Mintz Levin: False Claims Act Amendments Gain Traction

William Hogarth, Satire on False Perspective (1753)

I’ve never done this before (except perhaps to introduce Ezra Klein’s new site), but I came across a really good Health Law feed on Twitter from Mintz Levin Health Sciences Practice. Good enough that you can now find it in the “Resources” section of this Blog. I was particularly taken by the report on the progress of the amendments to the Fair Claims Act in Congress. We have written at length about the Fair Claims Act and its use as an enforcement mechanism, but I was impressed by how clearly and cogently Mintz Levin described the current status of the efforts to amend as well as the implications– in a very short space. This link is to their feed, and  this one is to their Health Law Washington Beat: Recent Health Industry News - Issue 9. Click on Issue 9 and scroll down a little until you get to “False Claims Act Amendments Gain Traction in Both the House and Senate.”

Las Vegas Infectious Disease Specialists Accused of Fabricating Medicare Services

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The Las Vegas Sun reports that the Nevada Medical Examiners Board is investigating into the falsification of medical records at HealthSouth Tenaya.  Raye Kraft, wife of a patient at this hospital, began to notice “infectious disease specialists Dr. Dhiresh Joshi and his then-employee, Dr. Fadi El Salibi,” writing in Kraft’s husband’s medical charts that they were examining him when they were not.  As her suspicion rose, Ms. Kraft took detailed notes of when the specialists charted activity on her husband, compared these notes with her insurance bill and her own notes of the times they actually examined him, and then sent these notes and comparisons along with a complaint to the Nevada Medical Examiners Board.

The Sun reports:

Her claim: that on an ongoing basis, Joshi and El Salibi were writing in the chart that they had examined her husband when they hadn’t, and then billing for it. One supposed exam was nothing more than the doctor’s friendly wave from the door, she said.

Ms. Kraft’s was not the only person suspicious.  The article notes that another patient “had complained a year earlier to the medical board of similar experiences.”  Additionally, nurses at MountainView Hospital Medical Center also filed complaints  “about El Salibi’s fly-by visits.”

In addition, the number of patients Dr. Joshi has claimed to have examined in the course of  a day has been deemed further cause for suspicion. According to the Sun, Elizabeth Neubauer, Dr. El Salibi’s former billing manager, “said that Joshi himself routinely billed for 70 patients a day. Other infectious diseases doctors say that’s double the number they could reasonably see in a long day of hospital rounds.”

The Sun also reports:

Indeed, a 2004 Medicare audit showed that in a single day, Joshi billed for an impossibly high number of patients - 104, according to Neubauer’s recollection. Joshi said it was 81 Medicare patients, and 20 of them were seen by medical residents under his supervision.

One might have thought that the audit would have served as a red flag for further examination for fraud and abuse at that time.  An  “impossibly high number of patients” is, after all, impossible– and therefore seemingly either the result of either inadvertence or knowing falsehood. If a pattern of such “impossible” billing emerges, “inadvertence” begins to seem less likely– especially when coupled with independent allegations of “overbilling.”

The articles reports that “[a]llegations about doctors fraudulently billing Medicare and insurance companies are whispered throughout the Las Vegas medical community . . . .” One might hope that the numerical evidence derived from audits in cases such as this would do more than whisper– and would occasion heightened scrutiny.

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Family-Run Medical Equipment And Billing Companies Enterprise Lead To Prison Time

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The Miami Herald reports that Laura and David Hernandez, as well as other family members, were sentenced by U.S. District Judge Adalberto Jordan for running a fraudulent Medicare operation.

The Herald states:

Over the past decade, the family-run enterprise of medical equipment and billing companies submitted more than $17 million in false claims to Medicare, they admitted in court.

Their total take: about $6 million.

The family-run enterprise started as a sole medical equipment company and later transformed into “a string of equipment businesses in Miami-Dade.”  David Hernandez, a Cuban immigrant who is said to have completed formal schooling up to only the ninth grade, was the mastermind of the conspiracy:

David Hernandez, in the lead role, recruited four people to register as the official owners of four equipment-supply companies to conceal his participation in the scam, according to the court statement. Those ”nominee” owners, members of another family, were charged in a separate Medicare fraud indictment.

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Bipartisan Effort to Amend the False Claims Act

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American Health Lawyers Association reports that Senators are seeking to amend the False Claims Act:

Senators Charles Grassley (R-IA), Richard Durbin (D-IL), Patrick Leahy (D-VT), Arlen Specter (R-PA), and Sheldon Whitehouse (D-RI) introduced recently the False Claims Act Clarification Act of 2009 (S. 458), which would amend the False Claims Act (FCA) to strengthen a whistleblower’s ability to bring a qui tam action on behalf of the government, among other things.

This amendment would also clarify some of the ambiguity surrounding the FCA.  The AHLA stated:

The bill includes a provision clarifying that the FCA was intended to extend to any false or fraudulent claim for government money or property, whether or not the claim is presented to a government official or employee, whether or not the government has physical custody of the money, and whether or not the defendant specifically intended to defraud the government.

This clarifying amendment may have a significant impact on two areas of health care litigation.  First, the amendment would strengthen qui tam actions against pharmaceutical companies where the pharmaceutical companies do not actually present a claim to the government, such as with off-label drug marketing cases.  Second, the amendment may strengthen “bootstrapped” qui tam actions, where the qui tam relator brings a FCA action for Anti-Kickback Statute and/or Stark Law violations (physician “self-referral” cases), despite the lack of  any specific FCA violation, and because the Anti-Kickback Statute and Stark Law themselves lack a private right of action.

At the very least, the proposed amendment, which would facilitate the use of qui tam actions, is further evidence of the federal government’s increased reliance, and an intention to continue in such reliance, upon qui tam actions as a means of both regulatory and punitive enforcement.

The DOJ Sets Its Sights On Forest Laboratories

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Forbes reports in its article, “Forest says 11 states will join fraud lawsuit,” and the New York Times reports in its article, “Drug Maker Is Accused of Fraud,” that a civil claim was filed against Forest Laboratories Inc. under the False Claims Act. The claim relates to the advertisement of the  “off-label” use of certain drugs.

Forbes reports:

The Justice Department said Forest promoted Lexapro and Celexa for use by children even though it is not allowed to do so. While doctors are allowed to prescribe drugs for uses not listed on the labels, companies are not allowed to actively promote the drugs for that kind of “off-label” use.

This suit is similar to the qui tam actions against Scios.  Both the cases against Scios and the suits against Forest Laboratories involve the off-label marketing of the unapproved uses of certain prescription drugs.  And like the claims against Scios, it appears that the case against Forrest Laboratories began as a qui tam action.

The NY Times reports:

The filing follows a long-running federal investigation that began with complaints filed by two former company officials. Under the civil charges brought against Forest, the government is seeking to recover up to three times the amount of money spent by federal programs to pay for pediatric prescriptions of Celexa and Lexapro, but did not specify a figure.

This case is consistent with the DOJ’s heightened investigation of the pharmaceutical industry and shows the federal government’s reliance on qui tam actions.  As the number of cases against pharmaceutical companies for the off-label advertising of the unapproved uses of drugs increases, the gap between the FDA approval of the use of drugs and the actions of pharmaceutical companies is becoming more apparent.

To some extent, the Civil False Claims Act is bridging this compliance gap by functioning as a mechanism to enforce FDA decisions on the uses of drugs. But perhaps a legitimate question to ask is whether this increasing reliance upon an “outsourcing” of regulatory compliance is the appropriate mechanism by which to fix this inefficiency. Or, might we consider, as recommended by the recent Center for Health & Pharmaceutical Law & Policy whitepaper, being that “estimates suggest that as many as 40% of all prescriptions are for off-label uses,” that we give the “FDA the authority to mandate scientific studies for off-label medications and devices that have high sales volumes or large profits but lack needed evidence of efficacy or safety?”

As the Center stated, “this would protect the interests of patients and advance sound choices about the risks, benefits, and economic value of off-label uses.”

DOJ Plans To Intervene In Two Qui Tam Actions Against Scios

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Kaiser Family Foundation reports the intervention of two qui tam civil False Claims Act actions.  The qui tam actions involve the off-label marketing of medication unapproved for certain usages.  The medication in question is Natrecor, a heart failure medication.  There are two qui tam actions against Scios, a subsidiary of Johnson and Johnson.  Kaiser states:

The Department of Justice on Thursday announced plans to join two whistleblower lawsuits filed against Johnson & Johnson subsidiary Scios over allegations that the company illegally marketed the heart failure medication Natrecor for unapproved uses and defrauded Medicare and other federal health care programs, the San Francisco Chronicle reports. FDA in 2001 approved Natrecor for use in hospital patients who experienced shortness of breath caused by acute congestive heart failure (Egelko, San Francisco Chronicle, 2/20).

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