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Don’t Believe the Hype – United States ex rel Greenfield v. Medco Health Solutions: Third Circuit Reaffirms the Breadth of False Claims Act Liability for Illegal Kickbacks

Courts have long held that to prove a False Claims Act case premised on illegal kickbacks, a plaintiff need not prove that kickbacks caused specific claims because “[t]he Government does not get what it bargained for when a defendant is paid by CMS for services tainted by a kickback. ”  See, e.g., U.S. ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 314 (3d Cir. 2011); United States ex rel. Hutcheson v. Blackstone Medical, Inc., 647 F.3d 377, 393 (1st Cir. 2011) (rejecting defense “services that would have been provided in the absence of” violations.”). The Third Circuit recently addressed this standard in its affirmance of a district courts dismissal of FCA claims in  United States ex rel. Greenfield v. Medco Health Sols., Inc., No. 17-1152, ___ F.3d ____ (3d Cir. Jan. 19, 2018).  Predictably, commentators are already claiming that the decision alters this analysis now requiring plaintiffs to link kickbacks to “specific false claims” to make out a False Claims Act violation.

Greenfield reflects no such sea-change in law.  Rather, it applied the Wilkins rule — that claims “tainted” by kickbacks are false — to the less common situation where kickbacks are paid in exchange for “recommendations” rather than referrals.

Anti-Kickback Statute

The Medicare and Medicaid Fraud and Abuse Statute (the “Anti-Kickback Statute” or “AKS”), 42 U.S.C. § 1320a-7b(b), is a criminal statute that prohibits soliciting or receiving or offering or paying anything of value to induce any person to induce use of a service for which payment may be made under a federally-funded health care program. 42 U.S.C. § 1320a-7b(b).


The prohibitions on referring and furnishing – (“‘A’ Prohibitions”), are generally directed at healthcare professionals and prevent the corruption of their medical judgement when they perform procedures refer their patients to other providers.  § 1320a-7b(b)(1)(A), (b)(2)(A).  The prohibitions on “purchasing, leasing, or ordering” and “arranging or recommending” (“‘B Prohibitions”) are much broader and directed to patients themselves, marketers, and authoritative third-parties to protect the public fisc against their corruption. § 1320a-7b(b)(1)(B), (b)(2)(B).  Since 2010, the AKS has explicitly stated that “a claim that includes items or services resulting from a violation of this section” is a false claim.  Id. at § 1320a-7b(g).  That language reflects pre-2010 case law as well.  See United States ex rel. Westmoreland v. Amgen, Inc., 812 F. Supp. 2d 39, 52 (D. Mass. 2011).

Most AKS litigation involves “A prohibitions” where the connection between the kickback and the good or service is straightforward –when a medical professional receives kickbacks for a particular good or service, the services actually performed and goods or services actually referred are false or fraudulent under the FCA. But with “B Prohibitions” it is less clear which claims “resulted from” kickbacks.  That was the issue presented in Greenfield.

Greenfield Confirms Kickbacks Cause False Claims

In Greenfield, Medco subsidiary Accredo Health Group Inc, a specialty pharmacy focused on hemophilia patients donated several hundred thousand dollars to hemophilia-related charities, in exchange for recognition as an “approved” provider that provides “the highest quality of care,” and links from the charities’ websites along with an admonition to visitors to “[r]emember to work with our” approved providers.  Greenfield, Slip Op. at 5. The charities provided their “treatment centers with lists identifying [approved] specialty pharmacies” including Accredo.  Id.

Thus, Accredo’s hundreds of thousands of dollars in “charitable donations,” induced trusted patient-focused charities to recommend Accredo’s services to the vulnerable populations they served.  This is precisely the corruption of trust that the AKS prohibits, nor was there any dispute in Greenfield that this arrangement violated the AKS.

The only question was which claims “resulted” from the kickback arrangement.  The district court concluded that “resulted” means “caused” and held that a plaintiff must provide “some evidence” that federal beneficiaries “chose [the good or service] because of” the kickbacks. Greenfield, 223 F.Supp.3d at 230.  In other words, a plaintiff would have to produce evidence regarding the subjective intent of the patients.  On appeal, the U.S. Government filed an amicus brief arguing that this requirement misstated the law.  Reviewing the statutory text and legislative history, the Third Circuit agreed with the Government and Plaintiff that nothing “requires a plaintiff to show that a kickback directly influenced a patient’s decision to use a particular medical provider.”  Greenfield, Slip Op. at 18.

Third Circuit Interprets “Link” Between Kickbacks and Claims Broadly

While “a ‘link’ is required” to establish that claims “resulted” from kickbacks, the appeals court’s analysis makes clear that the link may be quite broad.  Id.  In the context of Greenfield, that meant only that the plaintiff must produce some evidence that patients who utilized Accredo’s services had been exposed to the charities’ recommendations.  Id. at 21.

The plaintiff, however, offered no evidence whatsoever of any link, relying on the mere fact that Accredo submitted claims during the same time period that it paid kickbacks.  The Third Circuit recognized that the outcome would have been different with evidence ”that any of Accredo’s 24 federally insured patients viewed [the] approved provider list or that [the charities] referred the federally insured patients to Accredo through some other means” or even that “federally insured patients were members of [of the charities] and thus recipients of [the] communications.”  Id.

Thus Greenfield does not in any way suggest the need to show a heightened link between kickbacks and the resulting claims. Indeed, Greenfield appears to make no change when False Claims result from a medical professionals referrals under “A prohibitions” and illustrates the breadth of kickback arrangements that give rise to False Claims Act liability.

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?


On Wednesday, the New York Times ran a story on a courageous lawyer fighting an important case.  Although it’s not a whistleblower case per se, it resonated so fully with the nature of what we do here at the Whistleblower Law Collaborative that I felt compelled to submit a comment.


The story is about an attorney name Rob Bilott who is representing plaintiffs in several environmental lawsuits against chemical giant DuPont, for having dumped toxic chemicals into the groundwater and streams of Parkersburg, West Virginia, suppressed what they knew about the problem, and misled plaintiffs and regulators about the seriousness of the problem with bogus expert analysis blaming the problem on others.  Similar to the stories of Erin Brockovich or Jan Schlichtmann in A Civil Action, it is the tale of the underdog taking on powerful corporate interests, over decades, and obtaining some measure of justice in environmental contamination suits, against improbable odds.  (Another great environmental true story in film is Semper Fi, the documentary of the U.S. Marine Corps’ contamination of the ground-water at Camp LeJeune, North Carolina, the cancer clusters that resulted, the Marine Corps’ refusal for years to acknowledge the problem or support the veterans who got cancer as a result, and the courageous folks who brought the story to light as the Marine Corps stonewalled).


Before I was a whistleblower attorney, I was a white collar fraud prosecutor at the U.S. Attorney’s Office in Baltimore, Maryland, where I worked on as many environmental cases as I could get my hands on.  We brought cases against developers who destroyed wetlands, utility companies who failed to contain flyash runoff, and even one controversial criminal case against high-ranking military officers from a U.S. Army Base in Aberdeen, Maryland for dumping toxic wastes into the local streams for decades.  We took a lot of heat for bringing these cases — the Wall Street Journal even called us the “Eco-Gestapo” at one point — but they were vitally important.  These cases stood for the notion that people have to be held accountable for these kinds of quiet crimes that affect everyone.


In a way, the heat we took was nothing compared to what plaintiff’s attorneys in small firms face in these private civil cases going up against corporate fraud.  We at least in theory had the U.S. Government standing behind us, and agents with badges and guns to help level the playing field.  It’s even tougher when you stand out there on your own without a net.  Tough, but necessary.

Powerful interests get used to the notion that rules that apply to “ordinary criminals” don’t apply — or shouldn’t apply — to them.  They take exception to the notion that some lawyer — some young prosecutor, some whistleblower attorney — is going to put their conduct on display for all to see.  They deny; they delay; they try to bury you in paper and motions and appeals.  So it takes guts like Rob Bilott’s guts to stand up to these powerful interests and stay committed to the proposition that we won’t stop until there is a measure of real justice at the end of the story.  Justice for one’s clients, and justice for the public who needs to know about these silent crimes going on around us and in our bodies.


So we’re proud to be on the side of whistleblowers and plaintiffs, proud to be part of the effort to level the playing field and provide transparency to a public that needs to know.  It’s not just fighting the good fight.  It’s fighting the necessary fight.  Without people of courage, just where exactly would we be?

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!”

Florida Home Health Care Kickbacks to Doctors

In the past month, the Justice Department has settled two cases involving kickbacks between doctors and home health care companies providing services to Medicare patients.


Offering and/or accepting kickbacks has been banned by Congress and violates the False Claims Act .


As the Justice Department said in a recent release:


“The Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives.  The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.  The Stark Law forbids a home health care provider from billing Medicare for certain services referred by physicians who have a financial relationship with the entity.”


The first case involved two South Florida medical doctors and their wives who allegedly accepted sham marketer salaries in exchange for their husbands’ referrals to A Plus Home Health Care Inc.  Dr. Alan and Lynn Buhler agreed to pay to the United States $1.047 million and Dr. Craig and Cynthia Prokos agreed to pay $90,000 to settle allegations that accepting such kickbacks violated the False Claims Act.


The second case involved Recovery Home Care Inc. and Recovery Home Care Services Inc.  who allegedly paid dozens of physicians thousands of dollars per month to perform patient chart reviews in return for referring their patients to Recovery Home Care. The government contended that these doctors were over-compensated for any actual work they performed and the payments were an illegal inducement.


Recovery Home Care agreed to pay $1.1 million to resolve allegations that the Recovery Home Care entities violated the False Claims Act.  Whistleblower Gregory Simony, a former employee of Recovery Home Care, will receive $198,000 of the recovered funds.  The government continues to litigate this case against Recovery Home Care’s previous owner, Mark Conklin.


As they say, “it takes two to tango” and in health care that often means the “partners” are the doctors and another health care provider. The cases above involved home health care companies, but in other instances improper relationships could involve, for example, hospitals, hospice care,  to name just a couple. Any health care provider who depends on physician referrals is in a position to improperly influence the doctor’s judgment with illegal kickbacks. Medicare patients deserve conflict free medical care, as do the taxpayers.


For more on home health care fraud, see the announcement last year of the largest home health care fraud settlement against Amedisys – United States ex rel. CAF Partners v. Amedisys, et al., Civ. No.:10-cv-02323 (E.D. PA) – in which the Whistleblower Law Collaborative represented one of the relators.

RELATED: Florida Home Health Care Company Agrees to Pay $1.1 Million to Resolve False Claims Act Allegations RELATED: Two Florida Couples Agree to Pay $1.13 Million to Resolve Allegations that They Accepted Kickbacks in Exchange for Home Health Care Referrals

Omnicare, Inc. Continues to Rip Off Medicare and Medicaid

Repeat False Claims Act offender Omnicare, the country’s largest nursing home pharmacy, faces yet another allegation of misconduct with respect to nursing home patients. Last month the United States intervened in two whistleblower cases against Omnicare accusing it of accepting kickbacks from drug manufacturer Abbott Laboratories in return for promoting Abbott’s drug Depakote, an anti-epileptic drug, for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare. According to the United States’ complaint, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients.  The government alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott, and disguised the kickbacks it received from Abbott in a variety of ways.


Over the last several years, Omnicare has settled several FCA cases alleging it violated the law with respect to nursing home patients. Among these were a $124 Million settlement in June 2014; and $112 Million settlement in November 2009.


All of this might lead  one to wonder how it is that Omnicare (and none of its officers or employees) has not been charged criminally or been excluded from serving Medicare and Medicaid nursing home patients. Instead, HHS-OIG has allowed Omnicare to enter into Corporate Integrity Agreements in an effort to retrain Omnicare and its employees.  Repeat offenders such as Omnicare contribute to the ongoing debate about the effectiveness of FCA settlements and CIAs in deterring future misconduct.