Articles Posted in Health Law

Section 1557 of the Affordable Care Act (ACA) is the nondiscrimination provision that prohibits discrimination on the basis of race, color, national origin, sex, age, and disability in any health program that receives federal funding. On May 24, 2019, the Department of Health and Human Services (HHS) proposed a new rule that would maintain vigorous civil rights enforcement and revise certain provisions that a federal court has said are likely unlawful.

Existing civil rights laws and regulations were originally applied to Section 1557 of the ACA. These include:

• Title VI of the Civil Rights Act of 1964, prohibiting discrimination on the basis of race, color, and national origin;

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,

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.”

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.