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01/2006 |
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William T Mathias Appeared in Healthcare Expert Guide, 2006
Over the past several years, there have been a number of important changes in the way that decisions regarding health care policy, payment, and delivery are being made on the federal level. Such decisions were once driven by providers and, to a lesser extent, government regulators, specifically officials at the Centers for Medicare and Medicaid Services. Today, such decisions are increasingly being made, or at least driven by, government enforcement efforts. The term "government enforcement efforts" includes a multitude of different individuals both inside and outside the government. Inside the government, enforcement efforts progress on several levels. The Department of Justice in Washington, DC (commonly referred to as "Main Justice") is responsible for making decisions about the allocation of resources and for directing substantial, national investigations. For example, the PATH initiative was a national investigation into billing for services by physicians at teaching hospitals that had a substantial impact on physicians and academic medical centers across the country. The United States Attorney's offices in each federal court district are the line prosecutors who are responsible for investigating and prosecuting government enforcement actions. These offices have a great deal of flexibility in determining the types of cases they will pursue and the vigor with which they will pursue them. Some U.S. Attorneys offices are known for their aggressive enforcement efforts against the health care industry. For example, the U.S. Attorney's Office for the Eastern District of Pennsylvania in Philadelphia has aggressively pursued health care providers, particularly nursing homes, with charges that poor quality services provided to Medicare and Medicaid beneficiaries represent false claims. More recently, the U.S. Attorney's Office for the Eastern District of Pennsylvania has been pursuing a number of novel legal theories against pharmacy benefit managers ("PBMs"). Similarly, the U.S. Attorney's Office for the District of Massachusetts in Boston has been particularly aggressive in pursuing pharmaceutical manufacturers. See $875 million settlement with TAP Pharmaceutical Products related to the sales and marketing of its prostate cancer drug Lupron and criminal plea and $257 million settlement with Bayer Corp. related to the Medicaid drug rebate program. Finally, the Office of Inspector General of the Department of Health and Human Services (the "OIG") is responsible for investigating health care fraud, waste, and abuse. While the OIG has traditionally acted in cooperation with DOJ in pursuing matters, the OIG has shown a willingness to pursue matters on its own using various administrative sanctions authorities. An example of this was the OIG's pursuit of PharMerica, one of the nation's largest institutional pharmacies, based on alleged kickback violations. In June 2004, the OIG issued a press release and demand letter seeking civil monetary penalties totaling $21.8 million and a 10-year exclusion from participation in Medicare and other Federal health care programs. The case centered on the purchase of a pharmacy from the owners of 17 nursing homes and 8 assisted living facilities. The OIG alleged that the purchase price was excessive and constituted a kickback for future business from the owners. According to press reports, the OIG pursued the matter on its own after DOJ refused to pursue the matter. Ultimately, PharMerica settled the case with the OIG. Outside the government, increasing numbers of private citizens are stepping forward as relators under the qui tam provisions of the False Claims Act to blow the whistle on perceived health care fraud. If the government finds the allegations compelling, it will pursue the matter and the relator will receive a percentage of any judgment or settlement. However, even if the government decides not to pursue the matter, the qui tam relator still has the ability to pursue the matter on their own on behalf of the government and receive a larger percentage of any judgment or settlement. Many observes worry that the growing number of qui tam actions has hijacked the government's enforcement efforts. U.S. Attorney's offices across the country are required to devote substantial resources to investigating qui tam actions. In many cases, the issues raised in qui tam actions are not on the priority list of the U.S. Attorney's office. Finally, outside the government, there has been a growth of class actions and other impact litigation pursued by private citizens and well-healed plaintiffs attorneys. An example of this type of enforcement action is the series of lawsuits brought by Mississippi attorney Richard Scruggs and a group of high-profile, class action lawyers against nonprofit hospitals, alleging that their uninsured billing and collection methods abuse their tax-exempt status by grossly overcharging uninsured patients while providing discounted care to all other patients. While these cases have not been overly successful to date, they represent a worrisome trend for the healthcare industry. What does the increasing influence of government enforcement efforts on health care policy, payment, and delivery mean to hospitals, physicians, nursing facilities, laboratories, pharmaceutical companies, and others in the health care industry? First, and foremost, it has a profound impact on the way in which providers act. There is a growing understanding in the healthcare community of the costs of defending oneself in a government enforcement action, even when successful. Providers are increasingly reluctant to pursue strategies that, while legal, may invite government scrutiny. Second, providers are becoming increasingly cognizant of the importance of compliance programs. Compliance programs are helpful on two fronts. First, by addressing problems as they are identified by employees, providers are less likely to be faced with qui tam actions. The evidence suggests that a majority of whistleblowers are disaffected employees who have raised issues internally only to have their concerns dismissed or ignored. Second, a proactive compliance program will hopefully identify and correct potential problems before they become major issues. |
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Ober, Kaler, Grimes & Shriver
Maryland
Washington, D.C. Virginia |
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