This issue of McDermott's Healthcare Regulatory Check-Up highlights significant regulatory activity between October 21 and November 18, 2022, including recent enforcement activity, new litigation associated with the Office of Inspector General (OIG) Advisory Opinion No. 22-19, and a series of final Medicare payment rules from the Centers for Medicare & Medicaid Services (CMS)

NOTABLE ENFORCEMENT RESOLUTIONS AND ACTIVITY

PRIMARY CARE OWNER SETTLES FCA ALLEGATIONS FOR $2.6M

Feel Well Health Center, a primary care practice, and its physician owner entered into a civil settlement agreement and paid $2.6 million to resolve allegations that they violated the federal False Claims Act (FCA) and the state false claims act by improperly billing Medicare, Connecticut Medicaid and the State of Connecticut Comptroller Healthcare Programs by submitting false claims for payment for medical visits when, in fact, the patients had received fitness- related services with no legitimate medical component at a gym operated and staffed by a medically unlicensed coach and yoga instructor. The government also alleged that Feel Well and its owner submitted false claims for services allegedly rendered by its owner in an office setting when he was not physically present in the office suite, including when he was out of the country, on vacation or in a different office at the time. In connection with the civil settlement, Feel Well also entered into a three-year corporate integrity agreement with US Department of Health and Human Services (HHS).

OUTPATIENT SUBSTANCE-USE TREATMENT CENTER OWNER SENTENCED TO SIX YEARS IN PRISON

An Ohio-based substance-use treatment center owner was sentenced to six years in prison and ordered to pay $1.57 million in restitution to the Ohio Department of Medicaid's benefits program after pleading guilty to one count of aggravated theft and one count of Medicaid fraud. Ohio investigators found that the owner had submitted approximately 5,000 claims for services that were not provided, including claims for services purported to be personally provided while the owner was out of the state.

DOCTOR PLEADS GUILTY TO PSYCHOTHERPAY FRAUD SCHEME

A Connecticut-based physician and owner of MDCareNow LLC waived his right to be indicted and pleaded guilty to one count of healthcare fraud and one count of kickbacks involving federal healthcare programs in connection with his submission of fraudulent claims for psychotherapy services. MDCareNow and its physician owner submitted claims for psychotherapy services that the owner knew patients did not receive from his employees and that were not supported by medical records. The investigation revealed that the physician owner submitted fraudulent claims to Medicaid for reimbursement that falsely represented that his employees had rendered 60-minute psychotherapy sessions when, in fact, his employees only had very brief conversations with patients, only left a voicemail for patients or had no contact with patients at all. In pleading guilty, the physician owner also admitted that, in violation of his Connecticut Medical Assistance Program provider agreement, he paid a third-party "patient recruiting" company for each Connecticut Medicaid patient the company recruited and provided with transportation to MDCareNow for medical services. As part of his plea, the physician owner also agreed to pay $1.67 million in restitution.

DEFAULT JUDGMENT ENTERED AGAINST CHIROPRACTOR IN NATIONAL P-STIM CODING SCHEME

The Hon. Mitchell S. Goldberg of the Eastern District of Pennsylvania entered a default judgment against Titan Medical Compliance, LLC, and its owner in the amount of $15.2 million for FCA violations. As alleged in the complaint, Titan falsely promoted auricular electro-acupuncture devices as reimbursable by Medicare and other federal insurers, and as approved by the US Food and Drug Administration, ultimately causing more than 1,200 claims to be falsely submitted. This action is the latest in connection with the DOJ's nationwide investigation of improper billing schemes involving P- Stim electro-acupuncture devices.

SETTLEMENT REACHED MID-TRIAL IN GEORGIA FCA SUIT

A week into the trial involving a whistleblower and the State of Georgia versus Athens Orthopedic Clinic, US District Judge Clay Land dismissed the case because a settlement had been reached. The FCA action, filed in 2015 by Athens Orthopedic's former chief operations officer turned whistleblower, alleged that the clinic implemented a culture of cheating and maximizing profits while simultaneously covering up billing noncompliance. The settlement remains confidential at this time.

PHYSICIAN, PHARMACEUTICAL REP PLEAD GUILTY TO PRESCRIPTION KICKBACK CONSPIRACY

An Ohio-based physician and a pharmaceutical representative pleaded guilty to one count of conspiracy to solicit, receive, offer and pay healthcare kickbacks for their role in a scheme in which the physician wrote prescriptions for a drug to patients that did not have the requisite condition in exchange for money and other items of value. The physician received almost $1,500 per engagement for purported speaking engagements. Court documents provide that the physician received approximately $331,550 in payments from Avanir Pharmaceuticals Inc. (manufacturer of Nuedexta, a drug approved to treat pseudobulbar), while simultaneously writing more prescriptions for Nuedexta than any physician in the country. As part of his plea agreement, the physician agreed to a sentence of 30 months in prison, surrendered his medical license and will pay at least $1.17 million in restitution.

OIG ADVISORY OPINIONS

LITIGATION ASSOCIATED WITH OIG ADVISORY OPINION NO. 22-19

BACKGROUND

Pharmaceutical Coalition for Patient Access (PCPA), a Virginia corporation that has applied for 501(c)(3) status under the internal revenue code, requested an advisory opinion from OIG concerning a proposed arrangement between itself and manufacturers of oncology drugs reimbursed by Medicare Part D. PCPA's request stipulated that the manufacturers would fully fund the operations of PCPA. PCPA asked OIG to analyze the proposed arrangement and advise whether its terms would constitute grounds for sanctions under OIG's civil monetary penalties (CMP) and exclusion authorities related to violations of the federal anti-kickback statute (AKS) and the beneficiary inducements CMP law. On October 5, 2022, OIG issued an unfavorable opinion (AO 22-19) finding that the proposed arrangement contained numerous remunerative streams, many of which involved more than minimal risk of violating the aforementioned statutes. Our prior summary of AO 22-19 is available here.

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