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Articles Posted in Health Law News

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Following a circuit split over the statute of limitations on whistleblower actions, the Supreme Court (SCOTUS) issued a unanimous decision on May 13, 2019. This decision held that, regardless of government intervention, a longer statute of limitations may apply to qui tam lawsuits under the False Claims Act (FCA).

Two types of limitation periods govern whistleblower actions under Section 3731(b)(2):

  1. The action must be brought within six years after the violation; or,
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In order to secure a new Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) contractor, the Centers for Medicare and Medicaid Services (CMS) has temporarily paused both Short Stay and Higher Weighted Diagnosis-Related Group (HWDRG) reviews.

Previously, two BFCC-QIOs have performed HWDRG reviews since 2014 and Short Stay reviews since 2015 for all 50 states and three territories: Kepro and Livanta. Moving forward, one organization will handle both types of reviews on a national basis.

Short Stay reviews provide an opportunity for BFCC-QIOs to ensure doctors and hospitals are maintaining compliance with the Medicare Part A payment policy for inpatient admission. BFCC-QIOs assumed responsibility of conducting Short Stay reviews on October 1, 2015. Previously, the reviews were conducted by Medicare Administrative Contractors (MACs) and Recovery Auditors.

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As of April 30, 2019, the maximum penalties for violations of the Health Insurance Portability and Accountability Act (HIPAA) have new annual limits. These updated penalties will be based on the level of culpability associated with the violation, according to the Department of Health and Human Services (HHS). Organizations that have taken measures to meet HIPAA’s requirements now face a smaller maximum potential penalty than organizations who are found neglectful.

The level of culpability associated with a HIPAA violation is based on four tiers, described in the Health Information Technology for Economic and Clinical Health (HITECH) Act. In order to address “apparently inconsistent language” in HITECH’s penalty scheme, which outlines the minimum and maximum HIPAA enforcement penalties, HHS published a notice of enforcement discretion that further defines the updated fines for the four tiers:

  1. The person did not know (and, by exercising reasonable diligence, would not have known) that the person violated the provision – $100 to $50,000 per violation, capped at $25,000 per year the issue persisted
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The former CEO of a hospital chain that was headquarted in Naples, Florida has agreed to pay $3.46 million to settle allegations that he caused the hospital to knowingly submit false claims to government health care programs. Gary D. Newsome was the CEO of Health Management Associates (HMA) from September 2008 to July 2013, during which time he caused patients to be admitted who could have been treated on a less costly, outpatient basis, according to the Department of Justice’s release. Allegations that Newsome caused HMA to pay remuneration to Emergency Department (ED) physicians in exchange for referrals are also resolved by this settlement.

“A physician’s health care decisions should be driven by what is in the patient’s best interest, not by what helps line a provider’s pockets,” said Barbara Bowens, the Acting U.S. Attorney for South Carolina for purposes of this case. “The U.S. Attorney’s Office will not tolerate false claims based on unnecessary hospital admissions, which drive up health care costs and can harm patients.”

The allegations against Newsome that are resolved by this settlement payment include:

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Following the December 2018 attempt of the U.S. Department of Justice (DOJ) to dismiss nearly a dozen False Claims Act (FCA) lawsuits, a recent ruling by Pennsylvania Federal Judge Timothy J. Savage states that the DOJ must have a legitimate reason for dismissing whistleblower suits.

On Wednesday, April 3, 2019, Judge Savage granted a DOJ dismissal request – ending a case against Pfizer, Inc. – while also emphasizing that there must be a valid purpose for any FCA dismissal, rather than allowing the “unfettered discretion” of the DOJ to toss whistleblower suits. The requirement of “some justification, no matter how insubstantial…acts as a check against the executive [branch] from absolving a fraudster on a whim or for some illegitimate reason”, Savage added.

This justification for dismissal is needed partly because the FCA authorizes a court hearing if a whistleblower objects to dismissal. However, “if the government’s right to dismiss is ‘unfettered,’ as the [D.C.] Circuit has held,” Judge Savage wrote, “a hearing would be superfluous, rendering the requirement of a hearing a nullity.”

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For health care providers concerned about the effect the Covenant Medical Center v. State Farm ruling would have on their right to receive insurance payments for undisputed services, the University of Michigan Regents v. Victor P. Valentino, J.D. decision is a victory. The Michigan Supreme Court upheld the right of no-fault insurers to directly pay medical providers, reversing the earlier Michigan Court of Appeals decision.

The Court of Appeals ruling had awarded Victor P. Valentino, a personal-injury attorney, a portion of more than $98,000 from his client’s no-fault auto insurance settlement that was designated for medical treatment. The client, Larry Reed, later filed for bankruptcy and was subsequently unable to pay the University of Michigan’s University Hospital’s health care bills.

Reed had agreed upon a 1/3 contingency fee “of the net recovery…received through suit, settlement, or in any other manner” in Valentino’s retainer agreement. Therefore, when Reed’s insurance company began sending two-party checks listing both the hospital and Reed as payees, Valentino would take his portion of the check. Only after the hospital filed a five-count complaint alleging conversion, tortious interference with a contract, claim and delivery, declaratory relief, and injunctive relief, did Valentino forward the remainder of the insurance proceeds to the University Hospital in order to cover Reed’s medical bills.

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In her Federation of American Hospitals’ 2019 Public Policy Conference speech, CMS Administrator Seema Verma indicated the Stark Law would be receiving a major overhaul sometime in 2019. This update, according to Verma, will “represent the most significant changes to the Stark Law since its [1989] inception.”

One of the primary goals of this update is to ensure the policy maintains relevance in the modern health care world with the relatively recent implementation of electronic health records and cybersecurity. This includes the clarification of certain areas of noncompliance as well as reflection of the shift from a fee-for-service model to a value-based care model.

These regulatory modifications come in response to CMS’ public Request for Information (RFI) in June 2018 concerning adjustments that may be necessary in order to lessen any undue impact or burden brought about by the Stark Law. Specifically, CMS solicited responses regarding “the structure of arrangements between parties that participate in alternative payment models or other novel financial arrangements, the need for revisions or additions to exceptions to the physician self-referral law, and terminology related to alternative payment models and the physician self-referral law.”

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Maintaining compliance with all HIPAA Rules has never been more important for a health care business’s success than it is now. Last year, the Office for Civil Rights (OCR) at the U.S. Department of Health and Human Services (HHS) concluded an all-time record in Health Insurance Portability and Accountability Act (HIPAA) enforcement activity. In 2018, ten cases were settled by OCR, with an additional case that was granted summary judgement before an Administrative Law Judge (ALJ). The total of these eleven cases exceeded $28.6 million, surpassing the 2016 record of $23.5 million.

HHS’s February 7, 2019 press release regarding the settlements can be found here.

January 2018

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Tomorrow, March 1, 2019, is the deadline for reporting small data breaches (<500) that occurred in calendar year 2018 to the Department of Health and Human Services’ Office for Civil Rights (OCR).

Any HIPAA-covered entities and their business associates are required by the HIPAA Breach Notification Rule to, at least once yearly, report data breaches of fewer than 500 individuals to OCR on or before 60 days after the end of the prior calendar year (March 1). Breaches of over 500 individuals must be reported to the OCR at the same time as patients and the media are notified.

Breaches can be reported online here. Contact your attorneys at The Health Law Partners for assistance reporting, or evaluating if you need to report.

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California has joined a number of other states, including Vermont and Washington, in requiring pharmacy benefit managers (PBMs) to register with a state department. Assembly Bill 315 (AB 315), Pharmacy Benefit Management was signed by California Governor Jerry Brown on September 29, 2018 and became effective January 1, 2019. The bill includes several new requirements detailed below. A complete list of legislation affecting PBMs across the country can be found here.

Pharmacy benefit managers ostensibly exist as middlemen seeking to reduce prescription drug prices and to negotiate contracts on behalf of their clients. PBMs are now responsible, among other things, for administering the various pharmacy benefits for health plans, conducting drug utilization reviews, and negotiating rebates and reimbursement amounts. Although professionals in PBM positions, as the California Assembly analysis writes (available as PDF download here), “have one of the most prominent roles in determining coverage and payment for drug products, despite never taking physical possession of the drug”, they have largely “escaped scrutiny of regulation and licensure.” With the large purchasing power they wield, their arguably conflicting interests, and the increasingly aggressive stance of PBMs when dealing with those they interact with, it is important that the business dealings of PBMs are transparent and that the managers are held accountable.

This new bill now requires PBMs to register with the California Department of Managed Health Care (DMHC) and to “exercise good faith and fair dealing” by requiring PBMs to provide quarterly disclosures to the purchasers of their services, including revealing both direct and indirect conflicts of interest. Additional disclosures containing certain information can be requested by the purchaser at any time. These disclosures can include information such as rates negotiated with pharmacies, drug acquisition cost, and rebates received from pharmaceutical manufacturers.

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