New York Settles EmblemHealth Breach for $575,000

“New York Settles EmblemHealth Breach for $575,000,” is a reprint of an article first posted on the Sheppard Mullin Eye on Privacy blog on March 15, 2018. EmblemHealth is one of the United States’ largest nonprofit health plans. It is headquartered in New York City, New York.

New York Settles EmblemHealth Breach for $575,000

The recent $575,000 settlement with EmblemHealth signals a push from AG Schneiderman “for stronger security laws and hold[ing] businesses accountable for protecting their customers’ personal data.” Noting New York’s “weak and outdated” security laws, AG Scheiderman used the settlement to urge for the swift passage of the Stop Hacks and Improve Electronic Data Security Act (“SHIELD Act”) introduced by his office in November 2017, which would make New York one of the most protective states in terms of data privacy and security. Continue Reading

Healthcare Industry Beware: The Use of Statistical Sampling to Establish Damages and Liability Under the False Claims Act Remains a Viable Option for Plaintiffs

The False Claims Act contains numerous requirements that are designed to prevent meritless cases from proceeding to discovery and trial. Among these provisions is the rule that, to establish liability, the government or a relator must show that an actual claim was submitted to federal Medicare or state Medicaid for reimbursement. In some Circuits, such as the Eleventh, the government or a relator must identify claims at the pleading stage. Failure to do so will result in dismissal. Continue Reading

Proposed CVS Health-Aetna Acquisition Holds Strong in Congressional Hearing

Last Tuesday, February 27, 2018, representatives of CVS Health and Aetna went before the House Judiciary Committee Subcommittee on Regulatory Reform, Commercial, and Antitrust Law (“Subcommittee”) to argue in favor of CVS Health’s recently proposed acquisition of Aetna.[1] The Hearing, “Competition in the Pharmaceutical Supply Chain: the Proposed Merger of CVS Health and Aetna,” has drawn significant attention from stakeholders in the healthcare marketplace who are looking at the testimony and questions as an indicator of the current Congressional mood regarding (i) the antitrust/anticompetitive concerns raised by the transaction’s detractors, and (ii) the pro-consumer benefits (e.g., reduction in healthcare care costs and the transformation of the CVS Pharmacy locations into community medical hubs for primary care and basic procedures) identified by the transaction’s supporters. Continue Reading

Lifting the Limits on Physician-Owned Hospitals: Can Regulators Prevail Where Legislators Have Stalled?

We reported, in early 2017, on what was then the latest legislative effort to repeal the Affordable Care Act’s amendment to the Stark Law’s whole hospital exception, which amendment has effectively prevented new physician-owned hospitals from participating in the Medicare program. (You can visit—or revisit—that post, which explores arguments in favor of and in opposition to the restriction, here.)

While the Patient Access to Higher Quality Health Care Act of 2017, introduced in the House in February 2017 and, in May 2017, the Senate, did not pass, recent rumblings suggest that repeal efforts are far from exhausted; rather, proponents of physician hospital ownership may be targeting a new tactic: regulation. Continue Reading

New DOJ Guidance Policy Limits Use of Guidance Documents in Federal Civil Actions

[1] On January 25, 2018, Associate Attorney General Rachel Brand issued a memorandum on behalf of the U.S. Department of Justice (DOJ) (the “Brand Memo”) which effectively limits the use and enforcement power of guidance documents for the purposes of affirmative civil enforcement cases, a development that could have a significant impact on how certain healthcare cases are handled at the federal level by federal departments, agencies, and administrations, including those that are fixtures of the healthcare marketplace – the Department of Health and Human Services (HHS) and its constituent agencies, including the Centers for Medicare and Medicaid Services (CMS), the Food and Drug Administration (FDA) and the HHS Office of Inspector General (OIG). Continue Reading

The Bipartisan Budget Act Boosts Medicare: Flexibility and Financing for Healthcare Plans and Providers

On Friday, February 9, 2018, President Trump signed the Bipartisan Budget Act of 2018 (the “Budget”), a two-year budget which, in significant part, made substantial revisions to Medicare, including the Medicare Advantage (MA) program. Such revisions include:

i. the addition of non-medical services (e.g., home-delivered meals, transportation to and from a physician’s office, etc.) and telehealth services to the range of MA-covered services that an MA plan (Plan) can offer to its members;

ii. a significant increase in federal funding for services provided by federally qualified health centers (FQHCs);

iii. disbanding the Independent Payment Advisory Board (IPAB), a board comprised of presidential appointees whose sole authority and responsibility was to cut Medicare costs and expenses; and

iv. an increase in the discounts that pharmaceutical companies must give seniors enrolled in Medicare Part D drug plans by making the so-called “doughnut hole” disappear in 2019.

The above Medicare-related changes were part of the “Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017” (the “Act”) – a bipartisan bill that passed the Senate last October and was incorporated into the Budget during the final throes of Budget negotiations.

The following includes a more in-depth discussion of each of the Budget items described above. Continue Reading

Temporal Proximity Is Not Enough: Third Circuit Nixes FCA/Anti-Kickback Suit For Failure To Link Alleged Scheme to Claims

On January 19, 2018, the United States Court of Appeals for the Third Circuit affirmed a district court’s ruling granting summary judgment to a specialty pharmacy that was accused of violating the Anti-Kickback Statute and the federal False Claims Act (United States ex rel. Greenfield v. Medco Health Solutions, Inc. et al., No. 17-1152.). The court held that the relator, a former vice president of the specialty pharmacy, failed to link the pharmacy’s alleged kickback scheme to the actual submission of claims to Medicare. The decision is important because it stands for the proposition that to be liable under the False Claims Act a relator must allege more than the defendant was submitting claims for federal health care program beneficiaries while engaging in kickbacks. Rather, it must allege that at least one claim was submitted for services that were provided in violation of the Anti-Kickback Statute. Continue Reading

Escobar’s Demanding Materiality Standard Nixes $350 Million Verdict Against Florida Nursing Facility

A Florida federal court threw out a $350 million jury verdict against a nursing facility, citing the Supreme Court’s landmark decision in Universal Health Services, Inc. v. United States ex rel. Escobar. The court explained that the relators had failed to establish that the alleged violations were material to the federal Medicare and state Medicaid programs’ decision pay claims.

The ruling is another piece of welcome news to the healthcare community, which is historically the primary target of the government’s False Claims Act enforcement efforts. The ruling demonstrates that under Escobar, it is one thing to proclaim that a violation was material to the government’s decision to pay, but it is another thing to prove it. Continue Reading

The Department of Justice Delivers Some Good News to the Healthcare Industry: New False Claims Act Guidance Predicts More Challenges to Qui Tam Plaintiffs

The DOJ is empowered under the FCA to seek dismissal of unmeritorious qui tam suits brought in its name. The DOJ has historically used this power sparingly. We are happy to report, however, that more dismissals may be on the horizon.

On January 10, 2018, Michael Granston, Director of the Commercial Litigation Branch of the Fraud Section of the U.S. Department of Justice circulated an internal memorandum that was published last week in the legal press. The memorandum collects cases in which the Department sought dismissal of unmeritorious qui tams. It categorizes these cases into seven factors that DOJ attorneys should consider when evaluating whether the government should seek to dismiss a qui tam.

Nearly all FCA recoveries against healthcare entities in the last three years came from cases filed by qui tam relators. In other words, of $7.3 billion recovered from healthcare entities in 2015-17, $6.9 billion of that originated from qui tam suits. The Department of Justice’s guidance is welcome news for healthcare entities as it will likely further stymie unmeritorious qui tam litigation.

The following article, “DOJ Formalizes Guidance for Government Dismissal of Unmeritorious Qui Tam Suits,” by Michael Paddock, David T. Fischer and Matthew Turetzky was previously posted on January 25, 2018, on the Sheppard Mullin False Claims Act Defense Blog. Continue Reading

Life in the Slow Lane? What the Net Neutrality Repeal May Mean for Telehealth Services

Will the repeal of the net neutrality rules negatively impact the provision of TELEHEALTH SERVICES, which require robust and reliable internet connectivity?

Net neutrality is the principle that Internet Service Providers (ISPs) must treat all internet data equally and not discriminate or charge differently based on content, user, website, platform, application, or method of communication. Following this principle, the Obama-era Federal Communications Commission (FCC) adopted net neutrality rules in 2015, classifying high-speed broadband service as a public utility under Title II of the Telecommunications Act and prohibiting ISPs from intentionally speeding up, slowing down, or blocking any content, applications, or websites.[1] On December 14, 2017, however, the FCC voted 3-2 to repeal the net neutrality rules, creating considerable uncertainty about how this policy change will affect the healthcare industry, particularly with respect to telemedicine.[2]    Continue Reading