Amgen Settlement Highlights Anti-Kickback Exposures From Whistleblowers, Need For Effective Compliance & Risk Management

April 22, 2013

California-based biotechnology giant Amgen, Inc. has agreed to pay $24,9 Million to resolve Justice Department False Claims Act charges that the biotechnology giant violated the False Claims Act by paying illegal kickbacks to long-term care pharmacy providers to promote the sale of its Aranesp and other products.  The settlement announced by the Justice Department on April 16, 2013 is the latest in a series of settlements resulting from efforts by Federal officials to target pharmaceutical and other providers for violating federal anti-kickback and other health care fraud laws brought by the Justice Department. See Amgen to Pay U.S. $24.9 Million to Resolve False Claims Act Allegations.  It highlights the growing risk of civil prosecution that pharmaceutical companies face for offering or providing prohibited kickbacks, as well as the growing role of whistleblowers in civil prosecutions under the anti-kickback law.

Amgen Settlement Highlights

The Amgen Settlement Agreement resolves Federal allegations that Amgen paid illegal kickbacks to long-term care pharmacy providers Omnicare Inc., PharMerica Corporation and Kindred Healthcare Inc. in return for implementing “therapeutic interchange” programs designed to switch Medicare and Medicaid beneficiaries from a competitor drug to Aranesp, which Amgen manufactures.    

The government alleged that the kickbacks took the form of performance-based rebates tied to market-share or volume thresholds.   The government also charged that, as part of the therapeutic interchange program, Amgen distributed materials to consultant pharmacists and nursing home staff encouraging the use of Aranesp for patients who did not have anemia associated with chronic renal failure.

The Amgen Settlement Agreement resolves a civil lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the United States and share in any recovery.   The False Claims Act suit in the U.S. District Court for the District of South Carolina is captioned United States ex rel. Kurnik v. Amgen Inc., et al.

When announcing the settlement, Justice Department officials emphasized federal officials’ commitment to pursuing pharmaceutical companies for paying illegal kickbacks to secure drug sales.  “We will continue to pursue pharmaceutical companies that pay kickbacks to long-term care pharmacy providers to influence drug prescribing decisions,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.   “Patients in skilled nursing facilities deserve care that is free of improper financial influences.”

The Settlement Agreement and lawsuit that it resolves also show the key role that whistleblowers can play in these types of prosecutions.  Qui tam and other fraud reports made by employees or other business partners have become a significant tool in the Federal government’s war against health care fraud.   The Amgen Settlement and other recent prosecutions and settlement show that Federal officials are acting on this promise and that whistleblowers increasingly are helping them to do so.

As this trend continues, pharmaceutical companies and other health care providers subject to the anti-kickback and other health care fraud laws will need to review their existing and former practices to identify pre-existing and ongoing exposures, and decide what steps to take, if any, to mitigate these risks.  In addition to considering what corrective actions, if any are needed generally, these organizations also should consider the workforce management and other internal controls that will help promote compliance with these policies and manage potential whistleblower and other liabilities.

In addition to working to promote compliance with the False Claims Act and other health care laws, pharmaceutical companies and health care providers need to implement strong internal investigation, audit, and employee and contractor management procedures to help self-discover and address potential compliance or other liability concerns.  These processes and policies should involve but not be limited to hotlines and other processes for reporting suspected fraud or other misconduct.  Most companies also should consider adopting and enforcing strong policies that require employees, contractors and other business partners to timely report and coöperate in the investigation and redress of potential health care fraud or other legal violations, should promptly investigate and redress as needed alleged noncompliance, and should retaliation against individuals making these reports in good faith. 

For More Information Or Assistance

For help  reviewing and updating your Stark Law, Anti-Kickback Statute, or other health care compliance, workforce, internal controls and risk management policies, practices or programs; assessing the strength of your organizations existing risk management and compliance controls under these laws or other healthcare laws and regulations; or in addressing other compliance or health care concerns, please contact Cynthia Marcotte Stamer via e-mail here or via telephone at 469.767.8872.   To review  and register to receive other helpful updates or for more information about Ms. Stamer and her experience, see here.

Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need help responding to concerns about the matters discussed in this publication or other health care concerns, wish to get information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2012 Cynthia Marcotte Stamer, P.C. All rights reserved.


Updated 2013 ACA Prescription Drug Fee Calculation & Payment Rules Released; 12/18 Deadline To File Form 8947

December 4, 2012

December 17, 2012 is the deadline for covered entities to file a Form 8947 as part if its reporting and payment of the Form 8947The Internal Revenue Service (IRS) Notice 2012-74 sets forth the instructions for calculation and reporting branded prescription drug fee for the 2013 fee year under Section 9008 of the Patient Protection and Affordable Care Act, as amended by section 1404 of the Health Care and Education Reconciliation Act of 2010 (Affordable Care Act).

The Act imposes an annual fee on covered entities engaged in the business of manufacturing or importing branded prescription drugs.  The Branded Prescription Drug Fee Regulations in 26 C.F.R. Part 51 published on August 18, 2011 provide the method for calculating each covered entity’s annual fee and the fee year for purposes of these rules and how the fee must be reported and paid.  See  76 Fed. Reg. 51245.  These regulations also define terms for the administration of the fee.

Notice 2012-74/s instructions on the 2013 prescription drug fee discusses:

  • The submission of Form 8947, “Report of Branded Prescription Drug Information,”
  • The time and manner for notifying covered entities of their preliminary fee calculation;
  • the time and manner for covered entities to submit error reports for the dispute resolution; process; and
  • The time for the IRS to notify covered entities of their final fee calculation.

12/18/12 Deadline to File Form 8947

One of the deadlines for this process is rapidly approaching.  Section 51.3T provides that annually, each covered entity may submit a completed Form 8947, “Report of Branded Prescription Drug Information,” in accordance with the instructions for the form. Generally, the form solicits information from covered entities on National Drug Codes, orphan drugs, designated entities, rebates, and other information specified by the form or its instructions. The form is to be filed by the date prescribed in guidance published in the Internal Revenue Bulletin.

Notice 2012-74 sets the deadline for a covered entity that chooses to submit Form 8947 for 2013 at December 17, 2012.

Preliminary Fee Calculation

For the 2013 fee year, the IRS will mail each covered entity a paper notice of its preliminary fee calculation by April 1, 2013. This mailing will include a National Drug Code (NDC) attachment (NDC attachment) that lists the covered entity’s NDCs and the sales data reported to the IRS by each government program pursuant to § 51.4T.

A covered entity may request that the IRS send a CD-ROM with the NDC attachment in Microsoft Excel format. The covered entity must make this request by March 15, 2013. This request must be made either by telephone to Ingrid Taylor at (908) 301-2118 or Mi Lim at (312) 292-3775 (not toll-free calls) or by email to it.bpd.fee@irs.gov. If a covered entity makes this request timely, the IRS will mail the covered entity its notice of preliminary fee calculation on paper and the NDC attachment on paper and CD-ROM by April 1, 2013.

Submitting Error Reports For The Dispute Resolution Process

For the 2013 fee year, a covered entity that chooses to submit an error report regarding its preliminary fee calculation must mail the error report by May 16, 2013.   When the IRS mails each covered entity a notice of its preliminary fee calculation by April 1, 2013, the IRS will also send each covered entity a template on a CD-ROM that the covered entity must use to prepare its error report. All completed templates and the supporting documentation must be submitted on a CD-ROM to the IRS in a timely fashion.

Final Fee Calculation & Payment

The IRS will notify each covered entity of its final fee calculation for 2013 by August 31, 2013. In accordance with § 51.8T(c), each covered entity must pay this fee by September 30, 2013.

For Help With Monitoring Developments, Compliance, Investigations Or Other Needs

If you need help reviewing or commenting on the Tests Procedures or monitoring or responding to these or other health care or health IT related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, can help.  Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, and A Fellow in the American Bar Association, State Bar of Texas and other prominent organizations, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to set up and administer medical privacy, EHR and other technology and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.   

Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the second year will serve as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy and other technology, risk management and compliance-related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, the American Bar Association, the Health Care Compliance Association, a multitude of health industry, health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.

You can get more information about her experience here.

Other Recent Updates & Resources

If you found this information of interest, you also may be interested in the following recent updates on health care, health plan and employee benefits, human resources and other risk management and compliance matters.  Recent examples on health care compliance and risk management matters include:

OIG Recommends CMS, ONC Tighten EMR Incentive Program Rules To Improve Oversight

Congress Sends Bill Amending Lab Testing Rule Violation Sanctions

Learn Latest On OCR New HIPAA De-Identification Guidance & Other HIPAA Developments In 12/12 HIPAA Update Workshop!

$12M+ Settlement Recoveries In 2 Health Care Fraud Whistleblower Claims Shows Providers, Owners, Management & Staff Must Manage Compliance & Risks

Feds Health Fraud Suit Against Psychiatrists Shows Risks Providers Run From Aggressive Referral or Billing Activities

ONC Releases Next Wave of 2014 Draft Test Methods For Public Review and Comment; Plans 11/13 Virtual Workshop

Recent OIG Audit Reports Provide Insights Where Fraud Audits Likely To Look Next

Hospital Chain HCA Inc. Pays $16.5 Million to Settle False Claims Act Allegations That Hospital

Detroit-Area Doctor Charged for Role in Alleged $40 Million Medicare Fraud Scheme

Five More Individuals Charged in Detroit for Alleged Roles in $24.7 Million Medicare Fraud Scheme

Massachusetts Ear Group To Pay $1.5 Million To Resolve HIPAA Charges

Personal Consumer Information Protection In Health Care Operations Topic of Stamer’s 11/1 Speech

ONC Releases First Wave of EHR Test Procedures; More To Come

OCR Releases HIPAA Compliance Training Tool As Enforcement Risks Rise

Health Care Orgs Disability Exposure High As $475K Paid To Settle Justice Department Charges Medical Fitness Screenings of EMTs, Others Violated ADA

HHS/DOJ Partner With Private Health Plans To Further Ramp Up Health Care Fraud Heat!

AHRQ Issues New Guide for Use of Interactive Preventive Care Record

Nextcare Inc. $10 Million False Claims Act Settlement Shows Qui Tam Role In False Claims Act Prosecutions

For more resources and publications training materials by Ms. Stamer, see here.  

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.  If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to here.

©2012 Cynthia Marcotte Stamer, P.C. nonexclusive license to republish granted to Solutions Law Press, Inc.  All other rights reserved.

 

Hospitals Urged To Tighten Inpatient & Outpatient Admission Records As OIG Audits Hospitals for New vs. Established Patients,

November 29, 2012

Hospitals should act quickly to adopt appropriate compliance policies and tighten outpatient and inpatient admissions recordkeeping and associated billing activities to minimize exposures signaled by audits announced by the Department of Health & Human Services (HHS) Office of Inspector General (OIG).

OIG reportedly is auditing inpatient and outpatient hospital claims for new and established patients to identify potential overcharges by some hospital-based outpatient clinics that may have resulted from treating established patients as if they were new patients. OIG’s Office of Audit Services reportedly sent letters to some hospitals in October, asking about a handful of claims for new patient visits that OIG suspects the hospital should have billed as established patient visits. In addition to requesting specific information about line items on the claims and their internal controls for billing new versus established patients and provide descriptions of written policies and procedures governing the facilities classification of new versus established patients and internal controls for detecting errors.

Medicare typically pays more for new versus established patients since CMS  implemented the outpatient prospective payment system in 2000. Since 2008, CMS rules have specified that patients who visit the hospital outpatient clinic within three years are established patients, and after that they are new, with Medicare paying more for the latter. See(73 Fed. Reg. 68502, 68679 (November 18, 2009).  Data mining technology increasingly used by CMS and other federal fraud investigators facilities the ability of Medicare and others to identify errors in coding and billing resulting from misclassication of existing patients as new.  

Many hospitals may be exposed under this requirement for a variety of reasons including failure to appropriately track and coordinate inpatient and outpatient admission data, defaults built into recordkeeping systems and omissions to timely update practices or training.  In contrast to the risk of overbilling from incorrectly treating patients as new, hospitals that bill all patients as established to overcome inadequacies in their ability to track new versus established patients often leave money on the table unnecessarily by foregoing added reimbursement that the facility otherwise would qualify for it could reliably identify new patients.

While strengthening coding and billing to ward of risks, may debate the appropriateness of CMS’ new versus existing patient distinction outside the physician office context.  Critics contend that unlike in the physician office context, the level of care or resources delivered for a new patient compared to a patient who previously visited the hospital doesn’t generally differ. Parties with these concerns should continue to ensure appropriate compliance with existing rules while providing input and feedback to CMS and other regulators about their concerns with the policy’s suitability.

For Help With Monitoring Developments, Compliance, Investigations Or Other Needs

If you need help reviewing or commenting on the Tests Procedures or monitoring or responding to these or other health care or health IT related risk management, compliance, enforcement or management concerns, the author of this update, attorney Cynthia Marcotte Stamer, can help.  Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, and A Fellow in the American Bar Association, State Bar of Texas and other prominent organizations, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Ms. Stamer has extensive experience advising and assisting health care providers, health plans, their business associates and other health industry clients to set up and administer medical privacy, EHR and other technology and other compliance and risk management policies, to health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns. She regularly designs and presents HIPAA and other risk management, compliance and other training for health plans, employers, health care providers, professional associations and others.   

Ms. Stamer also regularly works with OCR and other agencies, publishes and speaks extensively on medical and other privacy and data security, health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns.  Her publications and insights appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, World At Work, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.   For instance, Ms. Stamer for the second year will serve as the appointed scribe for the ABA Joint Committee on Employee Benefits Agency meeting with OCR.  Her insights on HIPAA risk management and compliance often appear in medical privacy and other technology, risk management and compliance-related publications of a broad range of health care, health plan and other industry publications Among others, she has conducted privacy training for the Association of State & Territorial Health Plans (ASTHO), the Los Angeles Health Department, the American Bar Association, the Health Care Compliance Association, a multitude of health industry, health plan, insurance and financial services, education, employer employee benefit and other clients, trade and professional associations and others.

You can get more information about her experience here.

Other Recent Updates & Resources

If you found this information of interest, you also may be interested in the following recent updates on health care, health plan and employee benefits, human resources and other risk management and compliance matters.  Recent examples on health care compliance and risk management matters include:

OIG Recommends CMS, ONC Tighten EMR Incentive Program Rules To Improve Oversight

Congress Sends Bill Amending Lab Testing Rule Violation Sanctions

Learn Latest On OCR New HIPAA De-Identification Guidance & Other HIPAA Developments In 12/12 HIPAA Update Workshop!

$12M+ Settlement Recoveries In 2 Health Care Fraud Whistleblower Claims Shows Providers, Owners, Management & Staff Must Manage Compliance & Risks

Feds Health Fraud Suit Against Psychiatrists Shows Risks Providers Run From Aggressive Referral or Billing Activities

ONC Releases Next Wave of 2014 Draft Test Methods For Public Review and Comment; Plans 11/13 Virtual Workshop

Recent OIG Audit Reports Provide Insights Where Fraud Audits Likely To Look Next

Hospital Chain HCA Inc. Pays $16.5 Million to Settle False Claims Act Allegations That Hospital

Detroit-Area Doctor Charged for Role in Alleged $40 Million Medicare Fraud Scheme

Five More Individuals Charged in Detroit for Alleged Roles in $24.7 Million Medicare Fraud Scheme

Massachusetts Ear Group To Pay $1.5 Million To Resolve HIPAA Charges

Personal Consumer Information Protection In Health Care Operations Topic of Stamer’s 11/1 Speech

ONC Releases First Wave of EHR Test Procedures; More To Come

OCR Releases HIPAA Compliance Training Tool As Enforcement Risks Rise

Health Care Orgs Disability Exposure High As $475K Paid To Settle Justice Department Charges Medical Fitness Screenings of EMTs, Others Violated ADA

HHS/DOJ Partner With Private Health Plans To Further Ramp Up Health Care Fraud Heat!

AHRQ Issues New Guide for Use of Interactive Preventive Care Record

Nextcare Inc. $10 Million False Claims Act Settlement Shows Qui Tam Role In False Claims Act Prosecutions

For more resources and publications training materials by Ms. Stamer, see here.  

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here.  If you do not wish to receive these updates in the future, send an e-mail with the word “Remove” in the Subject to here.

©2012 Cynthia Marcotte Stamer, P.C. nonexclusive license to republish granted to Solutions Law Press, Inc.  All other rights reserved.

 

AHRQ Issues New Guide for Use of Interactive Preventive Care Record

July 19, 2012

A new guide from the Agency for Healthcare Research and Quality (AHRQ) titled An Interactive Preventive Care Record (IPHR): A Handbook for Using Patient-Centered Personal Health Records to Promote Prevention provides practical steps for healthcare professionals to follow when deploying IPHRs as components of electronic health records.  AHRQ and other government and private health care technology advocates hope that the IPHR will help boost and promote care delivery practices that promote health and wellness among patient populations.

AHRQ touts the resource as a guidebook of  targeted advice for practice leaders, informatics staff, and practice personnel on selection, implementation and maintenance of electronic health records and practices to help them work as a team to promote full utilization of IPHRs.

To get the handbook, see here

For More Information Or Assistance

For help  reviewing and updating your health care compliance, workforce, internal controls and risk management policies, technology, operations, practices or programs; assessing the strength of your organizations existing operations, risk management and compliance controls under these laws or other healthcare regulatory or operational issues or concerns, please contact Cynthia Marcotte Stamer via e-mail here or via telephone at 469.767.8872.   To review  and register to receive other helpful updates or for more information about Ms. Stamer and her experience, see here.

Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need help responding to concerns about the matters discussed in this publication or other health care concerns, wish to get information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2012 Cynthia Marcotte Stamer, P.C. All rights reserved.


Nextcare Inc. $10 Million False Claims Act Settlement Shows Qui Tam Role In False Claims Act Prosecutions

July 11, 2012

A False Claims Act settlement announced last week with Arizona-based urgent care chain NextCare Inc. provides another illustration of the growing exposure that qui tam and other reports of illegal practices by employees, contractors and other business partners create for health care and other companies.

Last week, Justice Department officials announced that NextCare Inc agreed to pay $10 million to settle federal and state allegations that it submitted false claims initially raised in a lawsuit filed against NextCare Inc. by former NextCare employee Lorin Cohen.    

The settlement resolves allegations that NextCare violated the False Claims Act by:

  • Submitting false claims to Medicare, TRICARE, the Federal Employees Health Benefits Program, and the Medicaid programs of Colorado, Virginia, Texas, North Carolina and Arizona, by billing for unnecessary allergy, H1N1 virus and respiratory panel testing and
  • Upcoding when billing for urgent care medical services.

As a condition of the settlement, NextCare Inc. will become subject to a five-year Corporate Integrity Agreement with HHS-OIG. 

Investigated and prosecuted as part of the Federal government’s highly touted HEAT initiative, the Nextcare Inc. settlement emphasize both the strong commitment by the Department of Justice and HHS to find a prosecute Medicare and Medicaid financial fraud and the growing importance of qui tam actions and other insider reports of legal violations to the success of these actions. 

Qui tam and other fraud reports made by employees or other business partners have become a significant tool in the Federal government’s war against health care fraud.  Under the False Claims Act, private citizens acting as relators can bring suit on behalf of the United States and share in the recovery.   Ms. Cohen will receive $1.614 million as her share of the recovery.

Through the False Claims Act alone, the Justice Department has recovered more than $7.7 billion since January 2009 in cases involving fraud against federal health care programs.   The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $11.3 billion.   

In response to the Nextcare Inc. settlement and other enforcement actions, health care providers should strengthen both their health care compliance and employment management processes.  In addition to working to promote compliance with the False Claims Act and other health care laws, health care providers need to implement strong internal investigation, audit, and employee and contractor management procedures to help self-discover and address potential compliance or other liability concerns. 

As part of these efforts, health care providers generally should not only provide hotlines for reporting suspected fraud or other misconduct.  Many health care providers also can benefit by adopting and enforcing strong policies that require employees, contractors and other business partners to timely report and cooperate in the investigation and redress of potential health care fraud or other legal violations, should promptly investigate and redress as needed alleged noncompliance, and should retaliation against individuals making these reports in good faith.   GSK and other enforcement actions show that Federal officials are acting on this promise. 

For More Information Or Assistance

For help designing, enforcing or defending your organization’s health care compliance, workforce and risk management policies, practices or programs; assessing the strength of your organizations existing risk management and compliance controls under these laws or other healthcare laws and regulations; or in addressing other compliance or health care concerns, please contact Cynthia Marcotte Stamer via e-mail here or via telephone at 469.767.8872.   To review  and register to receive other helpful updates or for more information about Ms. Stamer and her experience, see here.

Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need help responding to concerns about the matters discussed in this publication or other health care concerns, wish to get information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press, Inc.™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2012 Cynthia Marcotte Stamer, P.C. All rights reserved.


Pharmas Face New Pressure To Put Patients Before Profits After GlaxoSmithKline Record $3 Billion Health Care Fraud, FDCA Conviction & Settlement

July 11, 2012

Pharmaceutical companies will need to carefully study and consider how to react to “groundbreaking” business practice reforms global health care giant GlaxoSmithKline LLC (“GSK”) has agreed to implement as part of the record $3 billion criminal and civil agreement resolving federal health care fraud and drug marketing charges following its July 2, 2012 guilty plea in U.S. v. GlaxoSmithKline PLC Complaint.  Justice Department and Food & Drug Administration (FDA) officials have signaled they expect industry businesses to “follow suit” by adopting business practice reforms that GSK has agreed to implement in the five year Corporate Integrity Agreement it entered into as part of collection of criminal plea agreements and accompanying civil settlements that is resulting in the largest combined federal and state health care fraud recovery in a single global resolution against a pharmaceutical company in the history of the United States.  Meeting this expectation will require most pharmaceutical companies to significantly change research and marketing, compensation and other workforce management, board governance and other fundamental business practices well-beyond the reforms already being implemented in response to the past decade’s enforcement war against the industry.

Snapshot of U.S. v. GlaxoSmithKline PLC Civil & Criminal Charges & Settlement

After GSK plead guilty on July 2, 2012 to criminal charges it illegally marketed three drugs, the Federal Court in Massachusetts on July 5, 2012 approved a Justice Department sentencing recommendation that incorporated the settlement agreement. In recommending approval of the settlement agreement, the Justice Department told the Court GSK’s commitment to ‘put patients before profits’ by make sweeping reforms to its marketing and other business practices justified approving the settlement agreement in lieu of imposition of probation or other sanctions.

To resolve the criminal charges, GSK agreed to pay a criminal fine of $956,814,400, and criminal forfeiture in the amount of $43,185,600, for a total amount of $1 billion. Along with its criminal guilty plea, GSK also agreed to pay amount additional $2 billion to the U.S as restitution to the federal health care programs and other civil payments and implement an unprecedented list of business practice changes that will revolutionize its sales, marketing and drug efficacy study practices.

GSK Misdemeanor Guilty Plea

On July 2, 2012, GSK plead guilty to three misdemeanor violations of the Food, Drug and Cosmetic Act (FDCA):

  • Regarding Paxil, GSK plead guilty to distribution of a misbranded drug due to false and misleading labeling, in violation of 21 U.S.C. §§ 331(a), 333(a)(1) & 352(a);
  • Regarding Wellbutrin, GSK plead guilty to distribution of a misbranded drug due to inadequate directions for use, in violation of 21 U.S.C. §§ 331(a), 333(a)(1) & 352(f)(1); and
  • Regarding Avandia, GSK will plead guilty to failure to report data to the FDA, in violation of 21 U.S.C. §§ 331(e), 333(a)(1) & 355(k)(1).

The misdemeanor guilty pleas resolved Justice Department criminal charges GSK engaged is a series of serious violations of federal law in the marketing of Paxil, Wellbutrin and Avandia.

GSK $2 Billion Civil Settlement Payments

The criminal sentence approved by the Court is part of a broader series of criminal, civil and administrative agreements reached between GSK and federal officials.

The civil and administrative agreements included in the package deal include three civil settlements that resolve health care fraud and qui tam claims arising from GSK’s marketing, sales and health program billings relating to various drugs.

Under the civil settlement agreement, GSK will make sweeping business practice reforms specified in a corporate integrity agreement as well as pay $2 billion in civil damages to federal and state health care programs, which is the largest civil recovery from a drug company in a single global resolution.

Under the settlement package negotiated to resolve these civil claims, GSK has agreed to pay $2 billion in civil damages.  The $2 billion of civil damages include:

  • $1,043,000,000 in civil damages to resolve allegations relating to false claims arising from the off-label promotion and kickback allegations relating to Paxil, Wellbutrin, Advair, Lamictal, Zofran, Flovent, Imitrex, Lotronex and Valtrex;
  • $657,000,000 in civil damages to resolve allegations relating to misrepresentations about Avandia;
  • $300,000,000 in civil damages to resolve allegations relating to false reporting of best prices.

The settlement package actually includes three civil settlement agreements.

  • One civil settlement resolves allegations relating to false claims to federal health care programs resulting from marketing and promotion practices, including off-label marketing of Paxil, Wellbutrin, Advair, Lamictal and Zofran for uses that were not approved as safe and effective by the Food and Drug Administration and paid kickbacks to doctors to induce them to prescribe Advair, Flovent, Imitrex, Lotronex, Paxil, Wellbutrin, and Valtrex and other drugs, critically undermining the doctors’ independent clinical judgment.
  • A second civil settlement resolves allegations that GSK promoted Avandia to physicians and other health care providers with false and misleading representations, causing false claims to be submitted to federal health care programs in the marketing and sale of Avandia.
  • A third settlement resolves allegations that GSK reported false best prices to the Department of Health and Human Services and as a result underpaid quarterly rebates owed under the Medicaid Drug Rebate Program. Under federal law, pharmaceutical companies are required to give Medicaid the best price on medications that they offer to any customer.   The Justice Department contends that GSK improperly “bundled sales” arrangements that included steep discounts known as “nominal prices” and yet failed to take such contingent arrangements into account when calculating and reporting its best prices to HHS.

Whistleblower Claims Played A Role, Resolved By Settlement

A review of the settlement emphasize both the strong commitment by the Department of Justice and HHS to find a prosecute Medicare and Medicaid financial fraud and the growing importance of qui tam actions and other insider reports of legal violations to the success of these actions. 

Qui tam and other fraud reports made by employees or other business partners have become a significant tool in the Federal government’s war against health care fraud.  Under the False Claims Act, private citizens acting as relators can bring suit on behalf of the United States and share in the recovery.  Furthered in part by a series of qui tam claims, whistleblower suits clearly played a role in many of the GSK charges.

The off-label civil settlement also resolves allegations set forth in the following lawsuits filed against GSK under the qui tam, or whistleblower, provisions of the federal False Claims Act, 31 U.S.C. § 3730:

  • U.S. ex rel. Thorpe et al. v. Smith Kline Beecham Inc. and GlaxoSmithKline PLC d/b/a GlaxoSmithKline, Civil Action No. 11-10398 (D. Mass, transferred from D. Colo.) (filed 1/1/03);
  • U.S. ex rel. Gerahty et al. v. GlaxoSmithKline PLC and SmithKline Beecham Corp. d/b/a GlaxoSmithKline, (D. Mass.), Civil Action Number 03-10641 (D. Mass.) (filed 4/7/03);
  • U.S. ex rel. Graydon v. GlaxoSmithKline PLC, Civil Action No. 11-10741 (D. Mass.) (filed 6/5/09);
  • U.S. ex rel. LaFauci v. GlaxoSmithKline PLC, Civil Action No. 11-10921 (D. Mass.) (filed 8/7/09).

Get more details here.

 

Corporate Integrity Agreement Requires GSK To “Put Patients Before Profits” Thru “Groundbreaking” Business Practice Reforms

Pharmaceutical industry businesses should view with grave concern the statements made by Carmen Ortiz, U.S. Attorney for the District of Massachusetts in announcing agreement that with Federal officials “hope the rest of the pharmaceutical industry follows suit” in “putting patients before profits” by adopting the “groundbreaking” business practice reforms set forth in the a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services.  Given the ongoing aggressive investigation and enforcement of federal drug and health care fraud laws by the Justice Department and Food and Drug Administration and the Justice Department’s stated hope that the rest of the pharmaceutical industry will adopt similar reforms to those GSK has committed to implement in connection with its sentence, pharmaceutical companies will want to carefully examine the “groundbreaking” marketing and other business practice reforms that GSK has committed to implement for insights about what federal prosecutors and regulators expectation expect companies involved in the industry to do to reform their marketing, research and other practices.

In encouraging the Court to approve a total of $1 billion of criminal penalties as the sanction for the criminal charges, Justice Department officials argued GSK’s commitment under the related civil resolution agreement to make “groundbreaking” business practice reforms to ensure better behavior by its sales force, and to ensure full, fair and accurate reporting of scientific data from GSK studies justified the penalty in lieu of probation or other sanctions.   

The Justice Department officials announcing the settlement enhanced accountability, increased transparency and wide- ranging monitoring activities conducted by both internal and independent external reviewers. Specifically, among other things, the agreement requires:

  • Abolishment of incentive sales compensation; instead, the sales force will be compensated based on business acumen, customer engagement, and scientific knowledge of GSK products;
  • Clawback of up to 3 years of annual performance pay (annual bonus and long term incentives) for executives discovered to be involved in significant misconduct;
  • Publication of all GSK human research studies, not just those with positive outcomes for GSK drugs;
  • Publication of final clinical trial protocols to allow outside researchers to meaningfully analyze the results of GSK studies;
  • Removal of commercial influence on the determination of which GSK studies will be conducted; instead, studies will be conducted on scientific merit;
  • Removal of commercial influence on the determination of which GSK studies will be published and when; instead, studies will be published when the study is complete, not to create a buzz around a drug;
  • Annual certifications by the GSK’s Board of Directors that the GSK compliance program is effective, and by GSK’s U.S. President that the compliance measures continue and reportable incidents have been properly reported.

GSK & Other Prosecutions Reflect Need To Tighten Compliance

Pharmaceutical companies take seriously the need to maintain compliance and tighten marketing and other procedures to promote their ability to defend against the growing risk of federal prosecution signaled by the GSK and other enforcement actions. 

In announcing the GSK settlement, Justice Department officials touted the GSK case as demonstrating its “continuing commitment to ensuring that the messages provided by drug manufacturers to physicians and patients are true and accurate and that doctors’ decisions as to what drugs are prescribed to sick patients are based on best medical judgments, not false and misleading claims or bad science.”

The GSK and other enforcement actions show that Federal officials are acting on this promise.  Even before announcing the $3 billion resolution with GSK, the Justice Department and other federal officials accumulated an impressive and growing record of successful investigation and prosecutions.  The Justice Department health care fraud union in Boston that lead the GSK prosecution over the past three years already had recovered more than $5.5 billion in settlements, judgments, fines, restitution, and forfeiture in health care fraud cases under the False Claims Act and the Food, Drug and Cosmetic Act before it announced the GSK settlement.  Coupled with the overall increase in fraud and FDCA enforcement against pharmaceutical industry providers specifically and health care providers generally nationwide, the GSK decision makes clear that pharmaceutical and other health industry clients need to prepare to withstand ever-tightening expectations and rising enforcement.

In response to the GSK settlement and guilty plea, pharmaceutical companies will need to review their existing and former practices to identify pre-existing and ongoing exposures, and decide what steps to take, if any, to mitigate these risks.  In addition to considering what, if any, of the reforms outlined in the GSK Corporate Integrity Agreement to implement and how, these organizations also should consider the workforce management and other internal controls that will help promote compliance with these policies and manage potential whistleblower and other liabilities.

In addition to working to promote compliance with the False Claims Act and other health care laws, pharmaceutical companies and health care providers need to implement strong internal investigation, audit, and employee and contractor management procedures to help self-discover and address potential compliance or other liability concerns.  These processes and policies should involve but not be limited to hotlines and other processes for reporting suspected fraud or other misconduct.  Most companies also should consider adopting and enforcing strong policies that require employees, contractors and other business partners to timely report and cooperate in the investigation and redress of potential health care fraud or other legal violations, should promptly investigate and redress as needed alleged noncompliance, and should retaliation against individuals making these reports in good faith. 

For More Information Or Assistance

For help  reviewing and updating your Stark Law, Anti-Kickback Statute, or other health care compliance, workforce, internal controls and risk management policies, practices or programs; assessing the strength of your organizations existing risk management and compliance controls under these laws or other healthcare laws and regulations; or in addressing other compliance or health care concerns, please contact Cynthia Marcotte Stamer via e-mail here or via telephone at 469.767.8872.   To review  and register to receive other helpful updates or for more information about Ms. Stamer and her experience, see here.

Vice President of the North Texas Health Care Compliance Professionals Association, Past Chair of the ABA Health Law Section Managed Care & Insurance Section and the former Board Compliance Chair of the National Kidney Foundation of North Texas, Ms. Stamer has more than 24 years experience advising health industry clients about these and other matters. Her experience includes advising hospitals, nursing home, home health, rehabilitation and other health care providers and health industry clients to establish and administer compliance and risk management policies; prevent, conduct and investigate, and respond to peer review and other quality concerns; and to respond to Board of Medicine, Department of Aging & Disability, Drug Enforcement Agency, OCR Privacy and Civil Rights, HHS, DOD and other health care industry investigation, enforcement and other compliance, public policy, regulatory, staffing, and other operations and risk management concerns.

A popular lecturer and widely published author on health industry concerns, Ms. Stamer continuously advises health industry clients about compliance and internal controls, workforce and medical staff performance, quality, governance, reimbursement, and other risk management and operational matters. Ms. Stamer also publishes and speaks extensively on health and managed care industry regulatory, staffing and human resources, compensation and benefits, technology, public policy, reimbursement and other operations and risk management concerns. Her insights on these and other related matters appear in the Health Care Compliance Association, Atlantic Information Service, Bureau of National Affairs, The Wall Street Journal, Business Insurance, the Dallas Morning News, Modern Health Care, Managed Healthcare, Health Leaders, and a many other national and local publications.  You can get more information about her health industry experience here. If you need help responding to concerns about the matters discussed in this publication or other health care concerns, wish to get information about arranging for training or presentations by Ms. Stamer, wish to suggest a topic for a future program or update, or wish to request other information or materials, please contact Ms. Stamer via telephone at (214) 452-8297 or via e-mail here.

If you or someone else you know would like to receive future updates about developments on these and other concerns from Ms. Stamer, see here.

About Solutions Law Press

Solutions Law Press™ provides business risk management, legal compliance, management effectiveness and other resources, training and education on human resources, employee benefits, compensation, data security and privacy, health care, insurance, and other key compliance, risk management, internal controls and other key operational concerns. If you find this of interest, you also be interested reviewing some of our other Solutions Law Press resources including:

If you or someone else you know would like to receive future updates about developments on these and other concerns, please be sure that we have your current contact information – including your preferred e-mail – by creating or updating your profile here. For important information concerning this communication click here. 

THE FOLLOWING DISCLAIMER IS INCLUDED TO COMPLY WITH AND IN RESPONSE TO U.S. TREASURY DEPARTMENT CIRCULAR 230 REGULATIONS.  ANY STATEMENTS CONTAINED HEREIN ARE NOT INTENDED OR WRITTEN BY THE WRITER TO BE USED, AND NOTHING CONTAINED HEREIN CAN BE USED BY YOU OR ANY OTHER PERSON, FOR THE PURPOSE OF (1) AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW, OR (2) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED TRANSACTION OR MATTER ADDRESSED HEREIN.

©2012 Cynthia Marcotte Stamer, P.C. All rights reserved.


%d bloggers like this: