies seeking to develop business opportunities that, for example, a long-pending and/or declined qui tam case may have stymied.
Prior rule affected business opportunities
Health care entities entering into business arrangements involving remuneration to health care providers or federal program beneficiaries may request advisory opinions from the OIG to confirm that these business arrangements won’t result in sanctions under the Federal anti-kickback statute.
Before this new rule, however, any entity whose advisory opinion request described a course of action that was determined to be the same or substantially similar to a course of action currently under investigation by the OIG or to one that is the subject of a whistleblower claim pending in federal court, would find that request summarily rejected.
This approach has particularly challenged health care entities with business ventures similar to a course of action that had been challenged by a whistleblower in federal court, but in which the Department of Justice (DOJ) had declined to intervene. Those cases may take years to resolve, and in the meantime, the fraud-and-abuse landscape remains unsettled.
The eventual disposition of the case may come too late for the health care entity, which may give up on the business opportunity based on not having received a favorable advisory opinion.
New rule provides opportunity, with a risk
With the new rule, health care entities have an opportunity – although potentially at a high price. The opportunity to obtain a favorable review of a proposed action by the chief health care fraud regulators is a distinct advantage. That review, however, could result in those same regulators issuing an unfavorable opinion, and the new rule states that similarity to a current investigation or proceeding will weigh against the OIG issuing a favorable opinion.
In the right circumstances, however, the reverse could certainly be true. If the course of action was similar to a qui tam case declined by the DOJ, pursued only by a private whistleblower, the OIG may be more inclined to issue a favorable advisory opinion. And indeed, in the scenario where DOJ has declined intervention, a favorable advisory opinion from the OIG on a similar course of action may convince a federal judge to dismiss the whistleblower case altogether. Finally, even if the OIG issues an unfavorable opinion, it will serve to level the playing field, such that the requester’s competitors will likely not engage in similar conduct.
Overall, the rule opens the possibility of receiving OIG guidance on business arrangements with fraud-and-abuse implications, as opposed to outright rejection based only on similarity to a course of action that has been challenged elsewhere.
Reed Smith will continue to track developments related to this rule and any further health care fraud-and-abuse regulations. Please reach out to the health care attorneys at Reed Smith if you have any questions about this rule or seeking advisory opinions from the OIG.