Wachler & Associates Health Law BlogThe Detroit Free Press reported that the Detroit Medical Center has agreed to pay $30 million to the federal government to settle claims that involved violations of the Anti-Kickback Statute and Stark from improper financial relationships with referring physicians. The majority of the relationships at issue in the DMC matter involved office lease agreements and independent contractor relationships that were either not consistent with fair market value or not in writing. If you are a provider and would like to ensure that your relationships comply with Stark and the Anti-Kickback Statute, please contact Wachler & Associates.
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OIG Reports a $25.9 billion Expected Recovery of Savings in FY 2010
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) reported $25.9 billion of expected recoveries and savings in fiscal year (FY) 2010. The large amount is a combination of audit receivables, investigative receivables and other legislative and cost-saving actions that OIG recommended.
In addition, the OIG’s semiannual report documented that it initiated 647 criminal actions and 378 civil actions against individuals or entities that engaged in crimes against departmental programs. These actions included lawsuits under the False Claims Act (FCA), the Civil Monetary Penalties Law (CMPL) settlement and other administrative recoveries related to self-disclosure.
Finally, the report indicated the Health Care Fraud Prevention and Enforcement Action Team’s (HEAT) success in fighting fraud. That program alone recovered $71.3 million in investigative receivables.
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Medicare Physician Rate Cut Delayed for One Year
Last week President Obama signed legislation that will delay Medicare payment cuts for one more year. The reduction in pay, 25 percent, had been scheduled to begin on January 1, 2011. The American Medical Association strongly advocated for the delay that is longer than the previous five delays over the past year. Over the upcoming year, Congress will work to develop a long-term solution to the Medicare physician payment problem.
For more information on Medicare payments or the physician fee cut, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.
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Federal District Court Holds That the Individual Mandate in PPACA is Unconstitutional
The U.S. District Court for the Eastern District of Virginia ruled that Section 1501 of the Patient Protection and Affordable Care Act (PPACA) is unconstitutional. Shortly after PPACA was passed in March 2010, Virginia passed a state statute that conflicted with the individual mandate found in Section 1501 of PPACA which requires that by 2014 every United States citizen, with a few exceptions, must maintain a minimum level of health insurance coverage subject to penalty. Following the passage of its state law, Virginia filed its lawsuit alleging that the individual mandate of PPACA violated the Commerce, Necessary and Proper and General Welfare Clauses of the United States Constitution. The U.S. Department of Health and Human Services contended that the provision was Constitutional because individuals’ decisions to not purchase health care insurance combine to have a collectively serious effect on interstate commerce. Thus, the Commerce Clause and the Necessary and Proper Clause support the provision.
In his opinion, Judge Henry E. Hudson of the U.S. District Court for the Eastern District of Virginia disagreed with the U.S. Department of Health and Human Services’ analysis. The court held that the individual mandate in PPACA violates the Commerce Clause because the provision “compels” an individual to engage in commerce. Further, since the provision violates the Commerce Clause, the Necessary and Proper Clause does not protect the provision because that clause requires that legislation be in furtherance of Congress’ constitutionally enumerated powers.
For more information on health care reform and its impact on health care providers, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.
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The Red Flag Program Clarification Act of 2010 Passes in the House and Senate
Last week, the House and Senate passed the “Red Flag Program Clarification Act of 2010.” The Act limits the definition of “creditor” to a person who obtains or uses consumer reports in connection with a credit transaction, furnishes information to consumer reporting agencies in connection with credit transactions, or advances funds based on the recipients’ obligation to repay. The bill excludes from the definition persons, such as health care providers, who “advance funds” by providing services before receiving payment. Relevant government agencies, however, are permitted to designate creditors that will be subject to the Rule. The Agencies will designate based upon the determination that the person manages accounts that are subject to a reasonably foreseeable risk of identity theft. These designations must be made through agency rule making.
The enforcement of the Red Flags rule has been delayed several times, with the most recent delay expiring on January 2011. The FTC previously determined that health care providers met the definition of “creditor.” While the Clarification Act’s revised definition would not include most health care providers, the FTC could still designate health care providers as “creditors” through the rule making process based on the risk of medical identity theft concerns previously voiced by the FTC.
For more information on the Red Flags rule, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.
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The Justice Department Announces $3 Billion Recovery from Pursuing False Claims Against the Federal Government
The United States Justice Department reported that in 2009 it collected $3 billion from pursuing health care fraud and other false claims against the federal government. More than 80% of the recoveries were from healthcare fraud, including qui tam actions under the False Claims Act. Bloomberg News reported that Tony West, Assistant Attorney General in charge of the Justice Department’s civil division, stated that the Justice Department would hold those who violate the federal False Claims Act accountable, whether they are a corporation or individual. The $3 billion recovery in 2009, the second largest in history, is evidence of the aggressive nature with which the DOJ is pursuing False Claims Act violations.
False Claims Act violations can give rise from submission of claims for services not rendered, submission of claims for services that were not medically necessary or were improperly coded and billed. Further, as a result of the health care reform legislation, False Claims liability can attach to the retention of a known overpayment that is not refunded within 60 days of identification. For more on the False Claims Act, or for assistance with health care regulatory or billing matters, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.
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Proposed Purchase Of DMC Has Been Conditionally Approved
The proposed purchase of the Detroit Medical Center by Vanguard Health Systems Inc. has been conditionally approved by the Attorney General of Michigan Mike Cox. This sale would bring a purported $1.5 billion in funding for the center. The deal is tentatively set to take place on December 31, 2010 but there are still many issues that need to be worked out for the transaction to be completed. One of the major issues still needing resolution before the final deal is the transferring of Medicare and Medicaid billing procedures from the nonprofit DMC to the for profit Vanguard.
For information on compliance issues associated with health care transactions please contact a Wachler & Associates attorney at 248-544-0888.
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Health care summit series continues in Brooklyn, New York
As the focus on health care fraud continues within the federal government, Department of Health and Human Services Kathleen Sebelius and Attorney General Eric Holder recently participated in the third regional health care fraud prevention summit in Brooklyn, New York. The stated purpose of the summit was to bring together interested parties to discuss innovative ways to curtail fraud perpetrated on the U.S. health care system. In addition to Attorney General Holder and Secretary Sebelius, who spoke of new ways to battle fraud, there were educational panels to indentify best practices in the industry.
At the summit, the Office of the Inspector General introduced A Roadmap for News Physicians: Avoiding Medicare and Medicaid Fraud Abuse which is a tool to help explain to medical students the laws that apply to physicians and how they may comply with them. This manual is the OIG’s way of educating doctors at the beginning of their careers in order to help prevent mistakes in billing and compliance issues.
This summit was part of President Obama’s series of summits that will be held across the country in order to educate practitioners, recognize innovative solutions, and help lower the cost of healthcare by mitigating fraud on the system. Upcoming summits will be held in Detroit, Boston, Philadelphia and Las Vegas.
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The United States Supreme Court Refuses to Hear Challenge to the Healthcare Reform Law
The United States Supreme Court refused to hear a legal challenge to the healthcare reform law, the Patient Protection and Affordable Care Act (PPACA). The Court declined without comment to hear the case originally filed in federal court in California by Steve Baldwin and the Pacific Justice Institute. The plaintiffs challenged the constitutionality of the mandate that every American purchase health insurance by 2014. Because a federal appeals court in California is still considering its decision, it would have been highly unusual for the Supreme Court to hear the challenge at this time.
The California challenge to PPACA is only one of multiple challenges in courts around the country. For instance, in Michigan a legal challenge was brought by the Thomas More Law Center. In addition, there is another lawsuit filed by several states, the National Federation of Independent Business and two individuals.
For more information on healthcare reform and its impact on providers, please visit www.wachler.com or contact a Wachler & Associates attorney 248-544-0888.
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Device Manufacturer Settles False Claims Qui Tam Action
The device manufacturer, ELA Medical, Inc. agreed to pay the United States $9,178,000 to settle allegations that it violated the False Claims Act by giving kickbacks to cardiologists in exchange for the cardiologists ordering and causing hospitals to order ELA’s cardiac devices. The settlement resolves a qui tam action from 2006 that was filed by a former ELA employee. According to the allegations the cardiologists were given gifts, meals and entertainment, tickets to sporting events, travel to medical conferences, travel to Costa Rica, fishing and boating trips and payment of travel expenses for the physicians’ spouses. In addition to the settlement payment, ELA agreed to pay $485,000 to the relator’s attorneys and ELA also agreed to enter into a Corporate Integrity Agreement with the Officer of Inspector General of the U.S. Department of Health and Human Services (OIG). The relator’s share of the settlement amount is approximately $1.9 million.
There is also a second qui tam action pending against ELA. The relator in that action alleges that ELA paid kickbacks to cardiologists by paying excessive compensation for training services. The parties in the second qui tam action have reported that they are engaged in settlement discussions and that the case has been administratively closed due to those discussions.
For more information on the False Claims Act and Anti-Kickback Statute, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.