Last month, Baxter International Inc. and Baxter Healthcare Corporation (collectively “Baxter”) settled a qui tam False Claims Act (FCA) case with the Department of Justice (DOJ) for $18 million. The settlement is not monumental in terms of the amount, but does highlight the unique theory of FCA liability.
False Claims Act
Arent Fox has assembled a formidable team of health care regulatory experts, former federal and state prosecutors, civil litigators, and related professionals to help health care providers and suppliers of all types with False Claims Act (FCA) investigations, compliance issues, and related government program integrity matters. The resulting combination of regulatory and litigation expertise gives our clients substantial resources to respond to a difficult enforcement environment. The health care, pharmaceutical, and device industries are facing heightened scrutiny from the Centers for Medicare and Medicaid Services (CMS), the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS), Office of Civil Rights (OCR), the Department of Justice (DOJ), state Medicaid Fraud Control Units (MFCU), state and federal health care program administrative agencies, and a broad range of government contractors tasked with various program integrity and auditing functions.
This heightened enforcement has had meaningful consequences. In 2011 and 2012, CMS revoked the billing privileges of more than 14,000 providers and suppliers, which is more than double the number revoked in the previous two years. In some states the number of revocations has quadrupled. In 2012, the government recovered a record-breaking $4.2 billion from providers, suppliers, and manufacturers bringing total fraud recoveries for the past four years to $14.9 billion dollars — more than twice the prior four-year period.
The Arent Fox team is highly experienced in the settings in which FCA cases often arise. Our team includes professionals with deep experience both in counseling clients in complex regulatory compliance matters and investigations, and in litigating when necessary. On the regulatory side, our lawyers include former HHS and OIG counsel, a Medicaid Inspector General, certified professional coders and clinicians as well as nationally recognized experts in Medicare regulations, the anti-kickback statute, and the Stark Law. Our litigators include a former federal district court judge, a US Attorney, the former Chief of Government Fraud Section (Los Angeles), assistant US attorneys and an assistant district attorney, and an OIG Senior Trial Attorney. All of them have been at the forefront of health care criminal, civil, and administrative enforcement actions. With both government and private practice experience, the Arent Fox team knows how to navigate enforcement and regulatory matters.
Where our clients have been unable to avoid litigation, we have won and successfully settled many major cases in the health care and pharmaceutical areas. We have advised hospitals, nursing homes, hospices, home care agencies, medical device and pharma manufacturers, academic medical centers, and a broad range of other health care providers and suppliers, as well as clinical researchers and health care practitioners who have faced FCA allegations.
Our areas of concentration include the following:
- Compliance Program Development and Counseling
- Coverage and Reimbursement
- Fraud and Abuse Audits and Investigations
- Government Enforcement/ False Claims Defense
- Overpayments, RAC & Payment Appeals
- Pharmaceutical Pricing and Compliance
- DOJ, OIG, OMIG, ZPIC, OCR, RAC, MIC and MAC Medical Reviews, Audits, and Investigations
We have experience defending allegations of the following:
- Billing and coding fraud
- Failure to comply with Medicare and Medicaid payment and coverage requirements
- Anti-Kickback Act violations
- AWP, Best Price, 340B, ASP, and other pricing manipulation
- Off-label marketing
- Physician self-referral (Stark Law) violations
- False certification of medical necessity
- Clinical research fraud
- Whistleblower retaliation
- Privacy breaches
Some of the services we provide include the following:
- Representing providers in Department of Justice (DOJ) investigations and litigation.
- Representing providers in audits and investigations by the Office of the Inspector General (OIG), Office of the Medicaid Inspector General (OMIG), Zone Program Integrity Contractors (ZPIC), Recovery Audit Contractors (RAC), Medicaid Integrity Contractors (MIC) and Medical Administrative Contactors (MAC), and Office of Civil Rights (OCR) for HHS (HIPAA).
- Representing drug and device manufacturers in Medicare and Medicaid fraud and pricing investigations and litigation, including managing responses to state and federal investigative subpoenas.
- Performing audits, identify compliance risks and formulate Corrective Actions Plans.
- Preparing clients for on-site visits by government investigators, auditors and surveyors.
- Challenging billing privilege suspension, revocation or program enrollment termination.
- Guiding clients through new provider program enrollment and revalidation of existing provider eligibility.
- Conducting internal compliance investigations and, when necessary, assist with voluntary disclosures and repayments.
- Providing independent review and assessment of claims, and counsel on reimbursement, coding and billing issues.
- Providing compliance training, whether generalized or tailored to a specific need or issue.
Our practice includes counseling and advising clients in the development and implementation of strategies to minimize FCA exposure. Arent Fox works proactively with clients to develop effective compliance programs and training tailored to each client’s regulatory environment. We audit and evaluate existing compliance programs to identify and correct potential weak points. We also guide clients through government program audits, preempting unnecessary disputes and litigation. We also work with our employment law colleagues to help clients address the disruptive effect of whistleblowers within their organizations without running afoul of the FCA’s anti-retaliation provisions. When necessary, we assist our clients with repayments, voluntary disclosures, settlement negotiations, and the implementation of corporate integrity agreements or corporate monitoring programs. Our attorneys understand the collateral consequences that can result from FCA litigation, and we help clients avoid or defend against exclusion, suspension, or debarment.
Arent Fox also offers a full suite of proactive compliance assessment and advisory services to identify and address potential problems and vulnerabilities before the government investigators are at the door. Our team of health care compliance professionals and attorneys is uniquely qualified to prepare clients for the overwhelming challenges they will confront with full implementation of the Affordable Care Act.
On December 6, 2016, the Supreme Court determined in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby that violation of the statutorily mandated seal requirement, 31 U.S.C. § 3730(b)(2), in a qui tam False Claims Act case does not automatically require dismissal, but instead the district court has discretion to determine the appropriate sanction under the circumstances – whether it be dismissal or a less severe sanction.
The US Attorney’s Office for the District of New Jersey recently announced an agreement with BioTelemetry Inc. to settle allegations that its recently-acquired subsidiary, MedNet, Inc., violated the Anti-Kickback Statue and False Claims Act by improperly inducing health care providers to use the company’s cardiac monitoring services.
On November 1, 2016, the Supreme Court heard argument in State Farm Fire & Casualty Co. v. United States ex rel. Rigsby, a False Claims Act case in which the defendant sought dismissal of a qui tam action after the whistleblower violated the FCA’s seal requirement, 31 U.S.C. § 3730(b)(2), and publicly disclosed the complaint. See the oral-argument transcript here.
Life science companies, health care providers, and government contractors will be at risk for significantly larger penalties due to substantial increases to False Claims Act (FCA) penalties and civil monetary penalties (CMPs). These penalty increases cover a broad range of health care violations, including the Stark Law, the Anti-Kickback Statute, the Emergency Medical Treatment and Labor Act (EMTALA) and the Health Insurance Portability and Accountability Act (HIPAA).
Please join Arent Fox partner Erin Muellenberg on Friday, September 16, from 1:30-2:30 PM Eastern for an AHLA educational call on the Implications of Escobar: Credentialing and Peer Review Compliance Issues and Risks.
In a highly anticipated decision, the United States Supreme Court issued a unanimous opinion in Universal Services, Inc. v. United States ex rel. Escobar that threw out existing law related to the implied certification theory of liability under the False Claims Act.
ABOUT ARENT FOX LLP
Arent Fox LLP, founded in 1942, is internationally recognized in core practice areas where business and government intersect. With more than 350 lawyers, the firm provides strategic legal counsel and multidisciplinary solutions to clients that range from Fortune 500 corporations to trade associations. The firm has offices in Los Angeles, New York, San Francisco, and Washington, DC.