While attention has been focused on Medicare
physician payment data released by CMS yesterday, upcoming Sunshine
Act data will shine a new spotlight on financial relationships
between physicians and pharmaceutical and medical device companies
– with potential FCA implications.
Last week marked the deadline for pharmaceutical and medical
device manufacturers and group purchasing organizations (GPOs) to
register with and submit aggregate 2013 payment and investment
interest data to the Centers for Medicare & Medicaid Services
(CMS) on certain financial relationships between themselves and
physicians and teaching hospitals, as required by the Physician
Payment Sunshine Act.1 In May, manufacturers and GPOs
will be required to submit to CMS detailed 2013 payment data. With
some exceptions, CMS will be making these data public by September
1, 2014. While the publicly available data are intended to provide
more transparency for patients – to allow them to have a
better understanding of the financial relationships between
physicians and pharmaceutical and medical device companies –
patients will certainly not be the only group interested in this
public information. The Department of Health and Human Services
(HHS) Office of the Inspector General (OIG), Department of Justice
(DOJ), and relators' attorneys will likely utilize these data
to initiate investigations and support complaints under the federal
False Claims Act (FCA). As with the recent release of the 2012
Medicare Part B Physician Fee Schedule data, members of the media
will likely make inferences about certain financial
relationships.
The U.S. government recovered $3.8 billion in settlements and
judgments from civil cases involving fraud against the government
in the fiscal year ending Sept. 30, 2013.2 Fiscal 2014
looks to be a record-breaking year, with ever-increasing civil
settlements by major pharmaceutical companies.3
As the reporting deadlines approach, it is worth considering an
interesting, and largely unknown, potential implication of the
public availability of these data: How will it affect future FCA
litigation? The publically available Sunshine Act data could become
relevant to FCA litigation in a variety of ways; two in particular
are discussed below.
Anti-Kickback Statute Violations
The data could give rise to suspicions of violations of the federal
Anti-kickback Statute (AKS). The AKS makes it a criminal offense to
knowingly and willfully offer or pay remuneration to induce the
referral of, or arrange for the provisions of, federal health care
program business.4 In other words, the law prohibits any
person or entity from giving, receiving – or offering to give
or receive – anything of value in return for or to induce
referrals for businesses covered by Medicare, Medicaid, or any
other federally funded health care program. Violators of the AKS
face imprisonment, criminal, and civil fines, as well as exclusion
from federal health care programs.5
It is easy to see how publishing information regarding payments
from pharmaceutical and medical device manufacturers to physicians
and teaching hospitals could implicate the AKS, and by extension,
the FCA. The Patient Protection and Affordable Care Act (ACA) made
explicit that violations of the AKS are also violations of the
FCA.6 Any payment from a pharmaceutical or medical
device manufacturer to a physician who prescribes a product
manufactured by the company providing the payment could be viewed
as potentially inappropriate remuneration intended to influence
prescribing behavior.
Off-Label Promotion
Publically available information reported as a result of the
Sunshine Act may also have off-label promotion implications.
Notably, reports to CMS must include the name of the drug or the
type of device that forms the basis of the payment.7
Tying the payment to a particular drug or type of device could
raise suspicions of off-label promotion. A pharmaceutical or
medical device manufacturer that promotes its products for uses for
which the product has not yet been approved by the United States
Food and Drug Administration (FDA), i.e., off-label uses, is at
risk of FCA liability. A false claim can arise when a manufacturer
promotes a product for off-label, non-covered uses (that is, for a
use that both has not been approved by FDA and is not covered by
the federal health care programs). Payments going to physicians who
specialize in an area that is outside the scope of a pharmaceutical
or medical device's approved indication could necessarily raise
suspicions that the manufacturer is promoting the product for
unapproved uses.
Potential Limits
Besides the risk of government identifying potential issues for
further investigation and prosecution as a result of reported
Sunshine Act data, private parties may also mine the publically
available data. One substantial impediment to relators'
attorneys using Physician Sunshine Payment data in FCA litigation
is the limitation that publicly available data cannot form the
basis of a whistleblower claim.8 This is known as the
public disclosure bar, although the effectiveness of this defense
has been diminished with recent FCA amendments.
That said, the Sunshine Act data, even if not the basis of a claim,
could nonetheless impact the litigation in many ways. For example,
it could provide additional evidence for the government to review
in reaching its decision whether to intervene in a qui tam
action. Both OIG and DOJ could review the data before it is
publicly available to assist in the determination that a given
matter warrants intervention. Additionally, the publicly available
data – beyond providing flavor in support of an FCA claim and
assisting with meeting the heightened pleading standard associated
with fraud allegations9 – could be a potential
mine for plaintiff attorneys to locate areas of focus.
Relators' attorneys will no doubt track the data to ascertain
potential problem drugs or companies about which they can then
dedicate efforts to uncovering fraud and abuse in the federal
health care system.
Going Forward
It remains to be seen how all of these risks will play out going
forward. Courts will have to decide how these new data will fit
into FCA litigation. OIG and DOJ will have to determine how much to
rely on the new information. And relators' attorneys will need
to make decisions about how many resources to dedicate to mining
the Sunshine Act data.
One potential consequence that we are already starting to see occur
is that pharmaceutical and medical device manufacturers may halt or
limit payments to physicians, and/or that physicians themselves
will be reluctant to accept such payments, e.g., for research, for
expenses associated with training on a device, and the like.
Companies may decide to do so for a variety of reasons, including
avoiding the administrative burdens associated with tracking and
reporting such payments for purposes of the Sunshine Act, fear of
FCA litigation, or for public relations reasons. Many physicians
simply do not want their names publicized. It remains to be seen
how these trends will evolve.
1 42 C.F.R. § 403.908(a).
2 DOJ Press Release, available at:
http://www.justice.gov/opa/pr/2013/December/13-civ-1352.html.
3 See, e.g., DOJ Press Release, available at:
http://www.justice.gov/opa/pr/2013/November/13-ag-1170.html.
4 42 U.S.C. § 1320a-7.
5 Id.
6 42 U.S.C. § 1320a-7b(g). Note that manufacturers
may submit "assumptions documents" as part of Sunshine
reporting. Although CMS stated in the preamble to the Sunshine
regulations its belief that the contents of such documents
"should not be made public," it acknowledged that it
could provide access to the documents during an audit or
investigation by other HHS divisions, the Office of Inspector
General, or the Department of Justice.
7 42 C.F.R. 403.94(c)(8).
8 31 U.S.C. § 3730(e)(4).
9 Fed. R. Civ. P. Rule 9(b).
This article is presented for informational purposes only and is not intended to constitute legal advice.