White Collar Defense Update

Each week for the next four weeks, we will provide a summary of a notable recent decision under the False Claims Act. The first in this series is United States v. Kernan Hospital, 2012 WL 5879133 (D.Md., Nov. 20, 2012). Read the decision here: United States v. Kernan Hospital Memorandum Opinion.pdf

This case involves a motion to set aside a civil investigative demand ("CID") issued by the United States Attorney's Office for the District of Maryland, seeking documents from Kernan Hospital. The Government had already filed a False Claims Act suit against Kernan Hospital but the District Court dismissed it without prejudice pursuant to F.R.C.P. 9(b). After dismissal, the Government issued its CID. The District Court set aside the CID, holding that the False Claims Act expressly limits the Government's use of CID's to the period "before commencing a civil proceeding."

The Government alleged that Kernan devised a scheme to increase its Medicare, Medicaid, and Tri-Care reimbursement by systematically "upcoding" secondary diagnoses concerning malnutrition. Before filing its complaint against Kernan, the Government investigated the matter for three years. Specifically, pre-complaint proceedings included the issuance of an Office of Inspector General subpoena, the production by Kernan of 100 specifically identified medical records (15,686 pages of materials), the production by Kernan of the coding summary sheets corresponding to the 100 medical records, Kernan's production of an additional 3,000 pages of documents, the issuance of a September 7, 2011 CID seeking deposition testimony from Kernan's Director of Health Information Management, followed by her testimony two weeks later. The Government filed its FCA complaint in October 2011. The District Court dismissed the complaint under Rule 9(b) and, on August 23, 2012, the Government issued yet another CID on Kernan seeking many of the same documents that it had already sought and obtained.

Continue reading "Notable Recent Decisions Under the False Claims Act" »

The Health Information Technology for Economic and Clinical Health (HITECH) Act requires the Department of Health and Human Services (HHS) to provide for periodic audits to ensure that covered entities and business associates are complying with the HIPAA privacy and security rules and the HITECH Act's breach notification standards. To implement this mandate, the HHS Office for Civil Rights (OCR) piloted a program to conduct 115 audits of covered entities to assess privacy and security compliance. Audits conducted under OCR's pilot program began in November 2011 and ended in December 2012.

As part of the audit pilot program, OCR established an audit protocol that contains the requirements assessed during OCR's performance audits. The entire audit protocol is organized around modules, representing separate elements of privacy, security, and breach notification. (The protocol is available for public review at: http://www.hhs.gov/ocr/privacy/hipaa/enforcement/audit/protocol.html.) For example, with respect to the HITECH Act's breach notification standards, auditors checked, among other things, whether:

• a process exists for notifying individuals within the required time period of a breach of unsecured protected health information (PHI);
• if any breaches occurred, that individuals were notified within 60 days;
• if there is a standard template or form letter for breach notification; and
• if any breaches occurred, the notification to the individuals included the required elements set forth at 45 C.F.R. § 164.404(c).

In other words, the protocol provides a useful checklist for providers to ensure that they are complying with the HIPAA privacy and security rules and the HITECH Act's breach notification standards.

OCR has previously stated that the results of the initial audits will inform how audits will be conducted moving forward from the pilot program. It remains unclear how the initial audits will affect the existing audit protocol and whether OCR will revise the protocol. Until OCR provides notice that it is revising the existing protocol standards, providers would be well-served by continuing to compare their existing policies and procedures against the protocol's standards.

On October 15, 2012, three former Purdue Frederick Company executives filed a Petition for Rehearing En Banc before the U.S. Court of Appeals for the District of Columbia Circuit. (Click here to view a copy of the petition: Petition for Rehearing En Banc.pdf). The petition is the latest chapter in the saga of these three former executives who pled guilty to misdemeanor misbranding under the "responsible corporate officer" doctrine in connection with the plea of Purdue to felony misbranding of the drug OxyContin. The Office of Inspector General ("OIG) for the U.S. Department of Health and Human Services subsequently excluded these individuals from participation in all Federal health care programs under its permissive exclusion authority set forth at 42 U.S.C. § 1320a-7(b)(1) and (3) for 20 years. During their various challenges to their exclusions, the executives have successfully reduced the length of the exclusion from 20 years to 12 years, which is cold comfort since the exclusion effectively ends all of their careers in the health care arena.

In July, a three-judge D.C. Circuit panel held in Friedman v. Sebelius that section 1320a-7(b)(1) authorizes the OIG to exclude from Federal health care programs an individual convicted of a misdemeanor "if the conduct underlying that conviction is factually related to fraud." The specific statutory section at issue in the case is section 1320a-7(b)(1), which provides that the Secretary of HHS may exclude any individual that has been convicted of a criminal offense consisting of a misdemeanor relating to fraud. The specific issue before the D.C. Circuit was whether the phrase "misdemeanor relating to fraud" in section 1320a-7(b)(1) refers to a generic criminal offense or to the facts underlying the particular defendant's conviction.

Continue reading after the jump.

Continue reading "Purdue Executives Continue Battle Against Broad Application of Medicare Exclusion Statute" »

Wednesday, October 10, 2012

The CLE Conference Center
Wanamaker Building, 10th Floor, Suite 1010, Philadelphia

Hosted by the Pennsylvania Bar Institute, this full day program addresses the latest hot topics in health law. David M. Lagaie, Dilworth Paxson Partner and Chair of the firm's White Collar practice will join a panel discussion of the most notable False Claims Act cases from the past year.

For additional information and to register, click here www.pbi.org. Simulcast available throughout the state. CLE Credits will be offered!