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June 25, 2015

United States Supreme Court Rules to Uphold Federal Subsidies Created by the Affordable Care Act

June 25, 2015

On June 18, 2015, the United States Supreme Court decided the case of King, et al. v. Burwell, Secretary of Health and Human Services, et al., upholding federal subsidies for taxpayers who buy health insurance on the federal government's healthcare.gov webpage. The potential loss of the subsidies was seen by commentators as a significant threat to the Affordable Care Act.

Chief Justice John Roberts wrote for the 6-3 majority of the Court, finding that though the text of the law was ambiguous, the Affordable Care Act was passed "to improve health insurance markets, not destroy them." Thus, the Court found that the tax credits that are available to the state health insurance exchanges should also be available to insurance purchased on the federal government's healthcare.gov page, which is relied upon by as many as 37 states that do not have their own insurance exchanges. Chief Justice Roberts' opinion was joined by Justices Kennedy, Ginsburg, Breyer, Sotomayor and Kagan. Justice Scalia dissented, and was joined by Justices Thomas and Alito.

The attorneys at The Health Law Partners have a significant amount of experience in providing guidance to healthcare stakeholders as to developments in healthcare law, regulation and policy throughout the United States. For more information regarding such matters, please call (248) 996-8510 or visit thehlp.com.

June 18, 2015

U.S. Government Arrests 243 Individuals for Healthcare Fraud Allegations


On June 18, 2015, the U.S. Department of Health and Human Services ("HHS") arrested 243 individuals for allegedly participating in Medicare/Medicaid fraud schemes. The government claims that combined, the cases involve $712 million in supposedly false billings. As part of the sweep, the Centers for Medicare and Medicaid ("CMS") also suspended a number of providers' ability to bill Medicare using the Affordable Care Act's suspension authority. 16 individuals in the Metro Detroit area were arrested as part of the sweep. The arrests were credited to the Health Care Fraud Prevention and Enforcement Action Team ("HEAT"), a joint initiative between HHS and the Justice Department. HEAT operates in regions of concern throughout the U.S., including the Baton Rouge, Brooklyn, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami-Dade and Tampa Bay areas.

The government claims that the fraud occurred in various areas of healthcare, including home health care, psychotherapy, physical and occupational therapy, durable medical equipment ("DME") and pharmacy. Court documents claim that those charged were involved in billing Medicare and Medicaid for treatment that never occurred, treatment that was not medically necessary or for the payment of kickbacks in exchange for patient referrals.

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June 8, 2015

BILL TO AMEND MICHIGAN NO-FAULT LAW TO CREATE "D-INSURANCE" FOR THE CITY OF DETROIT WILL HAVE SIGNIFICANT ADVERSE IMPACT ON HEALTH CARE PROVIDERS

In addition to the proposed amendment to Michigan's No-Fault Act that is presently on the floor of the State House of Representatives awaiting a second reading, another bill that poses to decrease reimbursements has cleared the Michigan Senate's Insurance Committee. Senate Bill 288, proposed by Senator Virgil Smith, involves limiting no-fault benefits for injured residents of Detroit and potentially other large cities in the State of Michigan.

As proposed, cities over 500,000 in population (only the City of Detroit, with a U.S. Census-estimated 2014 population of 680,250 would qualify) or a city that can demonstrate that 35% or more of the city's residents who regularly drive a vehicle do so without automotive insurance would qualify. The bill's sponsors admit that it is not known which Michigan cities other than Detroit would qualify as 35% or greater uninsured, due to lack of data.

Under the bill, qualifying cities would be able to cause their residents to have access to particular insurers who could issue "qualifying no-fault policies." Unlike the current no-fault law, which requires that insurers provide unlimited coverage for reasonable charges incurred for medically necessary products, services for an injured person's care, recovery or rehabilitation, a qualifying no fault policy would have a minimum aggregate coverage amount of $275,000.00 for catastrophic injuries.

As currently proposed, the bill would limit coverage for the victims of catastrophic car accidents to as little as $275,000.00, which would have a significant negative effect on many healthcare providers/suppliers and their patients.

Now that the bill has been passed by the Senate Insurance Committee, it needs to be passed by the Senate as a whole before being sent to the Michigan House of Representatives for consideration.

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April 27, 2015

Bill To Amend Michigan No-Fault Law Could Substantially Decrease Revenue To Healthcare Industry

On Thursday, April 24, 2015, the Michigan House of Representatives' Insurance Committee passed a bill to reform Michigan's No-Fault law and sent it to the House floor for a vote. The bill (SB 248) will have significant negative changes for No-Fault reimbursements for health care providers in Michigan.

As currently proposed, the bill will cap reimbursements for accident victims at 150% of the amount that would be paid for the same services by Medicare. Additionally, it would create a fraud authority to investigate alleged fraudulent activities relative to No-Fault claims.

Now that the bill has been passed out of the House Insurance Committee, it could be up for passage by the House of Representatives during the week of April 27. If passed, it would be sent back to the Senate relative to the amendment currently proposed by the House. The bill, as currently proposed, will have a devastating financial impact on many healthcare providers and suppliers. The HLP will provide updates as to this bill's progress and the impacts to healthcare providers and suppliers in Michigan.

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February 4, 2015

Outpatient "Observation" Battle Continues

On January 22, 2015, in the case of Barrows v. Burwell, No. 3:11-cv-1703, 2015 WL 264727 (2nd Cir., January 22, 2015), the United States Court of Appeals for the Second Circuit ruled that Medicare beneficiaries be granted the opportunity to demonstrate a Constitutionally-protected property interest to challenge their patient status designations as hospital outpatients rather than inpatients.

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August 29, 2014

BCBSM Places Limits on Quantity of Highly Abused Narcotics

With the fight against prescription drug abuse reaching an all-time high, health insurance plans are now taking a proactive role in attempting to reduce the quantity of some of the most abused drugs in the marketplace. As of September 2, 2014, Blue Cross Blue Shield of Michigan (BCBSM) commercial plans (non-Medicare) will implement new quantity limits for Oxycodone immediate release tablets and capsules (sold under the brand names of Roxicodone an OxyIR) and Oxymorphone immediate release tablets (sold under the brand name of Opana) of 180 per 30 days. These new limits apply to all strengths of the generic and brand-name versions of these drugs. Some pain management physicians have expressed concern that such limitations are an attempt by the health insurance companies to usurp the medical judgment of treating physicians due to cost containment measures while others believe that such limitations are helpful in reducing the potential for unsupervised use, misuse or abuse of prescription painkillers that can lead to addiction, hospitalization and even death. BCBSM will entertain a written request from a prescriber for an override of the limitation that includes documentation that the amount prescribed is medically necessary. A quantity limit override form is available from BCBSM on its website.
The attorneys at The Health Law Partners have a significant amount of experience in the defense of health care fraud investigations and pharmacy legal matters. For more information regarding such matters, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or riwrey@thehlp.com.

January 28, 2014

Medicare Enforcement Increased Significantly in 2013

The U.S. Justice Department's Medicare Fraud Strike Force set record numbers for health care prosecutions throughout the Country in Fiscal Year (FY) 2013.

The Medicare Fraud Strike Force is a coordinated team of investigators and prosecutors from the Justice Department, the U.S. Department of Health and Human Services and the FBI who, under the supervision of the U.S. Attorney's Offices and Justice Department's Criminal Division, analyze Medicare claims data for unusual billing patterns in specific geographic areas. The Medicare Fraud Strike Force currently operates out of 9 cities: Baton Rouge, La.; Brooklyn, N.Y.; Chicago; Dallas; Detroit; Houston; Los Angeles; Miami and Tampa, Fla. Since its inception in March 2007, its operations have resulted in more than 1,700 defendants being charged.

In FY 2013 alone, the Medicare Fraud Strike Force filed 137 cases charging 345 individuals. Moreover, there were 234 guilty pleas and 46 jury trial convictions. In addition, the defendants who were charged and sentenced in FY 2013 faced an average of 52 months in prison compared to an average of 47 months for those sentenced since 2007.

In light of a recent statistic from the OIG that for every $1 spent in fraud enforcement nearly $8 is received, rest assured such enforcement will continue and likely increase for the foreseeable future.

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February 1, 2013

New Jersey Hospital Settles Anti-Kickback Qui Tam Case for $12.5 Million; Case Alleged Cardiologists Were Compensated $18,000 Per Year to Serve on Advisory Board That Was Actually Tied to Patient Referrals

On January 24, 2013, the U.S. Attorney's Office for the State of New Jersey unsealed a $12.5 Million Dollar settlement with Cooper Health System, headquartered in the Camden, New Jersey area, but serving regions of New Jersey, Pennsylvania and Delaware. The settlement was the result of cardiologist Nicholas DePace's whistleblower qui tam lawsuit, which alleged that the government had been defrauded.
The case arose out of an arrangement where cardiologists were paid $18,000 per year to sit on an advisory board. The physicians were paid to sit on the board from 2004 until 2010. Under the participating physicians' "consulting" and "compensation" agreements, they were required to attend at least four board meetings per year to receive the $18,000 payment. The complaint alleged that these physicians did little "advising" on the advisory board, and simply listened to lectures at the meetings.
In his qui tam complaint, DePace alleged that the hospital violated the Federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), Federal "Stark Law" (42 U.S.C. § 1395nn), the New Jersey Anti-Kickback Statute (N.J.S.A. 30:4D-14(c)), and New Jersey's physician self-referral law (N.J.S.A. 45:9-22.4, et seq., or the "Codey Law"). The U.S. Attorney's office alleged that Cooper's payments to physicians sitting on the board were at least in part to compensate them for their referrals of patients to the hospital, and that some of those patients were Medicare or Medicaid recipients. Dr. DePace was paid $2.39 Million from the United States and New Jersey for reporting the claims.
The $12.6 Million Dollar settlement will have a significant financial impact on the Camden-based healthcare system, which posted a 2012 11-month operating income of $13 Million, according to financial disclosures.

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February 1, 2013

Michigan Podiatrist Sentenced to over 4.5 years for Medicare Fraud

On January 15, 2013, Richard Behnan, DPM., a 56 year old podiatrist from Fenton, MI was sentenced by a federal judge to 55 months in prison and ordered to pay over $1.4 million in restitution to Medicare and nearly $200,000 to BCBSM for his participation in a $1.6 million fraudulent medical billing scheme. Dr.Behnan previously pleaded guilty on November 21, 2011 to one count of conspiracy to commit health care fraud. According to the plea documents, from approximately 2000 through 2010, Dr. Behnan, provided services to patients at various senior centers and assisted living facilities in Bay City, Flint, Detroit, and Lansing submitting claims to BCBSM and Medicare for nail avulsion procedures when he had merely trimmed and polished the patients' toenails. At times, Dr. Behnan submitted claims for nail avulsion procedures when he was traveling outside of the United States.

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December 12, 2012

PTA in Detroit Sentenced to 30 Months for Her Role in Multi-Million Dollar Home Health Care Fraud

On December 11, 2012, Hetal Barot, a physical therapy assistant from Westland, Michigan, was sentenced today to serve 30 months in prison followed by 2 years of supervised release after pleading guilty to 1 count of conspiracy to commit health care fraud. She was also ordered to pay $1,336,739 in restitution, jointly and severally with her co-defendants. Barot falsified medical documentation for home health agencies owned by her co-conspirators, creating evaluations, therapy revisit notes and other medical documentation to support physical therapy services that were billed but never rendered. From approximately May 2009 through September 2011, Medicare paid approximately $1,336,739 to four home health care companies for fraudulent physical therapy claims based on falsified files and notes signed by Barot. The four home health companies for which Barot worked were paid in total approximately $13.8 million by Medicare. With regard to Barot's co-defendants, 9 have pleaded guilty, 3 are fugitives, and 6 await trial.

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December 11, 2012

2 Brooklyn Physicians Pay the Price for Medicare Fraud

On Monday, December 10, 2012, Boris Sachakov, MD, a colorectal surgeon, was sentenced to serve 30 months in prison for Medicare and private insurance fraud for billing for procedures such as hemorrhoidectomies that he never performed. On June 13, 2012, Dr. Sachakov was found guilty by a jury of one count of health care fraud and five counts of health care false statements after a 2-week trial in federal court. At trial, 11 of his patients testified that they never received the surgeries and medical services for which Dr. Sachakov had billed their insurance companies. In addition, when confronted by 2 of the insurance companies for allegations of billing for services not rendered, Dr. Sachakov sent letters to his patients asking them to falsely certify that they did receive the surgeries. Dr. Sachakov was charged with submitting more than $22.6 million in false claims and receiving more than $9 million from those claims.

In addition, on December 10, 2012, Ho Yon Kim, M.D. plead guilty to conspiracy to commit health care fraud. Dr. Kim admitted that he conspired with others in 2 Brooklyn clinics to induce Medicare beneficiaries to allow the clinics to bill their Medicare numbers for services that were never rendered or medical unnecessary in exchange for a variety of spa services (e.g., facials, massages), lunches and dance classes.

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June 26, 2012

California Courts Uphold Governor Schwarzenegger's Interpretation That California State Law Allows CNRAs to Administer Anesthesia Without Physician Supervision

On June 13, 2012, the California Supreme Court unanimously denied review in the case of California Society of Anesthesiologists v. Superior Court, 204 Cal.App.4th 390 (1st Dist. 2012) ending an over two year battle by the California Society of Anesthesiologists and the California Medical Association who challenged former governor Arnold Schwarzenegger's certification to the federal government that California law allowed Certified Registered Nurse Anesthetists (CRNAs) to administer anesthesia without physician supervision.

Medicare regulations require physician supervision of CNRAs as a condition of receiving Medicare reimbursement. 42 C.F.R. §§ 482.52(a)(4); 485.639(c)(2); 416.42(b)(2). However, additional Medicare regulations allow a state to opt out of the physician supervision of CNRAs requirement. In order to opt out of the physician supervision requirement, the state's governor must submit a letter to the Centers for Medicare and Medicaid Services (CMS) requesting an exemption. The letter "must attest" that the governor has: (1) consulted with State Boards of Medicine and Nursing about issues related to access to and the quality of anesthesia services in the State; (2) concluded that it is in the "best interests of the State's citizens" to opt out of the current federal physician supervision requirement; and (3) concluded that the opt out is "consistent with State law." 42 C.F.R. §§ 482.52(c)(1), 485.639(c)(1), 416.42(c)(1). Former Governor Schwarzenegger opted California out of this requirement on June 10, 2009, finding that California law allowed CNRAs to administer anesthesia without physician supervision.
The California Society of Anesthesiologists and the California Medical Association challenged the certification by Schwarzenegger and argued that California law did not allow CNRAs to administer anesthesia without physician supervision. The California Nursing Practice Act provides that CRNAs are authorized to administer medications necessary to implement treatment "ordered" by a physician. West's Ann.Cal.Bus. & Prof.Code § 2725(b)(2).

The trial court which heard the case found that the Nursing Practice Act allowed CNRAs to administer anesthesia without physician supervision. On appeal to the California First District Court of Appeals, the appellate court likewise found that the plain language of the Nursing Practice Act authorizes CRNAs to administer anesthesia without physician supervision. The appellate court also relied on the conclusion reached by the Board of Registered Nursing and other agencies and officials, including the State Attorney General and denied the challenge by California Society of Anesthesiologists and the California Medical Association.

Fifteen other states have opted out of the Medicare requirement requiring CNRAs to be supervised by a physician while administering anesthesia: Washington, Oregon, Iowa, Nebraska, Idaho, Minnesota, New Hampshire, New Mexico, Kansas, North Dakota, Alaska, Montana, South Dakota, Wisconsin, and Colorado.

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April 23, 2012

Antitrust Lawsuit Against Blue Cross Blue Shield Dismissed

By an order dated March 30, 2012, the United States District Court for the Eastern District of Michigan dismissed an antitrust claim brought by the City of Pontiac against Blue Cross Blue Shield (BCBS), the largest private health insurance provider in Michigan. In the case of City of Pontiac v. Blue Cross Blue Shield of Michigan, the City alleged that BCBS' practice of requiring hospitals to charge higher fees to competitor insurance carriers is anti-competitive and results in higher prices for other insurers, thereby threatening their ability to remain viable. BCBS essentially trades higher payments for services to the hospitals in consideration of their agreement to this provision. This practice, which is known as "most favored nation plus" status, was asserted to be a "violation per se" of antitrust laws, resulting in higher prices for competitors.

To make a determination of whether an arrangement is a "per se" violation, one must first evaluate whether the collaborative arrangement involves agreements--such as jointly agreeing on prices--that are inherently anticompetitive. If so, the arrangement must demonstrate the following to avoid being determined per se unlawful:

1. the arrangement has the potential to yield significant benefits or efficiencies for consumers; and

2. the arrangement's anticompetitive agreements and practices are subordinate to and reasonably necessary to achieve these potential benefits and/or efficiencies.

The court dismissed the City's complaint because it determined that the arrangement was not horizontal in nature (i.e., among the hospital providers themselves who are direct competitors), but rather, was one of a vertical nature (i.e., between the provider and an entity at a different level within the same market; meaning, BCBS as a purchaser of hospital services). Horizontal arrangements are initially evaluated by the "per se" rule. An arrangement that is not "per se" unlawful is instead subject to the "rule of reason" analysis.

The "rule of reason" analysis primarily involves an assessment of whether a collaborative arrangement is likely to have anticompetitive effects--for example, result in prices above competitive levels--and if so, whether these potential effects are outweighed by any procompetitive efficiencies which would justify the collaborative arrangement or agreement. When assessing potential anticompetitive effects, one consideration is whether providers and health plans are capable of raising, and likely to raise, prices in their market above competitive levels. Another consideration is whether a collaborative arrangement is likely to prevent or impede the operation of other health
plans or providers.

In order to survive the motion to dismiss, the City had to allege sufficient facts to justify proceeding on a "rule of reason" claim (because the arrangment was vertical instead of horizontal), but it failed to state factual bases for such allegations since it focused on the "per se" allegations. The complaint was, in short, determined to be inadequate.

The U.S. Department of Justice (DOJ) and the Michigan Attorney General also previously filed an antitrust action on the same matter (United States of America v. Blue Cross Blue Shield of Michigan), which is still proceeding. The parties to the DOJ case initially acknowledged that the "rule of reason" analysis applies.

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April 2, 2012

Significant Stark Law Case Overturned by the Fourth Circuit Court of Appeals

In an opinion issued March 30, 2012, the United States Court of Appeals for the Fourth Circuit overturned a $45 million judgment against Tuomey Healthcare System, Inc. ("Tuomey"), a private, nonprofit corporation which owns and operates Tuomey Hospital in Sumter County, South Carolina. A former physician brought a qui tam action against Tuomey alleging that certain contracts entered with physicians violated the Stark Law and that billings resulting from referrals from those physicians constituted false claims under the False Claims Act. The United States government intervened in the action, which proceeded to a jury trial, with the False Claims Act violations and other equitable theories pursued by the government, such as unjust enrichment and payment by mistake.

The jury found that the contracts between Tuomey and the physicians violated the Stark Law, but also found that Tuomey did not violate the False Claims Act. After the jury verdict, the District Court set aside the jury verdict and ordered a new trial on the False Claims Act allegations. Additionally, the District Court found that because the jury had found that the contracts in question violated the Stark Law, the government was entitled to judgment against Tuomey on the equitable claims. The District Court then entered judgment against Tuomey for approximately $45 million plus interest on the equitable claims.

The Fourth Circuit vacated the decision of the District Court to enter judgment against Tuomey on the equitable claims, finding that the Judge's decision to set aside the jury verdict and order a new trial on the False Claims Act allegations precluded his use of the jury's finding of Stark Law violations to enter judgment against Tuomey on the government's equitable claims. The Fourth Circuit found that the manner in which the District Court reached his conclusions violated Tuomey's Seventh Amendment rights. A new trial should take place in the near future.

Going forward, this will be an important case to monitor for further developments as they related to the Stark Law and the physician compensation arrangements.

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March 19, 2012

Michigan Man Charged with Health Care Fraud in NY

According to a Department of Justice press release, on Thursday March 15, 2012, a man residing in Dearborn Heights, Michigan was charged by Criminal Complaint with health care fraud. 51-year-old Fitzgerald Anthony Hudson was arrested, and could face a maximum penalty of 10 years imprisonment and a fine of $250,000. Assistant U.S. Attorney Aaron J. Mango is handling the case, and has alleged that in October 2007, the defendant obtained a New York State medical license by listing false information on his application by stating that he graduated from York University-Facility of Science, North York, Ontario, Canada. It is further alleged that he does not hold such a degree and, in fact, had been dismissed from the Warren Hospital Family Practice residency program in July of 2003.

The complaint also states that the defendant provided medical care to patients in the Western District of New York at Jones Memorial Hospital in Wellsville, N.Y. and Nicholas H. Noyes Memorial Hospital in Dansville, N.Y. from August of 2008 to August of 2010. It is alleged that he was improperly reimbursed approximately $200,000 under the Medicare Part-B and Part-D programs.

Mr. Hudson's initial appearance on the charge has been scheduled for March 29, 2012 at 3 p.m. before United States Magistrate Judge H. Kenneth Schroeder, Jr. This arrest was the culmination of an investigation on the part of the Federal Bureau of Investigation.

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