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John Oliver Explains Dialysis

John Oliver recently devoted most of his show “Last Week Tonight” to explaining how America funds kidney dialysis.  Oliver admitted the topic was likely to make his viewers push the button on your TV remote marked “Dear God Literally Anything Else.”

 

 

 

But it’s an important topic.  The United States “continues to have one of the industrialized world’s highest mortality rates for dialysis care,” despite spending more on it than other nations.

 

Since 1972, the federal government has covered all kidney dialysis.  We now spend 1 percent of the federal budget just on kidney dialysis.  That’s half as much as we spend on the entire Department of Education!

 

Why do we spend so much? You can probably guess, fraud and greed. Two large companies, Fresenius Medical Care and DaVita, control 70 percent of the market.

 

Megallan Handford, a former DaVita employee who was fired for trying to unionize its employees, explained that:

 

“When I was working at DaVita, the priorities for transitioning patients was to get them on dialysis and get the next patient on as soon as possible,” Handford told Oliver. “You would have sometimes 15, maybe 25 minutes to get that next patient on the machine, so you were not properly disinfecting.”

 

This focus on profits above patients is reflected in the nearly $1 Billion in False Claims Act Settlements that DaVita has paid out in the last several years:

 

 

Nor do these settlements appear to represent the end of DaVita’s legal issues.  DaVita faces a lawsuit and related government subpoenas over use of a non-profit, the American Kidney Foundation to push patients from government healthcare to Healthcare Exchange-offered private plans in order to dramatically increase its reimbursements.

 

Nor should you think that Fresenius is without blame.  For example, in 2000,  a team led by Suzanne Durrell  secured the largest global settlement to date in a health care fraud case against Fresenius Medical Care. The investigation resulted in a record-setting $101 million criminal fine; an aggregate civil settlement payment of $385 million; and the withdrawal by the company of more than $130 million in pending claims for reimbursement with the Medicare Program.

 

If you have concerns about patient harm and fraud against the government by a healthcare company, please contact us to discuss how whistleblower laws including those above can protect and reward you and help ensure that the patients and taxpayers are protected.

 

Turning Your CEO Into a Whistleblower

We wish we didn’t see this kind of story all the time, but we do:  A high level executive gets sacked for trying to do the right thing.

 

In this case, Chief Executive Officer of a healthcare company recommended to his Board of Directors that the company self report about $ 10 million in improper payments he says the company received.  The Board sacked him, and this whistleblower retaliation suit ensued.

 

Now of course we don’t know all the details about who’s right and who’s wrong.  Those are the kinds of things that will be shown as the case now winds its way through the court system in what undoubtedly will be a messy, mud-slinging affair.

 

What if the Board had taken a different course?  What if they had followed his advice?  Could they have been acting without legal advice?  If they did get legal advice, how sound could it have been if the CEO stood his ground and said no we have to report this?  The imagination runs loose wondering how bad it must have been for the Board to invite this kind of public airing of the company’s internal affairs — which apparently include not only alleged False Claims Act violations but also violations of the government prohibitions against self-dealing under the so-called “Stark” laws.  Potentially quite smelly indeed.

 

This will be a full employment scenario for litigators, as the Board members themselves will now all be witnesses and drawn into discovery about their reasoning for terminating a person who says he was simply trying to follow the law — protected ground under the False Claims Act.

 

If the Board of Directors thought the problem would quietly go away, they miscalculated badly.  Now it will live on for months or years.  And the government — those folks with badges and guns — can simply sit back and see how it all unfolds, and decide whether to weigh in at some point about the company’s conduct.

 

Could it be that the Board took this seemingly ill-advised approach because they have their own personal interests to protect?  The suggestion of possible Stark violations certainly raises this question.  Why else would they expose the company to an obvious whistleblower retaliation suit?

Health Care Fraud and Abuse Seminar Wraps Up

After 13 lively sessions and a take home exam, the seminar taught by whistleblower attorney Bob Thomas has finished, with nine 3rd year students and one 2nd year student from BU School of Law showing real sophistication in this complex field.

 

The course, which is part of BU’s Health Law Program, is structured in two parts.  The first covers the main substantive areas of health care fraud enforcement:  The False Claims Act, the Anti-Kickback Act, The Food Drug & Cosmetic Act, Stark, and the Exclusion & Debarment remedies.  The second part of the course is practice-oriented, with the students hearing from prosecutors, defense attorneys, compliance officers, and whistleblowers and their attorneys, in presentations relating to actual cases they were involved in.

 

Similarly, the take home exam questions are based upon fact patterns that come up in the cases handled or evaluated by the Whistleblower Law Collaborative.  If you think you’re as smart as a law student, take a look at the questions they answered quite masterfully.  Several of the exams submitted were as good or better than any we could imagine an experienced practitioner writing  — a gratifying thing for a “professor” to see, given the multiple demands on the students’ time.

 

This is the sixth time that Bob Thomas has taught the course.  Given all the changes in the law in this dynamic field, he intends to keep offering the course indefinitely in future years, as long as student interest remains as high as it has been so far.

Health Care Fraud & Abuse Seminar

For the sixth year, whistleblower attorney Bob Thomas is teaching a course at Boston University School of Law on “Health Care Fraud and Abuse.” The course covers the major substantive laws in this field, including The False Claims Act, the Anti-Kickback Act, Stark, and the Food Drug and Cosmetic Act (including off-label and misbranding).  In addition, the students hear from practitioners in the field, including prosecutors, compliance attorneys, defense lawyers, and whistleblower lawyers — as a means of accessing the many ways in which one can work in this field.

 

The course includes some practical problem-solving.  Each week, students are given an assignment that is similar to a situation that might come up in their practice.  Last week, concerning the Anti-Kickback Act, they were asked the following:

 

You’re a partner in a law firm that represents pharma clients and other large businesses.  A pharma client emails you and asks:  “Hey, could you give me a little guidance on this Anti-Kickback stuff?  I’m confused by it.  I’ve read an article or two on it, and they seem to be talking about “inducement” as the main idea.  What if the money and perks we give to doctors aren’t intended to induce them to change their behavior?  What if it’s because we’re loyal to our customers and want to thank them?  What if we are careful to not link our financial payments to doctors to any attempt to persuade them to use our drugs.  Who gets to decide whether something was intended to induce if there is not written record of things?  I see that despite the new disclosure laws, my competitors are still paying lots of money, as are we, to doctors.  Should we stop, or just keep on keepin’ on, being careful not to go near the inducement line?  Does the government give any guidance on this stuff?”

 

Some thoughts on what might go into an answer:

 

With greater transparency now that payments to doctors are a matter of public record, there is indeed greater scrutiny of who is being paid for what.  Not surprisingly, there is a spectrum of conduct here, ranging from the relatively benign (a drug rep drops off a small number of free samples of the product) to the outright vile (doctor is paid a “consultancy fee” based on the number of devices he/she implants in patients).

 

While doctors typically insist that they are not influenced by the payment of money, common sense tells us otherwise, as John Oliver effectively lampoons.  If the payments didn’t influence doctors, the drug and device companies wouldn’t do it!!

 

So the partner’s question is really a little off base, and the associate will have to find a way to say so diplomatically.  Even if a company says that the payments are not “intended to induce” but rather are to thank the doctor (or some other euphemism),  the company does not have the final say.  In the end, a prosecutor and a judge and ultimately a jury are the final arbiters if the matter gets put under the microscope.

 

Yes, the government does give guidance on these issues, particularly at the website of the Inspector General of the Department of Health and Human services.  There are advisory opinions and other forms of guidance that help inform the regulated industries.

 

The bottom line:  the payments better be for something real, be commercially reasonable for a service actually performed and independent of the doctor’s prescribing of the medication, and in no colorable way linked to the amount of product the doctor is using.  The pharma client should be advised to get precise advice on the Safe Harbors of the AKA, and to be sure that the payments fall within them.  Getting close doesn’t count.  You’re either in the safe harbor or you’re not.

 

**Note:  As advocates, lawyers have an ethical duty to zealously represent their clients.  The associate might have a personal opinion about this conduct and may have to put those feelings aside in giving the advice to the partner.  If this were not a client of the firm, it might be tempting to say simply:  “Tell them to cut it out!  Of course these huge payments are causing mischief.  Knock it off!”

Medical Directorships Face False Claims Act Scrutiny

Just last week, HHS-OIG issued a Fraud Alert warning that “Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide.”

 

Then yesterday, the Department of Justice (DOJ) and HHS-OIG announced a record setting $17 million False Claims Act settlement of a whistleblower case against Hebrew Homes Health Network, Inc. alleging that the company improperly paid doctors ostensibly acting as medical directors for referrals of Medicare patients requiring skilled nursing care. Bona fide Medical Directors perform a valuable function at a hospital or a nursing facility, but the position can also be a cover for doctors to steer their patients to a particular facility. For example, in the Hebrew Homes case:

 

“From 2006 through 2013, Hebrew Homes allegedly operated a sophisticated kickback scheme in which they hired numerous physicians ostensibly as medical directors pursuant to contracts that specified numerous job duties and hourly requirements.  The various facilities had several such medical directors under contract at any given time, paying each several thousand dollars monthly.  The United States alleged that in reality these were ghost positions, and that most of the medical directors were required to perform few, if any, of their contracted job duties.  Instead, they were allegedly paid for their patient referrals to the Hebrew Homes facilities, which increased exponentially once the medical directors were put on the payroll.”

 

We have written before about the importance of Anti-Kickback Act and its close cousin the Stark Act, and this recent settlement is a perfect example of the evils each law seeks to prevent or punish.  In a nutshell, the Anti-Kickback Act (42 U.S.C. § 1320a-7b(b)) prohibits the making or offering or paying or accepting “remuneration” (defined as any thing of value) if one purpose of the payment is to induce referrals, while Stark (42 U.S.C.§1395nn) prohibits a hospital (or other entity providing healthcare items or services) from submitting claims to Medicare or Medicaid for items or services rendered to patients referred by physicians who have improper financial relationships with the providers of the items or services.

 

Each law contains certain “safe harbors” which are in essence exceptions to their blanket prohibitions. A violation of each law can be the basis for a civil (e.g., under the FCA) prosecution by DOJ, civil penalties, or an administrative action by HHS. In addition, the Anti-Kickback Act provides criminal penalties. Both laws are designed to ensure that physicians’ judgment about their patients’ care is conflict free (for example, as to whether an item or service is medically necessary, safe, effective, and of good quality), to keep the competitive playing field for health care providers level and fair, and to protect the financial integrity of government health care programs such as Medicare and Medicaid.

 

We expect this most recent settlement, coupled with HHS-OIG’s recent Fraud Alert, signals an increase in whistleblower cases and investigative and enforcement actions against hospitals, skilled nursing facilities, and other medical facilities that utilize physicians as medical directors.  However, it remains to be seen if these will focus also on the physicians who act improperly as the HHS-OIG Alert suggests or whether it is only the facilities that will be targeted.

 

As the saying goes, “It takes two to tango” and without physicians willing to accept kickbacks and break self-referral laws, the facilities could not play the game.  In the most recent announced settlement, only the facility (Hebrew Homes) is paying to settle. While HHS-OIG’s Fraud Alert notes that it has recently reached settlements with 12 individual physicians, these were administrative settlements under the Civil Monetary Penalties Law, not False Claims Act or criminal charges. It remains to be seen what further types of actions the United States takes against the individual physicians.

Tuomey Healthcare Faces $238 Million Judgment In False Claims Act and Stark Law Whistleblower Case

After two jury trials and one appeal, a federal district court judge lowered the boom on Tuomey this week, ordering it to pay over $277 million for False Claims Act violations predicated on its breaching the federal Stark Law which prohibits certain referral practices by health care providers. The judge subsequently lowered the amount to $238 million after the Department of Justice filed a motion to correct an error in how the judge calculated the penalties portion of the judgment.

 

The judgment shows the risk companies take when they roll the dice and “bet the company” to go to trial in FCA cases; Tuomey reportedly may not have enough assets to satisfy the judgment, and there is talk of a post judgment settlement. See Modern Healthcare article.

 

Along the way Tuomey’s defense lawyers pulled out many arguments only to see each one shot down by the jury and/or the judge. The court’s opinion makes for very instructive and interesting reading as the judge: upholds the jury’s finding that the company violated the Stark law by paying physicians (gastroenterologists) in excess of the fair market value of their services in return for their referrals of patients to Tuomey for their endoscopies (Opinion at pp. 8-11); refuses to overturn the jury’s decision rejecting the company’s “advice of counsel” defense (Opinion at pp. 11-14); and rejects the company’s arguments that damages were not adequately proven by DOJ and its expert witness, and that the mandatory treble damages and penalties under the FCA violate the Excessive Fines Clause (Eighth Amendment) and Due Process (Fifth Amendment) clauses of the United States Constitution (Opinion at pp. 14-36).

 

For the whistleblower, a doctor who objected to the conduct and filed his qui tam complaint in 2005, it has been a long and winding road that is not over yet. He and his lawyers are to be commended as are the lawyers and others at DOJ and the United States Attorney’s Office who have committed tremendous resources to see this case through. Finally we should not forget the two juries and the two district court judges and the hours they have devoted to rendering justice.