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Michael Paddock is a partner in the Governmental Practice in the firm's Washington, D.C. office.

Yesterday, the Supreme Court issued a unanimous decision holding that the scienter element of the False Claims Act (“FCA”) is met if a defendant subjectively knew his or her claims were false and submitted them anyway. See United States ex rel. Schutte v. SuperValu Inc. and United States ex rel. Proctor v. Safeway. The Court’s ruling was narrow and avoided the more challenging—and common—issues raised during oral argument (which we previously discussed here).Continue Reading Supreme Court Clarifies that Subjective (Not Objective) Knowledge of Falsity of Claim Dictates False Claims Act Liability

According to the White House, the end of the COVID-19 national emergency and public health emergency (PHE) declarations is now barely two months away, as they are scheduled to end on May 11, 2023. These declarations provided the federal government with flexibility to waive or modify certain regulatory requirements applicable to the healthcare industry. Once the declarations end, so will the vast majority of these flexibilities and waivers. Accordingly, a relatively short and closing window remains for the healthcare industry – including but not limited to health plans, hospitals, home health agencies, clinics, and entities that offer telehealth services – to prepare their operational, administrative, and clinical teams for the reinstatement of previously waived requirements.Continue Reading Tracking the Waivers: Implications of the Wind Down of the COVID-19 Public Health Emergency

The Centers for Medicare and Medicaid Services (“CMS”) has issued a proposed rule which would amend the existing regulations for reporting and returning identified overpayments (the “Proposed Rule”). Specifically, with respect to the meaning of “identification” of overpayment, CMS proposes to eliminate the “reasonable diligence” (or traditional negligence) standard and replace it with the False Claims Act’s (“FCA’s”) standard of “knowing” and “knowingly” (i.e., reckless disregard or deliberate ignorance of a potential overpayment).Continue Reading CMS Proposes to Amend Overpayment Rule, Remove Potential Overpayment and False Claims Act Liability for Mere Negligence

The Eighth Circuit Court of Appeals recently tossed a $5.5 million jury verdict finding that a physician violated the False Claims Act (“FCA”) by submitting claims for items and services ordered subsequent to a violation of the Federal health care program anti-kickback statute (“AKS”). According to the appellate court, the trial court’s jury instruction “brushed aside causation” and “misinterpreted” a 2010 amendment to the AKS.Continue Reading Eighth Circuit: In False Claims Act Cases Based On Kickback Violations, the Kickback Violation Must Be the “But For” Cause of the Items and Services Subject to the Claim

Since its passage in late 2018, the Eliminating Kickbacks in Recovery Act (EKRA) (18 U.S.C. § 220) has posed interpretive challenges. Our detailed critical analysis of EKRA is available here. EKRA prohibits, among other things, the exchange of remuneration for referrals of patients or patronage to a clinical laboratory, or an individual’s use of the services of a clinical laboratory. The law, however, leaves key terms undefined, including “referral”, “patronage”, and “use of services.” This ambiguity leaves unclear exactly which forms of conduct are prohibited by EKRA. Further, EKRA contains exceptions that overlap imperfectly with safe harbors under the Anti-Kickback Statute (AKS) and states, confusingly, that EKRA “shall not apply to conduct that is prohibited” by the AKS. The latter provision imperils the status of conduct that is within an AKS safe harbor, but which does not meet the requirements of an EKRA exception. No implementing regulations have been published to alleviate any of these ambiguities.Continue Reading California District Court Finds that EKRA Applies to Compensation Methodologies for Labs’ Employed Marketers Who Market to Physicians

As of April 11, 2022, the Health Resources & Services Administration (“HRSA”) is now offering providers who missed the original Provider Relief Fund (“PRF”) reporting deadlines the opportunity to request the ability to report in compliance with the PRF Terms and Conditions. Request submissions for Reporting Period 1 are due by Friday, April 22, 2022.
Continue Reading Alert to Providers: Another Shot to Comply with Provider Relief Fund Reporting Requirements

On August 13, 2021, the D.C. Circuit Court of Appeals reversed a district court opinion vacating CMS’ Overpayment Rule, 42 C.F.R. 422.326, for Medicare Advantage organizations (“MAOs”).  UnitedHealthcare Insurance Co. et al. v. Becerra et al., case number 18-5326.  As a result of this decision, CMS can once again rely on the Overpayment Rule to impose voluntary refund obligations for MAOs.  MAOs – already subject to significant government enforcement related to their risk adjustment coding practices – should carefully consider the implications of this decision for their coding and auditing practices.
Continue Reading D.C. Circuit Gives New Life to CMS Overpayment Rule

Introduction

CMS’ most recent Stark Law rulemaking includes important changes to the rules that allow physician practices to satisfy the definition of “Group Practice” while distributing designated health services (“DHS”) – based profit shares and productivity bonuses. 85 Fed. Reg. 77492 (Dec. 2, 2020) (the “Final Rule”).  As these changes go into effect January 1, 2022, and the ability to bill Medicare for DHS is often contingent on satisfying the definition of “Group Practice,” physician practices should take action now to assess their physician compensation arrangements and methodologies under the new rules.Continue Reading Physician Group Practices Take Heed – January 1, 2022 Deadline Approaches for Compliance with CMS’ Recent Changes to Permissible “Group Practice” Compensation Methodologies

On July 13, 2021, the Centers for Medicare and Medicaid Services (“CMS”) released a Proposed Rule that proposes to amend certain regulations implementing the Physician Self-Referral Law, otherwise known as the “Stark Law”. The Proposed Rule proposes to revise once again the definition of “indirect compensation arrangement” (ICA), effectively to revert the meaning of the definition back – for the vast majority of indirect financial relationships between DHS entities and referring physicians – to the definition of that term as it was in place prior to the latest Stark Law rulemaking, “Modernizing and Clarifying the Physician Self-Referral Regulations” (the “MCR Final Rule”), published on December 2, 2020.[1]  The Proposed Rule also proposes to define the term “unit” and the phrase “services that are personally performed”, both for purposes of the ICA definition.
Continue Reading CMS Proposes to Revise, Again, the Stark Law’s Definition of “Indirect Compensation Arrangement”: What Was Old is New Again

In July 2020, we discussed a ruling by the D.C. Court of Appeals upholding the Department of Health and Human Services’ (HHS) site-neutral payment rules. On Monday, June 28, 2021, the Supreme Court declined, without comment, to hear an appeal from the American Hospital Association (AHA) and other provider groups asking it to reverse this ruling.
Continue Reading Site-Neutral Payments Stand: SCOTUS Declines to Hear AHA Appeal, Preserving Lower Payments to Off-Campus Provider-Based Departments