Blog Post #1,000: Celebrating Emily Dickinson's 193rd Birthday

Taking a break from Health Care Law for this special blog post. But do read on for the health care tie-in. Promise.

From Day 1 -- 20 years ago -- the description for HealthLawBlog has included "poetry and other things that matter." So it's entirely fitting that my 1,000th blog post should fall on Emily Dickinson's 193rd birthday. 

The "Belle of Amherst" was born in Amherst, Massachusetts in 1830, and after 10 months of study at the Mount Holyoke Female Seminary, now Mount Holyoke College, lived out the rest of her 38 years back in her hometown. The home where she spent most days is now the Emily Dickinson Museum, a great place to visit and a website that is full of resources.

Emily Dickinson published 11 poems in her lifetime. Her 1,755 poems stand alongside the poetry of her contemporary, Walt Whitman, as the beginning of modern American poetry. She was obsessed with "Death," and her poems are an indispensable guide -- and challenge -- for health care providers who rely on the humanities to develop their professional chops.

This is why her poetry is included in my course, older than HealthLawBlog itself, "Law, Literature & Medicine." Ten 4th-year medical students from UT-Southwestern Medical School and ten 3rd-year Dedman Law students join together every spring semester to explore common issues in professional identity formation. Big shout-out to my collaborator UTSW prof (and law school adjunct) Reeni Abraham, M.D.! 

Poetry is a big part of the readings, and Emily is always on the list. 

Happy birthday, Em!

Hospital Discharge Planning: It Takes a SYSTEM

On Thursday (Dec. 7), I posted about a Catholic hospital system in California that has taken to suing patients for trespass when they refuse to leave the hospital after a discharge order has been written. I don't know how the suits will turn out (settled, is my guess), but there are factual disputes as to whether safe discharge locations (such as home, nursing home, intermediate care facilities) are available for patients who leave their hospital settings. The hospitals undoubtedly believe there are safe alternatives, so if there is no settlement, there will need to be a trial to resolve the factual disagreements. In short, it's a mess.

Another side of the same coin was highlighted by a different kind of story later in the week. Coming a $2.3 billion operating loss in 2022, Massachusetts General Hospital reported a $95 million operating revenue surplus for 2023 (Boston Globe, Dec. 8; paywall likely). Major contributors to the one-year turn-around: the last of the one-time COVID relief money and "a robust investment portfolio." In other words, this year's net revenue was not necessarily directly related to higher volumes and greater efficiencies in providing patient care, though the hospital did report an nearly $1 billion increase in revenue from patient activities year-over-year.

The financial picture could have been even better. According the the Globe story, "The system is treating fewer people than it would like to, largely because there is less capacity at nursing homes and rehabilitation facilities that would normally take discharged patients recovering from hospitalization" (emphasis added). The hyperlink is to a (June 12, 2023) report that over 1,000 patients in the Bay State remain "stuck" in hospitals because of the shortage of nursing homes and rehab facilities. But the main point of the Dec. 8 story is that hospitalizations are being limited at the front end at MGH, which means care is being delayed and even denied for lack of appropriate discharge options. 

We refer incessantly to the "American health care system," but this is another reminder that the "system" is less than that. It's an agglomeration of disparate parts -- some public, some private, some for-profit, others nonprofit -- the locations and even existence of which are largely market-driven, which is often not the same as need-driven. The big players are in a fairly decent position to protect themselves, as the 2023 MGH numbers illustrate. But there are lots of smaller and rural providers that lack the resources and resiliency to weather large losses year after year. The outlook for them is grimmer than ever. 

The Affordable Care Act was premised (correctly, IMHO) on the proposition that the private health insurance market could not operate in the public interest without a large dose of regulatory correction. Even the advances of the ACA -- as desirable and necessary as they were and are -- were delayed and reduced bu its opponents. From my Dec. 4 blog post:

As Abbe Gluck and two co-authors wrote in the Georgetown Law Journal in 2020, "[t]he ACA is the most challenged statute in American history." The authors cite more than 2,000 legal attacks, more than 70 GOP-led attempts in Congress to repeal or strip down the Act, and seven trips to the Supreme Court. Add to the story that "the statute has been rebelled against by the states charged with implementing it, sabotaged by the second President to administer it, and financially starved by Congress," and the story becomes one of "unprecedented statutory resilience."

Private health insurance is just one piece of the puzzle -- a very significant piece, but only a part of the story. If this country tried to get serious about organizing health care into a true system, the opposition would dwarf anything we saw from 2010-2020.  

Texas Supreme Court Stays Trial Court's Abortion Order

The court entered an "administrative stay" pending review of the TxAG's request for mandamus in the Cox case. In almost any other case, this would be a routine, even benign, development. In this case, though, it's far from routine or benign.

• Kate Cox is entering her 21st week of pregnancy. She's not far from her third trimester, when  termination of a pregnancy will be considered a "late term" abortion and nearly impossible to obtain.
  
  
• Every delay increases the risk to Kate Cox's health, including her ability to have a child in the future. There is no such thing as "maintaining the status quo" in this case.
  
  
• This case vividly illustrated the human cost of a GOP-dominated legislature and Republican AG torning abortion into a political football. One can only hope that the all-GOP Supreme Court sees this case as the trial judge did . . . and without delay.

A Further Comment on the Texas AG's Threat to Hospitals, Doctors, and Anyone Else

As noted earlier today, on Thursday the Texas AG's office responded immediately to the TRO enjoining the state from suing or prosecuting the parents, their doctor, or the doctor's staff pursuant to the Texas's abortion laws. AG Paxton's response was a letter to three hospitals where the doctor has medical staff privileges. As summarized on the AG's website, the letter stated:

The Temporary Restraining Order (“TRO”) granted by the Travis County district judge purporting to allow an abortion to proceed will not insulate hospitals, doctors, or anyone else, from civil and criminal liability for violating Texas’ abortion laws. This includes first degree felony prosecutions, Tex. Health & Safety Code § 170A.004, and civil penalties of not less than $100,000 for each violation, Tex. Health & Safety Code §§ 170A.005, 171.207-211. And, while the TRO purports to temporarily enjoin actions brought by the OAG and TMB against Dr. Karsan and her staff, it does not enjoin actions brought by private citizens. Tex. Health & Safety Code § ¬¬171.207. Nor does it prohibit a district or county attorney from enforcing Texas’ pre-Roe abortion laws against Dr. Karsan or anyone else. The TRO will expire long before the statute of limitations for violating Texas’ abortion laws expires.

Prof. Steve Vladeck (UT-Austin) made this excellent point on "X": 

Those defending ambiguous medical exceptions in abortion bans regularly suggest that the problem is not the ambiguities, but doctors narrowly construing them.

And yet, here’s Texas AG Ken Paxton threatening doctors with civil and criminal liability for FOLLOWING A COURT ORDER.

Vladeck's post underscores the irony of the state's argument in November before the Texas Supreme Court  in defense of the medical exception in Texas's abortion ban that allows for an abortion in cases of "a life-threatening condition or risk of substantial bodily harm." The AG's office argued that the problem wasn't with ambiguous statutory language but instead with timid doctors who unreasonably refuse to follow the standard of care in such cases: "Beth Klusmann, a lawyer for the state, argued . . . that the women did not have the standing to sue, suggesting that the women should have instead sued their doctors for medical malpractice" (CBS, Nov. 28). Oral arguments in the Supreme Court are here.

The case is Zurawski v. State of Texas, and developments in the case can be followed on the website of the Center for Reproductive Rights, which represents the plaintiffs. 

DFW Woman Obtains Court Order Allowing an Abortion, A First Since Dobbs and SB 8

The story is all over the news, so for now I will provide a few links to the news coverage and to some of the key documents in the case:

• News coverage:
• CNN
• NPR
• WaPo (possible firewall)
• NY Times (firewall)
• Yahoo News
  
  
• SB 8 (Tex. Leg., 2021): the so-called "heartbeat law," which provides that "a physician may not knowingly perform or induce an abortion on a pregnant woman if the physician detected a fetal heartbeat for the unborn child . . .  or failed to perform a test to detect a fetal heartbeat."
  
  
• Complaint (filed Dec. 5, 2023) -- the complaint alleges that "[o]n November 28, 2023, Ms. Kate Cox received the results of an amniocentesis which confirmed prior prenatal testing—her third pregnancy has full trisomy 18, meaning her pregnancy may not survive to birth, and, if it does, her baby would be stillborn or survive for only minutes, hours, or days."
  
  
• Trisomy 18 (from the National Library of Medicine) -- "Due to the presence of several life-threatening medical problems, many individuals with trisomy 18 die before birth or within their first month."
  
  
• Cleveland Clinic: At least 95% of fetuses with the condition don’t survive to full term, meaning pregnancies end in miscarriage or babies are stillborn. Infants born with trisomy 18 have many birth defects, which can cause life-threatening consequences. Almost 40% don’t survive labor, and less than 10% live past their first year.
  
  
• Trial Court's Order Granting TRO Against State Officials to Permit Abortion (Dec. 7, 2023, 10:21am)
  
  
• Letter from Attorney General Ken Paxton (Dec. 7, 2023, 1:49pm) -- posted to Twitter (now "X") -- sent to three Houston hospitals and addressed "To Whom It May Concern" -- 
  
  
  
  
  
  

  
• 
  
SB 8 was the first outrage. Requiring a pregnant person in Ms. Cox's circumstance to go to court for an order to preserve her health, including her future ability to have another child, continues the outrage. And the AG's letter to hospitals where Ms. Cox's physician has medical staff privileges is about what we've come to expect from that office.

What Is a Hospital to Do When a Patient Refuses a Discharge?

Here's the scenario: A patient is admitted to the hospital for treatment. Treatment goes well, and the patient can safely be discharged to home. But the patient refuses to leave the hospital. If the patient lacks decision-making ability, the surrogate decision-maker may be refusing on the patient's behalf. Either way, a patient who no longer needs hospital-level care continues to consume hospital resources -- a bed, nursing time and attention, housekeeping, dietary, etc. -- without a discernible medical advantage.

There are lots of ways to respond to the refusal to leave, mostly involving a sensitive exploration of the social, familial, financial, emotional or other reasons for the refusal. Sometimes it is possible to make arrangements that can address the patient's (or surrogate's) concerns.

As reported in the Los Angeles Times (and reprinted by KFF News (Nov. 15)), San Francisco-based Dignity Health, a tax-exempt organization Catholic hospital system with $9.5 billion in revenue, is trying another approach: sue the patients for trespass. In three cases, Dignity Health has invoked a California law intended to prevent anti-abortion demonstrators from obstructing entry to healthcare facilities, accusing the patients of "commercial blockage" for "unreasonably and unlawfully" refusing to be discharged once they were deemed medically and legally eligible. Dignity claims the actions hindered its ability to care for other patients during COVID-19 surges. 

Unsurprisingly, the patients claim a right to be discharged to a facility that offered appropriate care and that they could afford, not simply sent home without the ability to take care of themselves. As described by California Disability Rights, state and federal law (Medicare's Conditions of Participation) provide significant protections against hospital discharges that aren't safe, so the outcome in these cases is likely to turn on very fact-specific considerations.

One of the cases is scheduled to go to trial on November 15. More later . . . .

Latest Fraud Enfocement Actions include $148 Million Scheme

Here's the latest rundown from USDOJ, with some details on a couple of the most notable actions:

Lab Owner Pleads Guilty To $1.7 Million COVID-19 Test Fraud Scheme (December 1, 2023; U.S. Attorney's Office, Northern District of Texas)

Physician Sentenced For $1.2M Pill Mill Scheme (November 30 2023; U.S. Department of Justice)

Philadelphia Pharmacy Pleads Guilty To More Than $500,000 In Fraudulent Insurance Claims As Part Of Prescription Medication Scam (November 28, 2023; Pennsylvania Attorney General)

▶︎Man Charged In $148M Medicare And Medicaid Fraud Scheme (November 30 2023; U.S. Department of Justice)

A federal grand jury in Baton Rouge, Louisiana, returned an indictment today charging a Louisiana man for his role in a scheme to defraud Medicare and Medicaid of over $148 million in medically unnecessary definitive urine drug testing services.   

According to court documents, Brad Paul Schaeffer, 48, of Zachary, was a co-owner and chief executive officer of MedComp Sciences LLC (MedComp), a diagnostic laboratory located in Zachary. From approximately January 2013 through approximately August 2022, MedComp, at the direction of Schaeffer, allegedly billed Medicare and Medicaid for definitive testing of at least 15 substances in urine specimens it received, regardless of the patient’s treatment plan and history, or the request of the referring provider. 

To perpetuate the fraud, Schaeffer, through MedComp, allegedly took several actions, among them, writing off patient co-pays, directing MedComp staff to fill out and submit order forms on providers’ “behalf,” concealing the true nature, permissibility, and extent of testing from providers, orchestrating a pass-through billing scheme using hospitals, and paying kickbacks to physicians disguised as laboratory ownership interests. Schaeffer then allegedly used the fraudulent proceeds for his own benefit, including spending thousands of dollars to renovate a pool and on a pool house in his backyard, and to restore a truck. 

▶︎Caretaker Charged With Involuntary Manslaughter, Neglect For Failure To Renew Patient’s Medications Which Led To Fatal Seizure Episode (November 29, 2023; Pennsylvania Attorney General)

Kelly Gonzales, 48, was the administrator at ARC of Lawrence County, a personal care home in New Castle, when she failed to renew a prescription for the patient’s anti-seizure medication. Gonzalez then altered medical records to indicate that a health care provider discontinued the medication — which was not true.

As the administrator of the personal care home, Gonzales was responsible for the administration and management of the home, including the health, safety, and well-being of the residents. This included ensuring the residents’ paperwork was complete, that they attended all medical appointments, and received their prescribed medication in a timely manner.

According to the complaint, the resident was diagnosed with a seizure disorder and was prescribed anti-seizure medication to control his seizures. He died at the care home on Dec. 2, 2021 after not receiving his medication for over 10 days. Upon autopsy, it was discovered that the seizure disorder caused his death and that the levels of anti-seizure medication in his system were well below therapeutic levels.

Gonzales was charged Tuesday with felony counts of neglect of a care dependent person and tampering with records, and misdemeanor involuntary manslaughter. Gonzales surrendered Tuesday, was arraigned and released on her own recognizance.

What's the Test for Causation in a False Claims Act Suit Based Upon the Anti-Kickback Act?

This is an issue only a lawyer could love, but there's already a circuit split, and two federal judges in the Massachusetts District have reached opposite conclusions, with one of them asking for a resolution by the First Circuit, which will either deepen the split or (if it comes up with a third approach) broaden it. Considering the large number of qui tam actions for AKB violations that are litigated each year, this is an important issue that cries out for resolution by SCOTUS. 

How much do lawyers love this issue? Here is a collection of law firms' commentary on the issue in the last couple of months --

• Haynes and Boone, Another Win for Defendants on the Issue of Causation in AKS-Based FCA Cases (Oct. 5) (extensive analysis)
• Sidley: District of Massachusetts Adopts But-For Causation Test for FCA Claims Premised on AKS Violations (Oct. 3)
• WilmerHale: Government Setback “Resulting From” Another Court Adopting the “But For” Causation Standard for False Claims Act Cases Furthering Court Split (Oct. 19)
• DLA Piper: Massachusetts District Judge rules that government must clear high causation bar in False Claims Act cases (Oct. 10)
• ArentFox: Federal Judge Rules Government Must Demonstrate “But-For” Causation for Anti-Kickback Statute Claims (Oct. 6)
• Goodwin Procter: “Greenfield Fraught with Problems”: District of Massachusetts Holds But-For Causation Required in False Claims Act Cases Based on Kickbacks (Oct. 5)
• Bradley: District of Massachusetts Split on Causation Standard in Kickback FCA Cases (Oct. 30)
• Mintz: Courts Continue to Grapple with the Causation Standard for False Claims Act Suits Based on Alleged Kickback Schemes, While the Supreme Court Stays on the Sidelines (Oct. 5)
• Squire Patton Boggs: Federal Courts Continue to Grapple with Causation in Anti-Kickback-Based False Claims Act Cases (Nov. 29)
• Bass Berry & Sims: District Courts Wrestle with Causation in Kickback Cases While Circuit Courts Remain Divided (Oct. 5)
• Weiner Brodsky Kider: Mass. Federal Court Adopts More-Stringent Causation Standard for FCA Claims Based on Alleged Unlawful Kickbacks (Oct. 12)
• McGuireWoods: The Growing Causal Divide: But-For Causation in AKS/FCA Actions (Dec. 4) (citations and some hyperlinks to opinions)
• Akerman: Teva FCA Decision Sheds Light on Varying Interpretations of the Elements of an FCA Claim (Aug. 10)
• Hogan Lovells: Anti-kickback causation in FCA suits: text or purpose? (undated, but apparently written before the D. Mass. split)
• Ropes & Gray: Sixth Circuit Requires But-For Causation and Narrowly Defines Remuneration under AKS (April 4) (before the D. Mass. split)
• Arnold & Porter: More Disagreement About the Causation Standard for AKS Cases Under the FCA (July 21) (before the Regeneron case created a split within the Mass. District)

For a very brief introduction to the laws involved in this split, you can start with the HHS OIG website.

DeSantis Pledges to Supersede ACA

As reported in Becker's Hospital Review (Dec. 4), Ron DeSantis regards the ACA as a failure and has vowed to "repeal and supersede" the Act with a shinier and better alternative. Taking a page out of the Trump playbook in 2016, DeSantis has no plan of his own to offer, but he assured viewers of "Meet the Press" yesterday that his plan will "reduce healthcare costs to ensure affordability for individuals, protect those with preexisting conditions, and scrutinize 'big institutions that are causing prices to be high: big pharma, big insurance and big government.'" 

Right. 

As Abbe Gluck and two co-authors wrote in the Georgetown Law Journal in 2020, "[t]he ACA is the most challenged statute in American history." The authors cite more than 2,000 legal attacks, more than 70 GOP-led attempts in Congress to repeal or strip down the Act, and seven trips to the Supreme Court. Add to the story that "the statute has been rebelled against by the states charged with implementing it, sabotaged by the second President to administer it, and financially starved by Congress," and the story becomes one of "unprecedented statutory resilience."

According to a recent Statista study, tens of thousands of lives have been saved by the ACA, and 40 million of us are enrolled in ACA-related health plans. The same study points out that the ACA was flawed in some ways and -- due in part to the intransigence of twelve states that still haven't expanded Medicaid eligibility -- 19.5 million Americans are still uninsured. 

So the results have been mixed, though we will never know what the original Act would have accomplished, because of significant changes from Congress and SCOTUS before it was even implemented.  

The empty rhetoric and even emptier promises of DeSantis and Trump are recent illustrations of the wisdom of H.L. Mencken: "There is always an easy solution to every human problem -- neat, plausible, and wrong." A less well-knowm but perhaps even more apt Mencken quote is this: "The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."

When Your "Free" Annual Check-up Isn't Free

A good reminder from the Kaiser Family Foundation (and broadcast on NPR's "Morning Edition" today: The ACA requires that insurers pay for an annual physical with no out-of-pocket payment by the insured patient, but that doesn't cover "extra" services that are offered during the same visit.

What's "extra." Like so much in health care, it depends.

One patient, Christine Rogers, answered her doctor's screening questionnaire honestly when it asked about depression. Her mother had unexpectedly died in a nursing home 13 hours away, and she answered the questionnaire with "It was a horrible year. I lost my mom." That triggered a 5-minute conversation about depression and an additional charge - not covered by her insurer - of $76.06.

Ms. Rogers felt a bit betrayed by a screening process that depends upon honest answers to questions about a patient's physical and emotional condition and then adds to her bill at the rate of $912.72 an hour.

The hospital and physician group stood behind the charge but -- perhaps to avoid being highlighted by KFF and NPR -- wrote off the extra charge.

The take-away: The ACA guarantees you one free physical per year, but what's included in that free service may vary from provider to provider, with precious little guidance to constrain billing practices.

Caveat emptor, indeed.

Abortion: Legislative Update

We* had our 36th Annual Conference of the Professions here in Dallas yesterday. The official title was "Governmental conflict with standards and professional judgment: Case studies in Texas." Our keynote speaker -- Prof. David Orentlicher, M.D., J.D. -- was great, as were our panelists from the clergy, law, and medicine -- Dr. Charles Brown, TAMU School of Medicine; Shelly Skeen, JD – Southern Regional Director, Lambda Legal; and Rev. Danielle Ayers, Pastor of Justice, Friendship-west -- and our panel moderator, Rev. George Mason, pastor emeritus of Wilshire Baptist Church & founder of Faith Commons.

It didn't take a lot of imagination to read our open-ended title and conclude that abortion and gender-affirming care would figure prominently in the discussion. We did cover a number of other subjects, but these two topics dominated the discussion.

Coincidentally, today's Washington Post ran an article on the abortion bans around the country, with a focus on the vague language state legislatures use to describe exceptions to the ban, e.g.:

(Click on images to enlarge.)

Predictably, that vague language leaves physicians and hospital guessing about whether any particular patient's condition qualifies for termination of her pregnancy. The Conference explored this effect in some detail yesterday. If you missed it, this article is a very good guide to the issue.

_____________________
*The organizers of the Conference are:  SMU Dedman School of Law, the Dallas County Medical Society, the Dallas Bar Association, the SMU Perkins School of Theology, The University of Texas Southwestern Medical Center at Dallas, Faith Commons, and SMU’s Maguire Center for Ethics and Public Responsibility.

J.D. Degree is a Lousy Way to Get to a Health Care C-Suite

Becker's CEO Report had an article on Tuesday about "The most common degrees for healthcare CEOs," based upon a report by C-suite consulting firm Crist|Kolder. Lawyers are well represented in the ranks of CEO at universities, nonproft organizations, and for-profits, but within healthcare organizations? Not so much:

Fifty percent of healthcare CEOs have a MBA and did not study beyond it, compared to a cross-industry average of 43 percent, according to the report. Another 21.2 percent received only a bachelor's degree. 

More healthcare CEOs hold a MD or PhD than chief executives of any other industries; over 15 percent can call themselves "doctor." 

In addition, 4.5 percent have their JD, and 9.1 percent hold a Master's in any field. 

Hospice Director Sentenced in $150+ Million Fraud Scheme

A hospice medical director was sentenced yesterday to 50 months in prison for his role in a scheme that involved the submission of over $150 million in false and fraudulent claims to Medicare for hospice and other health care services. According to DOJ's press release: 

According to court documents, from 2009 to 2018, Jesus Virlar-Cadena, 52, served as the medical director of the Merida Group, a large health care company that operated dozens of locations throughout Texas. Evidence at the trial of co-defendants Rodney Mesquias, Henry McInnis, and Francisco Pena, showed that the Merida Group marketed their hospice programs through a group of companies known as the Merida Group. They enrolled patients with long-term incurable diseases, such as Alzheimer’s and dementia, as well as patients with limited mental capacity who lived at group homes, nursing homes, and in housing projects. In some instances, Merida Group marketers falsely told patients they had less than six months to live. They also sent chaplains to the patients based on the false pretense they were near death. [emphasis added]

In order to bill Medicare for these services, the Merida Group hired Virlar and other medical directors, but made payment of their medical director fees contingent upon an agreement to certify unqualified patients for hospice. In addition to regular medical director payments, Virlar received luxury trips, bottle service at exclusive nightclubs, and other perks in exchange for his certification of unnecessary hospice patients. In exchange for these illegal kickbacks, Virlar himself certified over $18 million in unnecessary hospice services as part of the over $150 million conspiracy.   

Putting aside the financial crime involved in this case. Lying to these patients that they have a terminal illness is a gross violation of the interests of a vulnerable population. 

Tennessee Physician Sentenced in $1.88 Million Health Fraud Case

A Tennessee doctor will have 7 years in federal prison to contemplate his crimes against the Medicare program and his patients. 

He was convicted on a 36-count indictment in the following scheme, as described by the U.S. Attorney for the Middle District of Tennessee:

The defendant, through his medical clinic in Clarksville, billed federal health insurance programs for hundreds of medically unnecessary services, including unnecessary office visits and steroid injections. The evidence at trial showed that he required Medicare beneficiaries and other patients to visit his clinic as many as six times each month and to undergo unnecessary steroid injections in order to obtain their prescriptions. The evidence also showed that the defendant altered progress visit notes in his patients’ medical records to justify higher billing rates.

The physician was ordered to pay over $1 million in restitution and serve three years of supervised release.  He was also fined $195,000 and must forfeit previously seized assets worth approximately $900,000.

This isn't the physician's first encounter with the legal system. In 2022 the Administrator of DEA revoked his authorization to prescribe controlled substances, based upon findings that he indiscriminately and dangerously prescribed large amounts of oxycodone and other controlled substances. See Fed. Reg., Jan. 19, 2022, at 2986. 

Health care fraud is as health care fraud does.

Chamber of Commerce Is Denied an Injunction to Halt Medicare Drug Price Negotiations

Happy to do the bidding of Big Pharma, the US Chamber of Commerce sued the Biden Administration to stop the Drug Price Negotiation Program created by the federal Inflation Reduction Act,  42  U.S.C.  §§ 1320(f), et  seq in its tracks on the theory that this program violates due process. The Chamber was joined by a handful of affiliates -- along with AbbVie, Inc., manufacturer of the lucrative Imbruvica (used to treat Chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma (SLL)) and is one of eight such suits filed around the country.

On Friday a Trump appointee in the Southern District of Ohio denied the Chamber's motion for a preliminary injunction, as well as the government's motion to dismiss. The opinion is a Civil Procedure teacher's dreams, covering such juicy first-years topics as:

• subject-matter jurisdiction
• standing, especially associational standing
• ripeness
• the standards for a preliminary injunction, especially irreparable harm if denied and likelihood of prevailing on the merits.

Dayton Area Chamber of Commerce v. Becerra, S.D. Ohio, September 29, 2023, No. 323cv00156SDOh/5.

It's hard to say how long this victory for HHS will last. Plaintiffs were ordered to file an amended complaint by October 13, and HHS will have until October 27 to respond, so it will be at least November before there's another ruling. Meanwhile, discovery will continue.

AHLA Podcast on Tax-Exempt Joint Ventures

AHLA has a nice, 19-minute podcast that offers a useful overview of the types of issues that arise when a tax-exempt entity enters into a joint venture (mostly ancillary jv's rather than whole-hospital jv's) with a for-profit entity. The participants include the indefatigable Gerry Griffith, Partner, Jones Day (Detroit), as well as Jennifer Noel, Corporate Director of Tax, Christiana Care Health System, and Robert Friz, Partner, PricewaterhouseCoopers. Nerd that I am, I love these tax issues and look forward to teaching them in my Health Law course each year. 

This podcast is actually a teaser for AHLA’s upcoming "Tax Issues for Health Care Organizations" program in Washington, DC on October 23-24. The program and faculty all look great.

Disclaimer: AHLA didn't ask me to post this plug for the program. 

Fourth Circuit Reinstates ERISA Claim Against Administrator (and Contractors) of Self-Insured Plan

Here are the facts as stated in the Fourth Circuit's opinion in Rose v. PSA Airlines et al., (4th Cir. 9/11/2023):

The Employee Retirement Income Security Act's § 502(a)(1)(B) allows a beneficiary to “recover benefits due to him under the terms of his plan.” And ERISA's § 502(a)(3) allows a beneficiary to sue for “other appropriate equitable relief.” This case requires us to answer when—and under what conditions—a plaintiff may seek monetary relief under one of those provisions.

Jody Rose's son had a rare heart condition. He died at the age of twenty-seven, awaiting a heart transplant, which Rose says that Defendants—who administered her son's employer-based health benefits program—wrongfully denied. So she sued on behalf of his estate, seeking monetary relief under both § 502(a)(1)(B) and § 502(a)(3). The district court dismissed both claims. As to Rose's (a)(1)(B) claim, the court held that money was not one of the “benefits” that her son was owed “under the terms of his plan.” And, as to her (a)(3) claim, the court held that her requested monetary relief was too similar to money damages and was thus not “equitable.”

We now affirm in part and vacate in part. The district court correctly held that money was not one of the “benefits” that Rose's son was “due” “under the terms of his plan.” So it was right to dismiss her (a)(1)(B) claim. But we must vacate its complete dismissal of Rose's (a)(3) claim. While the district court correctly noted that compensatory, “make-whole” monetary relief is unavailable under § 502(a)(3), it did not consider whether Rose plausibly alleged facts that would support relief “typically” available in equity. Montanile v. Bd. of Trs., 577 U.S. 136, 142, 136 S.Ct. 651, 193 L.Ed.2d 556 (2016). We thus remand for the district court to decide in the first instance whether Rose can properly allege such a theory based on a Defendant's unjust enrichment, including whether an unjust gain can be followed to “specifically identified funds that remain in the defendant's possession” or to “traceable items that the defendant purchased with the funds.” Id. at 144–45, 136 S.Ct. 651.

So the district court will now decide whether unjust-enrichment damages are available under § 502(a)(3). And unless the case settles, there will be the inevitable appeal to the Fourth Circuit no matter which way the lower court rules. And then cert.?

This case is worth watching. The Supreme Court ruled 30 years ago that § 502(a)(3) does not authorize damage actions, at least under the narrow facts of that case. See Mertens v. Hewitt Assocs., 508 U.S. 248 (1993). Yale law professor John Langbein has written that the Court got it wrong in Mertens. The Court has repeated its no-damages refrain in later cases over the decades. Is an unjust-enrichment claim the way to crack open that ruling? 

Texas Attorney Convicted for Role In Kickback Scheme

It's relatively rare for an attorney to be such an integral part of a kickback-for-referrals scheme that he gets convicted of money-laundering (as well as a charge of perjury for lying about the scheme under oath), but that's what happened this summer to Houston lawyer Peter Bennett. See Law360, 7/17/2023. Bennett was convicted on charges that he created sham corporations and sham trusts to launder money paid for referrals to a local hospital. His motion for acquittal or a new trial is pending before District Judge Jeremy Kernodle in the Eastern District of Texas. See Law360, 9/11/2023.

If there's ever an opinion in this case, it would provide a cautionary tale for my health law students . . . 

How Many Separate Fraud Schemes Can You Spot in This Picture?

This doesn't quite match the $200 million health care fraud scheme I reported on yesterday, but it could still be a great final exam "issue spotter" in my Health Care Law class. It reminds me of those children's puzzles that have 10 or 15 errors partially hidden in a picture. Here's the picture (from the DOJ press release; emphasis added):

[T]he United States has filed and settled a civil fraud lawsuit against KLAUS PETER RENTROP and his medical practice GRAMERCY CARDIAC DIAGNOSTIC SERVICES P.C. (“GRAMERCY CARDIAC”) for paying millions of dollars in kickbacks to physicians and their practices for patient referrals.

RENTROP and GRAMERCY CARDIAC offered and paid physicians and their practices millions of dollars in kickbacks in the form of inflated “rental payments” and referral fees to induce them to refer patients to Gramercy-contracted cardiologists and to Gramercy Cardiac for diagnostic tests and procedures, in violation of the Anti-Kickback Statute and the Stark Law. 

RENTROP and GRAMERCY CARDIAC’s scheme worked as follows.  RENTROP and GRAMERCY CARDIAC entered into office space rental agreements, often in excess of fair market value, with primary care and other physicians or their medical practices (the “Rental Practices”).  These agreements typically provided for the use of an exam room once or twice a month, as well as for the use of basic equipment (e.g., a telephone and a computer) and front desk staff to assist with scheduling.  The defendants often agreed to pay thousands of dollars each month in rent.  RENTROP and GRAMERCY CARDIAC also entered into independent contractor agreements with dozens of cardiologists (the “Gramercy-Contracted Cardiologists”) who were sent to see patients at the Rental Practices.  In exchange for the purported “rental payments,” the Rental Practices referred patients to the Gramercy-Contracted Cardiologists, who in turn referred many of these patients to a GRAMERCY CARDIAC office to undergo cardiac diagnostic tests and procedures.  RENTROP and GRAMERCY CARDIAC paid the Gramercy-Contracted Cardiologists a flat fee for each test or procedure performed on referred patients at a Gramercy Cardiac location, with larger fees paid for tests and procedures for which GRAMERCY CARDIAC received a greater reimbursement.  These per-procedure fees were the only compensation paid to some Gramercy-Contracted Cardiologists.

To ensure the kickbacks paid to the Rental Practices were working, RENTROP directed his staff to calculate GRAMERCY CARDIAC’s return on investment from the “rental payments” paid to each Rental Practice.  RENTROP insisted on a minimum return on investment of at least 300% from the kickbacks. 

These Rental Practices referred tens of thousands of patients to the Gramercy-Contracted Cardiologists, who in turn referred more than 23,000 patients for PET and SPECT scans at GRAMERCY CARDIAC.  A significant proportion of these patients were Medicare or Medicaid beneficiaries: GRAMERCY CARDIAC billed Medicare or Medicaid for tests or procedures provided to tens of thousands of Medicare or Medicaid beneficiaries who were referred by the Rental Practices, including for PET and SPECT scans for many thousands of these beneficiaries.  As a result, the claims submitted for payment for these tests and procedures were false and violated the federal False Claims Act. 

As part of the settlement, RENTROP and GRAMERCY CARDIAC each admits, acknowledges, and accepts responsibility for the following conduct:

From 2010 through 2021, GRAMERCY CARDIAC, at RENTROP’s direction, entered into rental agreements (the “Rental Agreements”) with more than 130 physicians and medical practices (the “Rental Practices”) under which GRAMERCY CARDIAC leased a portion of the practice’s office space, usually one or two exam rooms for certain days or hours each month.  RENTROP took part in the negotiation of the Rental Agreements and signed them on behalf of GRAMERCY CARDIAC.  GRAMERCY CARDIAC paid a total of more than $11 million to the Rental Practices pursuant to the Rental Agreements. 

From 2010 through 2021, GRAMERCY CARDIAC, at RENTROP’s direction, entered into independent contractor agreements (the “Independent Contractor Agreements”) with more than 50 cardiologists (the “Gramercy-Contracted Cardiologists”) or their medical practices.  RENTROP took part in the negotiation of the Independent Contractor Agreements and signed them on behalf of GRAMERCY CARDIAC. 

GRAMERCY CARDIAC sent the Gramercy-Contracted Cardiologists to the rented office space one or more times each month to see patients who were referred for an assessment by the healthcare providers at the Rental Practice.  The Gramercy-Contracted Cardiologists in turn referred these patients to GRAMERCY CARDIAC to undergo diagnostic tests and procedures, such as PET and SPECT scans.

GRAMERCY CARDIAC paid many of the Gramercy-Contracted Cardiologists a flat fee for each diagnostic test or procedure which the cardiologist referred to GRAMERCY CARDIAC provided that the patient received the test or procedure at a GRAMERCY CARDIAC location.  These “per procedure” fees were the only compensation GRAMERCY CARDIAC provided to the Gramercy-Contracted Cardiologists.

Certain versions of Independent Contractor Agreements stated that the Gramercy-Contracted Cardiologist was to be paid not for the referrals to GRAMERCY CARDIAC, but rather for the “[a]dministration and supervision” of the PET and SPECT scans to be performed at GRAMERCY CARDIAC.  However, in many cases, the Gramercy-Contracted Cardiologists did not, in fact, administer and supervise the PET and SPECT scans and were nonetheless paid by GRAMERCY CARDIAC based solely on the number of tests and procedures referred.

At the time the Rental Agreements were executed, it was understood that the Rental Practices would refer their patients to the Gramercy-Contracted Cardiologists.  Indeed, GRAMERCY CARDIAC calculated the number of hours per month that GRAMERCY CARDIAC leased the office space based on the volume of expected patient referrals.

GRAMERCY CARDIAC calculated its return on investment from its Rental Agreements — which it internally referred to as the “efficiency” of the Rental Agreements — by comparing the revenue GRAMERCY CARDIAC generated from the patient referrals to the payments it made to the Rental Practice.  

When a Rental Agreement’s return on investment fell below the minimum threshold, GRAMERCY CARDIAC, at RENTROP’s direction, would often refuse to pay the Rental Practice the amounts due under the Rental Agreement.  In addition, at RENTROP’s direction, GRAMERCY CARDIAC Physician Liaisons advised Rental Practice physicians that if the volume of referrals to Gramercy-Contracted Cardiologists did not increase, rent would be decreased, or the Rental Agreement would be terminated.  GRAMERCY CARDIAC terminated a number of Rental Agreements because the return on investment through patient referrals was too low.

When negotiating or re-negotiating the monthly rental payment to be made under a Rental Agreement, GRAMERCY CARDIAC took into account the expected or historic return on investment based on the volume of patient referrals generated from the Rental Practice.

The rental fees paid by GRAMERCY CARDIAC under the Rental Agreements were in excess of fair market value for at least some Rental Agreements.

That's a whole lotta kickback-payin' goin' on! How much fraud are we talking about? The defendant physician and his practice are paying $6.5 million to settle the charges, but if they fail to pay, there is "a Consent Judgment in the amount of $64,416,515, which may be enforced if Defendants do not make the payments required under the settlement agreement." 

Health Care Fraud Case of the Week

 

Here's the headline from the DOJ news release on this conviction: "Nurse Practitioner Convicted of $200M Health Care Fraud Scheme." There were a few other parties involved, as you might imagine, but this one NP was at the center of a $200 million fraud scheme. As audacious as that sounds, the facts are equally breathtaking:

According to court documents and evidence presented at trial, [the defendant] signed thousands of orders for medically unnecessary orthotic braces and genetic tests, resulting in fraudulent Medicare billings in excess of $200 million. As part of the scheme, telemarketing companies would contact Medicare beneficiaries to convince them to request orthotic braces and genetic tests, and then send pre-filled orders for these products to Hernandez, who signed them, attesting that she had examined or treated the patients. In reality, she had never spoken with many of the patients.

There's more: 

In 2020, Hernandez ordered more cancer genetic tests for Medicare beneficiaries than any other provider in the nation, including oncologists and geneticists. She then billed Medicare as though she were conducting complex office visits with these patients, and routinely billed more than 24 hours of “office visits” in a single day. Hernandez personally pocketed approximately $1.6 million in the scheme, which she used to purchase expensive cars, jewelry, home renovations, and travel.

The truly astonishing thing about this is the defendant's apparent confidence that the CMS computers wouldn't pick up on the fact that she ordered more cancer genetic tests than any other Medicare provider in the entire country. 

Love is blind, and so is greed.