United States: Seven Takeaways From The ABA National Institute On Health Care Fraud

Last Updated: June 2 2017
Article by Ellyn Sternfield

On May 17, 2017 the American Bar Association convened its 27th National Institute on Health Care Fraud.  I have attended many of the past annual meetings, and always enjoy the presentations and the opportunity to network with colleagues from all sides of the aisle.  And I always come away with a few nuggets to share with those who did not attend.

Here are my seven top takeaways from this year's Institute.

  1. DOJ Enforcement Priorities: The acting Criminal Chief at the U.S. Department of Justice (DOJ), Kenneth Blanco, was a late addition to the agenda.  Blanco asked to speak, in part, to assure attendees that health care fraud will remain a prime focus of DOJ.  Mr. Blanco highlighted two priority areas of focus for DOJ attorneys: (i) opioid-related cases (an area mentioned by all government speakers), and (ii) Medicare Part D billing.  Without referencing Sally Yates or the "Yates Memo," Mr. Blanco also reiterated DOJ's ongoing commitment to focusing on individual responsibility in pursuing health care fraud cases.
  1. Admissions of Conduct: Blanco did not address the question of admissions of conduct as part of civil False Claims Act (FCA) settlements.  But through other speakers it became apparent that there is not a consistent, nation-wide approach as to whether or not respondents can continue to deny liability, or must admit to alleged conduct, in civil FCA settlements.  While at least one district is presently insisting that respondents admit to responsible conduct as part of any civil FCA settlement, many other districts continue to allow respondents to deny liability to facilitate civil FCA settlements.
  1. Materiality and Escobar: The U.S. Supreme Court decision in U.S. v. Escobar continues to reverberate in civil FCA litigation.  Federal prosecutors recognize that the mere assertion that the government "could" have denied the claim based on the underlying conduct will likely not suffice to establish FCA materiality under Escobar.   Defense attorneys believe that materiality must be judged not by what government attorneys say, but by what affected government agencies do in response to the asserted conduct.  Government attorneys, defense attorneys and relators' counsel are all concerned about the spin being put on the recent 4th Circuit Opinion in Triple Canopy, that materiality can be found based on whether or not the government intervened in a qui tam. 
  1. Kickback Violations: Whether or not it is a result of Escobar, it is clear that kickback violations are now the primary issue being addressed through FCA qui tam
  1. FCA Penalties: Most practitioners know that the FCA penalty assessments, as well as civil monetary penalty assessments, and other types of federal penalty provisions, were significantly increased last year as a result of legislative mandate.  However, the legislation also requires the penalty assessments to be subject to an annual inflation adjustment.  For example, civil FCA claims penalties just went up again to a minimum of $10,957 and a maximum of $21,916 per claim.  Yet to be litigated: is the applicable penalty range determined when the conduct occurred or, as one government attorney opined, by the penalty range that exists when the penalty is assessed?  As an editorial aside, would a court really apply an ex post facto penalty assessment in light of the already-lurking 8th Amendment challenges to the penalties?
  1. OIG: The Office of Inspector General for the U.S. Department of Health and Human Service (OIG) has staffed up its legal team, and, combined with improved data access and analytics, is now pursuing more affirmative civil monetary penalty cases than ever before.  And the OIG is exercising discretion under its announced standards on when to exclude individuals responsible for conduct underlying FCA judgments and settlements.  The average time to resolve an OIG self-disclosure is now under ten months. OIG did not report on whether there was a similar decrease in the average time to respond to a request for an Advisory Opinion.
  1. Access to Care Exception: OIG acknowledged that while the final rule codifying the Access to Care exception to the beneficiary inducement prohibition provides no safe harbor for kickback violations (or potential qui tams for the kickback violation), OIG has no present intention to propose a corollary kickback safe harbor for Access to Care.  However, OIG has issued an Advisory Opinion, #17-1, in which it said that if a proposal met the Access to Care exception for beneficiary inducement, OIG would "exercise its discretion" and would not consider sanctioning the conduct as a kickback.  The clear implication was that OIG would consider similar language in future Advisory Opinions.

On this final point, I believe it is important to note the exact language of Opinion #17-1.  In examining a proposed arrangement to provide needy patients with reduced cost lodging and meals during medically necessary hospital treatments, OIG acknowledged the arrangement qualified for the Access to Care exception for beneficiary inducement.  OIG also stated that it would not sanction the conduct under the kickback prohibition, but in doing so it acknowledged that the proposed arrangement does implicate the anti-kickback statute.  The Opinion also states that the Opinion is only binding on the U.S. Department of Health and Human Services, not on DOJ or any relator.  And the Opinion specifies that OIG is not opining on whether the arrangement could be used to allege potential liability under the false claims act, including an allegation based on alleged kickbacks.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Ellyn Sternfield
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