Tag Archives: False Claims Act

OIG Releases Criteria for Implementing Exclusion Authority

On April 18, 2016, the Health and Human Services Office of Inspector General (OIG) released updated guidance related to the criteria it may use for evaluating its permissive exclusion authority under Section 1128(b)(7) of the Social Security Act. This guidance replaces guidance previously released by the OIG in 1997. All of the OIG’s special advisory bulletins and guidance documents related to its exclusion authority can be found here.

The OIG stated that in determining where a person or entity falls on the “compliance risk spectrum”, thereby determining whether exclusion should be pursued, the OIG will consider the following four risk areas:

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Filed under Compliance, DHHS OIG, Fraud and Abuse, Government Enforcement, OIG Guidance

Final Medicare 60-Day Overpayment Rule Provides Reasonable Framework for Providers

Published today in the Federal Register was a long-awaited Final Rule implementing a requirement from the 2010 Affordable Care Act requiring Medicare Part A and B providers and suppliers to report and return overpayments to Medicare by the later of 60 days after the date an overpayment was identified, or the due date of any corresponding cost report, if applicable (Overpayment Rule). The Proposed Rule was previously published on February 16, 2012. Additionally, the final rule implementing overpayments in Medicare Parts C and D was previously published in May 2014. Case law interpreting the Overpayment Rule has been limited to date.

The Final Rule includes several significant clarifications, including the following:

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Filed under Fraud and Abuse, Health Reform, Medicare

First Court Decision Interpreting the Overpayment Rule Issued This Week

Earlier this week, a key decision denying defendants’ motion to dismiss was issued in the case, Kane v. Healthfirst Inc., et al. and United States v. Continuum Health Partners Inc., et al. (case no. 1:11-cv-02325, S.D.N.Y.). This is the first court decision to interpret a provision of the Affordable Care Act that requires a person who has received an overpayment of Medicare or Medicaid funds to report and return the overpayment by the later of: (i) 60 days after the date on which the overpayment was “identified”; or (ii) the date any corresponding cost report is due, if applicable. 42 U.S.C. § 1320a-7k(d). Although the Centers for Medicare and Medicaid Services (CMS) issued a Proposed Rule in 2014 related to the process for reporting and returning overpayments, the deadline for issuing the Final Rule has been extended  until February 2016.

In Kane, the relator was a former employee of the company who allegedly provided to management a spreadsheet of over 900 potential overpayments caused by a software glitch. The employee was fired four days later and the company failed to return all of the overpayments due until it subsequently received a civil investigative demand in connection with the qui tam lawsuit that had been filed by the former employee under the False Claims Act (FCA). The Court determined that defining “identified”, and thus starting the 60-day clock, when a “provider is put on notice of a potential overpayment, rather than the moment when an overpayment is conclusively ascertained”, is consistent with FCA legislative history.  The Court further stated that the defendants’ position that its obligation to pay would not be triggered until after it had “done the work necessary to determine conclusively the precise amount owed to the Government”, thereby “relegating the sixty-day period to merely the time within which they would have to cut the check”, would create an “absurd result.”

We will continue to monitor this important case and provide significant updates. 



Filed under Fraud and Abuse, Government Enforcement, Health Reform

Court Holds Corporate Integrity Agreement May Be Basis for Reverse False Claim Liability

This week, a federal district court denied Cephalon Inc.’s (Cephalon) motion to dismiss a third amended complaint filed under the False Claims Act (FCA) by three qui tam relators in United States ex rel. Boise v. Cephalon, Inc. The motion to dismiss relates to claims made by the whistleblowers under 31 U.S.C.§ 3729(a)(1)(G) (“. . . knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government . . .”). Specifically, the relators allege that Cephalon promoted its drugs Provigil and Nuvigil for off-label purposes and paid unlawful kickbacks to health care professionals, and failed to report this conduct in violation of its 2008 corporate integrity agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (OIG).

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Filed under Corporate Compliance, Fraud and Abuse

Expansion of State False Claims Acts Continues

On May 19, 2015, Vermont’s governor signed into law a state false claims act that largely mirrors the federal False Claims Act, including the ability of a qui tam relator to bring an action on behalf of the state. Vermont joins the 33 states and the District of Columbia that have enacted false claims acts to date. Additionally, on May 12, 2015, Maryland’s governor approved a bill that expanded the state’s false claims act, which was enacted in 2010 to combat health care fraud.

This trend is being driven, in part, by the significant recoveries that the federal government is obtaining in fraud cases related to the health care industry and other sectors. According to the Department of Justice (DOJ), it recovered nearly $6 billion in civil false claims cases in FY2014, nearly half of which was a result of whistleblower suits. A state false claims act is critical for the state to maximize its recoveries in these fraud cases. This is because a state with a false claims act that meets the requirements of the Deficit Reduction Act of 2005, as determined by the Health and Human Services Office of Inspector General (OIG), receives a 10% increase in its share of any amounts recovered under these laws.

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Fraud Watch: Laboratory Referrals Under Government Scrutiny


Significant recent regulatory and enforcement activity related to laboratory fees and services continues to demonstrate an increased focus on this industry. Government enforcers are active in cases involving both the laboratories and physicians involved in kickback schemes.

The U.S. Department of Justice (DOJ) announced in late March and early April that three New Jersey doctors were sentenced to prison for accepting bribes in exchange for referring patients to a medical-testing laboratory company. The DOJ also announced this month that a New York physician admitted to accepting bribes in the same scheme. According to the DOJ, 26 physicians and 12 other individuals have been convicted to date of participating in the bribery scheme with the laboratory and the government has recovered $10.5 million in forfeitures.

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Filed under Fraud and Abuse, Government Enforcement, Laboratories, OIG Guidance

The Trade Agreements Act and Sales of Medical Devices to the U.S. Government

Does your company sell medical devices to the U.S. Government, either directly or through a reseller or distributor? Are those devices or supplies manufactured at least partly in a country other than the U.S.? If you answered yes to both questions, then you need to understand the Trade Agreements Act and verify that your U.S. Government sales to date have complied with the law.

The Trade Agreements Act, or “TAA,” requires certain products sold to the U.S. Government to be manufactured in the U.S. or in one of the “designated countries” with which the U.S. has a free trade agreement or other special trade-related arrangement. Notably, the TAA applies to all Federal Supply Schedule contracts, including Schedule 65 II A (Medical Equipment and Supplies), Schedule 65 II F (Patient Mobility Devices), and Schedule 65 II C (Dental Equipment and Supplies). Contractors with these VA Schedule contracts must certify, in their proposals to the Government, that the products listed for sale on those contracts comply with the TAA. If such certifications turn out to be false, the contractor may face unwelcome consequences, including (i) a mandatory disclosure obligation, (ii) significant monetary liability under the False Claims Act, (iii) the potential of criminal charges, and (iv) debarment from U.S. Government contracting. Continue reading

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Filed under Compliance, Government Enforcement, Medical Devices, Sales & Marketing