United States: The Opioid Crisis: An Emerging False Claims Act Risk Trend


The government's focus on the US opioid crisis has been consistently expanding over the past year beyond manufacturers to reach prescribers and health care providers who submit claims to federal health care programs for opioid prescriptions. These efforts increasingly include investigations under the False Claims Act and administrative actions, in addition to the more traditional criminal approach to these issues.

With the Trump administration's public health emergency orders, it is expected for the government's enforcement activities, including those instigated by relators and their counsel, to grow in this area.

In Depth

For the past year, we have witnessed increasing governmental focus on the US opioid crisis. Pharmaceutical manufacturers and wholesale distributors have recently seen the most activity with lawsuits filed by almost every state, multiple municipalities and several Native American tribal nations seeking recovery of funds expended dealing with opioid abuse. The federal government, principally the US Department of Justice (DOJ) and the US Department of Health and Human Services Office of Inspector General (OIG), have begun to take actions that indicate their expanding focus on prescribers and health care providers who submit claims to federal health care programs for opioid prescriptions, as well as drug treatment and drug testing services. This activity is taking the form of criminal, civil, and administrative actions and claims audit efforts. With the Trump administration's public health emergency orders, one can only expect to see the government's enforcement activities, including those instigated by relators and their counsel, to grow in this area.

Medicare Strikeforce Activities

For years now, DOJ and OIG, with other partner law enforcement agencies, have used the summer months to stage significant orchestrated "takedowns." This past July's takedown was the first to feature, as described by OIG, "a large-scale federal and state partnership to combat health care fraud and the opioid epidemic." This multi-agency, national enforcement operation is described by OIG as the largest in history, both in terms of the number of defendants charged and loss amount. More than 400 defendants in 41 federal districts were charged for their alleged participation in schemes involving more than $1.3 billion in false billings to federal health care programs. Of those subjects charged, 115 are medical professionals, with many of the charges involving improper or excessive prescription of opioids. Exclusion notices were served to 295 individuals (57 doctors, 162 nurses and 36 pharmacists) for conduct related to opioid diversion and abuse. The exclusion notices bar participation in, or submitting claims to Medicare, Medicaid and all other federal health care programs.

DOJ Activities

On January 30, Attorney General Jeff Sessions announced a surge of Drug Enforcement Administration (DEA) agents and investigators over the coming month and a half, focused on pharmacies and prescribers who are dispensing unusual or disproportionate amounts of opioid drugs. The DEA will examine distribution and inventory data reported to the DEA by prescription drug manufacturers and distributors for "patterns" and "outliers" for further investigation.

This follows Attorney General Sessions' announcement on August 2, 2017, of the creation of the Opioid Fraud and Abuse Detection Unit, a new DOJ pilot program that aims to utilize data to identify physicians and pharmacies for investigation of their opioid prescription practices. This data analytics team is described as tasked with identifying physicians who are "writing opioid prescriptions at a rate that far exceeds their peers; physicians who have patients who died within 60 days of an opioid prescription; the average age of patients receiving these prescriptions; [and] pharmacies that are dispensing disproportionately large amounts of opioids." As part of the program, DOJ will fund 12 assistant US attorneys for a three-year term to focus solely on investigating and prosecuting health care fraud related to opioid prescribers and pharmacies. These prosecutors will be based in Alabama, California, Florida, Kentucky, Maryland, Michigan, Nevada, North Carolina, Ohio, Pennsylvania, Tennessee and West Virginia.

Prosecutions are not limited to these jurisdictions. From Newark to New Orleans, there has been a noticeable uptick in the number of criminal convictions of physicians and pharmacists for opioid prescription practices. These cases further illustrate the "outlier"-driven approach the government is deploying to identify targets with higher than average prescription and dispensing rates for investigation.

The government's efforts are also leading to civil cases as well. In 2017, two pharmacies paid $11.75 million and $2.175 million respectively, to settle False Claims Act (FCA) allegations predicated on the Controlled Substances Act, such as filling prescriptions that were incomplete, lacked valid DEA numbers or were for substances beyond various doctors' scope of practice, and not keeping and maintaining accurate records for controlled substances. There have also been FCA settlements with physicians, clinics, wholesalers and manufacturers concerning opioid prescription issues.

OIG Activities

In addition to the stunningly large number of exclusion notices issued in the July 2017 takedown, OIG is mobilizing its administrative and audit resources to address the opioid crisis. At the American Health Lawyers Association fall conference, Deputy Inspector General for Investigations Gary Cantrell stated that OIG would be evaluating cases for potential civil monetary penalty and exclusion actions in coordination with DOJ's investigative efforts.

In the same month, OIG issued an unusual "data brief" document discussing its data analysis of Medicare Part D opioid prescriptions. OIG found (1) "one in three Medicare Part D beneficiaries received a prescription opioid in 2016"; (2) about 500,000 beneficiaries (excluding cancer and hospice patients) received high amounts of opioids (defined as an average morphine equivalent dose of greater than 120 milligrams per day or at least three months); (3) almost 90,000 beneficiaries are "at serious risk" who either received "extreme amounts of opioids" or appeared to be doctor shopping; and (4) about 400 prescribers had "questionable opioid prescribing patterns for beneficiaries at serious risk ... these patterns are far outside the norm and warrant further scrutiny."

For the last four months, OIG has added new items to its audit Work Plan concerning opioids.

In October, OIG added an item to examine the US Food and Drug Administration's (FDA) use of its the authority to require pharmaceutical companies to develop Risk Evaluation and Mitigation Strategies (REMS) when FDA determines that the risk of using a drug outweighs its benefit. According to OIG, FDA stated it would use the REMS program to "increase the number of prescribers who receive training on pain management and safe prescribing of opioid drugs in order to decrease inappropriate opioid prescribing." OIG will review how FDA determined the need for opioid REMS and determine the extent to which FDA has held pharmaceutical companies with required opioid REMS accountable for REMS assessments. OIG will also determine the extent to which FDA has held opioid REMS sponsors accountable for REMS goals to mitigate risks of misuse, abuse, addiction, overdose and serious complications because of medication errors. This audit topic may spur FDA to increase the use of, and scrutiny of existing, REMS programs.

  • In November, OIG said it would conduct an analysis of Medicaid beneficiaries to, similar to the Medicare Part D data brief, identify beneficiaries who received extreme amounts of opioids through Medicaid and those cases that appear to involve doctor shopping or pharmacy shopping, as well as prescribers associated with these beneficiaries.
  • In December, OIG announced an audit of states' use of funding from the Centers for Disease Control and the Substance Abuse and Mental Health Services Administration (SAMHSA) to prevent opioid abuse and misuse. This audit could spur certain states to increase their activities, which could include detecting suspect Medicaid spending on controlled substances.
  • Also in December, OIG announced an audit of technology/information security (IT/IS) operations and opioid prescribing practices at five Indian Health Services (IHS) hospitals to determine whether (1) IHS's decentralized management structure has affected its ability to deliver adequate IT/IS services in accordance with federal requirements, and (2) hospitals prescribed and dispensed opioids in accordance with IHS policies and procedures. This audit topic may be of interest to health systems, physician practices and pharmacies as a step to take to monitor a facet of their opioid dispending patterns and controls.
  • In January, OIG stated plans to release a toolkit as a follow up to the data brief "to assist public and private stakeholders in addressing the opioid epidemic." The toolkit will provide information on how OIG analyzed a large dataset of opioid claims to produce patient-level opioid data, as well as how it calculated Morphine Equivalent Dose (MED) levels for these patients. This toolkit could be a valuable resource for providers to analyze their own prescriber data, as well as provide relators' counsel and prosecutors with similar abilities.

* * *

Attention to the opioid crisis shows no signs of decreasing. Various government agencies are devoting substantial resources to addressing opioid abuse, including investigating and pursuing prescribers, health care providers and manufacturers. Organizations should consider the extent to which opioid prescription issues and practices are addressed by the compliance programs' risk assessment and auditing and monitoring functions.

The Opioid Crisis: An Emerging False Claims Act Risk Trend

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