Recent Governmental Enforcement and Regulatory Developments

Headshot - DDBy: Dave Davidson

The last few weeks have seen some significant examples of the federal government’s vigilance in policing the healthcare market.  These events serve as a reminder of the highly regulated and scrutinized industry in which we work.  They are also a reminder to physicians and other providers to make sure their practices and contractual arrangements can pass this scrutiny.

The most significant recent event is the $115 million settlement between the government and the Adventist Health System.  This settlement resolved two whistleblower cases brought against the system by three employees.  The lawsuits alleged that the Adventist Health System violated the Stark law, which generally prohibits payments to physicians for making referrals unless an exception to the law is met.  The specific allegations against the Adventist Health System were that the compensation paid by the health system to some of its employed physicians exceeded fair market value; that the structure of the practice of the employed physicians did not meet the “group practice” exception; that physician compensation improperly included payment work not performed by the physicians; and that the physicians were paid for making referrals to the system.  Continue reading

The First False Claims Act Involving the Affordable Care Act (ACA) 60 Day Repayment Rule

By: Valerie Shahriari

While the False Claims Act (FCA) has been in existence for years, many providers do not know that the rule was extended in 2010.  As part of the Affordable Care Act (ACA), Congress created the “60 Day Rule” and extended the False Claims Act liability to health care providers who fail to report and return overpayments within 60 days of identification if that overpayment came from a federal program (i.e., Medicare and Medicaid).  United States ex rel. Kane et al. v. Healthfirst, Inc., et al (Case No. 1:11-cv-02325) (S.D.N.Y. August 3, 2015) is the first case in which the federal government intervened on an alleged violation of the 60 Day Rule.  Continue reading

Provider Credit Balances Result in $6.8 Million Overpayment Settlement

bonus calculationBy: Karina Gonzalez

USA v. Pediatric Services of America –  settlement under the False Claims Act involving a health provider’s failure to investigate credit balances on its books to determine whether they resulted from overpayment by a federal health care program.

The U.S. Attorney for the Northern District of Georgia  announced that Pediatric Services of America Healthcare, Pediatric Services of America, Inc., Pediatric Healthcare, Inc., Pediatric Home Nursing Services (collectively, “PSA”), and Portfolio Logic, LLC agreed to pay $6.88 million ($6,882,387) to resolve allegations that PSA, a provider of home nursing services to medically fragile children, knowingly (1) failed to disclose and return overpayments that it received from federal health care programs such as Medicare and Medicaid, (2) submitted claims under the Georgia Pediatric Program for home nursing care without documenting the requisite monthly supervisory visits by a registered nurse, and (3) submitted claims to federal health care programs that overstated the length of time their staff had provided services, which resulted in PSA being overpaid.

“Participants in federal health care programs are required to actively investigate whether they have received overpayments and, if so, promptly return the overpayments,” said United States Attorney, John Horn. “This settlement is the first of its kind and reflects the serious obligations of health care providers to be responsible stewards of public health funds.” Continue reading

Compounding Pharmacy Shells Out $3.775 Mil to Settle False Claims Suit

bonus calculationA Jacksonville compounding pharmacy has agreed to pay $3.775 million to settle false claims allegations that it defrauded TRICARE. MediMix Specialty Pharmacy billed TRICARE for compounding pain prescriptions that came from an improper referral source. MediMix’s top-prescriber over a period of five years was also married to one of MediMix’s senior vice presidents. MediMix itself was one of TRICARE’s top billers for compounded pain medications.

Since the federal law limiting physician self-referrals, 42 U.S.C. 1395nn (more commonly called the “Stark law”) does not apply to TRICARE, the government proceeded under a law entitled Administrative Remedies for Fraud, Abuse, and Conflict of Interest, 32 C.F.R. 199.9, which is applicable for claims submitted to CHAMPUS and TRICARE. This law is much more broad than the Stark law. While the Stark law contains specific exceptions, this law does not. Continue reading

Houston Court Brings the Heat in Payer Provider Case

bcbs lawsuitBy: Jeff Cohen 

A recent Texas District Court case took the usually frustrating ERISA dynamics applicable in payer provider disputes and upended them in a way that helped the provider.  There (Cigna v. Humble Surgical Hospital, Civ. Action No. 4:13-CV-3291, U.S. Dist. Ct., S.D. Tex., Houston Division), the court was faced with an out of network hospital sued by CIGNA to recover payments made.  In particular, the case involved—

  • An out of network hospital (HSH);
  • HSH set its prices higher than neighboring in network hospitals;
  • HSH billed Cigna members for deductibles and coinsurance at in network rates, but billed Cigna on an out of network basis;
  • Cigna alleged that the billing practices of HSH caused Cigna to pay more than its required share under applicable plans, even though plan members paid little or nothing at all;
  • Cigna also alleged HSH paid owner physicians referral fees to induce patient referrals; and
  • Cigna sought to recover payments made to HSH.

The case is a departure from the usual scenario, which involves (a) providers suing payers for payment and relying on state laws to do so, and (b) provides side stepping those state laws by successfully arguing that the federal ERISA law applies (which usually offers provides less favorable remedies). Continue reading

Recovery Business Industry Forced to Grow Up Fast

bcbs lawsuitBy: Jeff Cohen

When Horizon Blue Cross/Blue Shield of New Jersey blasted Avee Laboratories in connection with a variety of business practices, some of which included kickback violations (in connection with the provision of POCT cups), businesses in the drug and alcohol recovery space took notice.  With the recent FBI raid on a Palm Beach County sober house and the amped up attention of managed care payers to clinical lab testing, the industry is reeling!  The good news, however, is that these recent developments, along with increased payor scrutiny (and payment denial!), is a call to compliance that has long seemed inapplicable to an industry that has been able for many years to operate with simplicity not found in other segments of the healthcare business community.  Where facilities once viewed DCF as the only regulatory parent they had to please, they are now learning there is a far greater degree of regulatory complexity to be considered; and they are rushing towards compliance. Continue reading

District Judge Hits Halifax Hospital with $26M Fine in Qui Tam Suit

bonus calculationA November 13th order from U.S. District Judge Gregory A. Presnell hit Halifax Hospital in Daytona Beach hard and has implications for all physician bonus compensation arrangements.  The background of the whistleblower case involves: Continue reading