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Health Care Fraud and Abuse Seminar at BU Law School

Whistleblower Attorney Bob Thomas is once again leading a law school seminar on “Health Care Fraud and Abuse” at Boston University, with second and third year law students digging into the False Claims Act, the Anti-Kickback Act, Stark I and II, and “off-label” misbranding and adulteration under the Food Drug and Cosmetic Act (“FDCA”), as well as many of the strategic and practical questions that come up for attorneys practicing in this area.  The course offers law students a view into this dynamic area of the law, where new case law is made every week, and where one can start to imagine a variety of different career options within the field.


Each week for the first half of the seminar, students are given a short writing assignment to answer a bothersome question that comes out of the reading – usually one that arises from one of Mr. Thomas’ qui tam cases.  In addition, each student will do at least one class presentation on a subject matter area.


This past week, the seminar explored the misbranding and adulteration theories under the FDCA, and how those violations can fall within the ambit of the False Claims Act (with its treble damages and penalties enhancements).  The Glaxo Cidra case served as a case study, with its $750 million settlement.


Another topic that was explored under the FDCA was the hot topic of compounding.  As you may know, compounders for too long managed to dodge federal oversight by posing as mere pharmacies, until the sad saga of New England Compounding put an end to the obfuscation.  Now, a new compounding law passed by Congress specifically requires compounders to register with the Food and Drug Administration and submit to its jurisdiction or formally seek a written waiver.  Revealingly, in the months since the law was  passed, the FDA has been on a tear visiting these sites, and finding quite a few violations that consumers would want to know about.  Right on cue, a USAToday article just came out summarizing this history, as the once lightly regulated industry now gets used to complying with stricter federal oversight.


It’s enjoyable to be working in a field that is so highly relevant and fluid, something the law students appreciate quickly from the content of the seminar.

Medicaid Fraud Highlighted in HHS-OIG Reports on Dental Services for Children

Sometime ago we wrote about the use of the False Claims Act to address the problem of fraud by dentist or oral surgeons who serve children covered by Medicaid. This week the Office of the Inspector General of the Department of Health and Human Services issued its third report on this problem; this report focused on fraud in the Louisiana Medicaid program, while prior reports focused on problems in New York and New York City.  This week’s report chronicles past FCA settlements and  Congressional hearings as well as the OIG’s earlier reports, and promises that further reports addressing the issue on a nationwide scale are forthcoming. See report at pp. 1-3 ; Law 360 article.


The federal-state Medicaid program is designed to assist low income persons obtain medical care, and among the benefits is dental coverage for children under the age of 18. According to the OIG, Medicaid is the primary source of dental coverage for children in low-income families and provides access to dental care for approximately 37 million children.  “Medicaid dental services must include diagnostic and preventive services, as well as needed treatment and follow up care. Diagnostic services may include x-rays of the mouth; preventive services may include cleanings, topical fluoride applications, and dental sealants. Dental treatment covers a wide range of services such as fillings; tooth extractions; and pulpotomies, which are often referred to as ‘baby root canals’.” Report at p. 1.  Among the OIG’s concerns are providers who are billing for dental procedures that are medically unnecessary or were in fact never even provided.   These concerns in turn implicate the quality of care these children are receiving or indeed the possibility of patient harm among a particularly vulnerable population. Id.


It appears from the OIG Reports that the government has so far been relying primarily on claims data and statistics to identify fraudulent providers. This approach has its limitations, however,  as reflected by the fact that the OIG readily acknowledges that it “ did not include pediatric dental specialists because the wide variation in their billing behavior made it difficult to analyze them as one peer group. Some pediatric dental specialists provide services that make them similar to general dentists, while others provide more complex services.” Report p. 4.  Moreover, at p. 6 the Report notes that the claims data simply identifies providers who may warrant further scrutiny, but it does not show they committed fraud. No doubt the taxpayers would benefit from whistleblowers who work in the dental sector of health care coming forward with real time information and cooperation to assist the government’s attempt to crackdown on fraud in this part of the Medicaid program.

Will Judge Rakoff’s Ruling Spur US and Bank of America Settlement Talks?

According to the New York Times, Bank of America has raised its offer to the Justice Department to settle charges stemming from its part in the Great Recession.


As the article notes, much of Bank of America’s legal exposure stems from its acquisition of Countrywide Financial, a large subprime lender, in early 2008.   Nevertheless, as Judge Rakoff’s ruling shows, Bank of America is nevertheless on the hook for the misconduct.   If an overall deal is reached, Bank of  America would be the most recent large bank to reach such a settlement with the Justice Department.

American Bar Association, Section of Public Contract Law, Recent Cases Interpreting the False Claims Act, and Consequences for Conducting Internal Investigations

American Bar Association, Section of Public Contract Law, Recent Cases Interpreting the False Claims Act, and Consequences for Conducting Internal Investigations,
Friday, August 8, 2014, from 9 a.m. to noon at the Hyatt Regency, Boston, Massachusetts

Attorney Robert M. Thomas, Jr., Thomas & Associates

Attorney Robert M. Thomas, Jr., Thomas & Associates

Robert M. Thomas will join several other esteemed speakers from government, the private sector, as well as the whistleblower perspective, in a session covering recent developments in the case law of the False Claims Act.


In the past few years, as the result of an increasing amount of litigation, courts have issued a number of decisions interpreting the provisions of the False Claims Act.


On some important issues involving the Act’s substantive liability provisions and procedural defenses, courts are diverging in their approaches, increasing the level of uncertainty for government contractors, and suggesting that some of these issues will find their way to the Supreme Court.

Full brochure [PDF version].

Whistleblower Law Collaborative Client Key Part of Amedisys $150 Million Settlement

The Justice Department today announced a record False Claims Act settlement against a home health care provider, Amedisys, Inc.  We are happy for our client who as a relator was instrumental in the investigation and this settlement, and we are grateful to our co-counsel Kenney & McCafferty with whom we teamed up to file the qui tam suit in Philadelphia in 2010.

DOJ Files Formal Complaint Against USIS After Intervening in False Claims Act Whistleblower Suit

In October, we wrote about the government’s intention to intervene in a pending whistleblower case against USIS, a security background check firm that is now accused of submitting hundreds of thousands of flawed background investigations. The Department of Justice has filed its complaint, which provides further insight into the allegations.


The complaint states that during the period between March 2008 and September 2012, USIS released at least 665,000 background investigations as complete when they had not received required levels of quality review. These “dumped” cases spanned across most government agencies, including the Department of Justice, Department of Homeland Security and the Defense Intelligence Agency. The complaint states that USIS management was acutely aware that the firm’s practice of dumping cases and quotes one manager as saying they, “flushed everything like a dead goldfish.” About 90% of USIS’ work is for the U.S. government and the company has been awarded more than $4 billion in federal contracts. See WSJ article. The company was responsible for the security checks of Aaron Alexis, the defense contractor responsible for last September’s shooting spree at the Washington Naval Yard, and Edward Snowden, the infamous NSA leaker, but the complaint does not allege that either of these checks were compromised.


Blake Percival, a longtime employee at USIS, was the original whistleblower that helped bring these allegations to light. Among the allegations, are claims that USIS created a special software program called “Blue Zone” to assist in dumping practices by sending cases to the government even when they had not undergone proper review. The company’s officials allegedly received close to $12 million in bonuses from the federal government, although USIS says it has replaced all officials implicated in the scheme.


In addition to alleging violations of the FCA, the United States’ complaint alleges USIS breached its contract with the Office of Personnel Management. This claim gives the United States a fallback in case it cannot prove the requisite scienter under the FCA.  However, breach of contract (like other common law claims) would only permit the United States to recover single damages plus interest, not the treble damages and civil penalties that are possible under the FCA. Common law claims can only be pursued by the United States; private citizen whistleblowers lack standing to bring such claims.


We also wrote last year about the government’s parallel criminal investigation of USIS. There is still no further news on that front, but we will update you when there is.

BU Law Health Care Fraud Seminar Turns From Substance To Practice

The fifteen students enrolled in Bob Thomas’s Health Care Fraud and Abuse seminar at Boston University Law School have covered a lot of substantive ground this fall and are now looking forward to hearing a series of outside speakers who offer different perspectives on this dynamic area of the law.


The first eight weeks have covered the nitty gritty of the most important statutes and legal theories: The False Claims Act, the Anti-Kickback Statute, Stark, Off-Label Marketing, Adulteration and Misbranding under the Food Drug and Cosmetic Act, Remedies including Exclusion and Debarment, and the False Claims Act’s Anti-Retaliation provisions.  Throughout the seminar, as the students have covered these areas of law, they’ve been asked to think like practitioners: How would a defense attorney deal with this issue? What would a prosecutor think? Would a whistleblower have a good claim? What would an in-house attorney do?


Now they get to dig a little more deeply into these practical aspects. Over the next four weeks, outstanding speakers will present their thoughts on the world of health care fraud enforcement as they see it, each from a unique perspective.


Next week, Gene Hull, the Chief Compliance Officer at Ironwood Pharmaceuticals in Cambridge, MA will lead an on-site presentation of what’s going on at the company, and how he and the General Counsel’s office are structuring compliance initiatives at a young company just rolling out its first product and hiring its first sales force. The students will get a tour of the company while they are there.


In the following three weeks, the students will hear from:


  •  defense lawyers at Boston white shoe firm Ropes & Gray, which has deep experience in this sector, including some high profile trial wins in health care fraud cases;


  • former Assistant U.S. Attorney Shannon Kelley, now in compliance at Boston Scientific but nationally known for her leadership in the ground-breaking Glaxo Smith Kline prosecution; and


  • an actual whistleblower who will recount what it’s like to take the big step into taking on one’s former employer in a multi-billion dollar claim, knowing that the decision is a life-altering moment, one way or another.


It will be a great sequence, and if history is any guide, the speakers will enjoy it just as much as the students!

Is It Enough?

For a long time now, judges, prosecutors, and False Claims Act whistleblower attorneys have been asking if these massive pharmaceutical settlements are enough to deter the bad conduct or are they just a cost of doing business?


In the past several years, government prosecutors have blown through the billion dollar mark on settlement recoveries like a plane still accelerating and climbing towards cruising altitude.  First Tenet Healthcare ($1.279 billion), then Eli Lilly ($1.314 billion), then Columbia HCA ($1.457 billion), then Abbott Labs ($1.5 billion), then Pfizer ($2.3 billion), and now GlaxoSmithKline ($3 billion), upwards and upwards we go to each new historic high.  Why, you might wonder, are the fraud settlements getting bigger and bigger?  Why, you might ask, aren’t these precedents slowing down the bad behavior?


You would not be alone in asking these questions.  As he accepted the jointly recommended plea agreement in the Pfizer settlement (in which the company pled to misdemeanor with a $ 1 billion fine attached), Judge Woodlock here in Boston asked some pointed questions of prosecutors.  With companies ready to shed their skin “like certain animals,” sacrificing a subsidiary to the government with the corporate parent going on merrily about its way, are we actually getting anywhere in the fight against fraud?  And if this company committed a billion dollar crime, how could it have engaged in conduct so massively fraudulent without any individuals being held accountable in a criminal court?


More recently, one law professor, tallying up the string of settlements from the last few years asked if Glaxo’s $3 billion penalty was “sufficient” or was it just a cost of doing business?


Two things seem clear from the last ten years of health care fraud and False Claims Act prosecutions.  First, industry has taken notice.  More and more companies have deep compliance departments and are trying seriously to avoid becoming the next statistic on the DOJ website, and to avoid supervision and reporting requirements from the HHS/OIG.  Second, and somewhat in contradiction of the first point, whistleblower claims keep coming out of the healthcare sector in record numbers, and the resulting settlements keep breaking records.


How to reconcile these two thoughts?  My view is that most of these companies are huge institutions, in which responsibility is diffused throughout the organization, and control of what is going on in the field becomes difficult if not impossible.  Driven to increase shareholder value and maximize profits, public companies have a difficult time resisting ways to make easy money.  Government health insurance programs, which pay out roughly one trillion dollars ($1,000,000,000,000) per year on an honor system, are easy targets.  So even companies serious about compliance have a difficult time controlling the profit-maximizing impulses of their employees (at all levels of the companies).  As long as they keep compensating salespeople based on volume of product sold, the cases will keep coming.


So I say, no, it’s not enough.  These big civil settlements are great accomplishments and they get people’s attention.  But until the decision-makers at the top of the companies start wondering whether their livelihoods are at stake or even their liberty at stake, this plane will just keep on climbing.