Recent DOJ settlements highlight compliance opportunities for providers

These types of conduct are material and offer corporate compliance officers and practice managers the opportunity to step back, assess policies and procedures, update training – both for HIPAA and fraud, waste, and abuse, and bring in outside consultants to assess risk.

In less than a month, the U.S. Department of Justice (DOJ) has settled various types of allegations ranging from altering patient medical records to get claims paid to paying kickbacks to physicians in order to induce the use of implantable cardiac devices. These types of conduct are material and offer corporate compliance officers and practice managers the opportunity to step back, assess policies and procedures, update training – both for HIPAA and fraud, waste, and abuse, and bring in outside consultants to assess risk.

On July 26th, the U.S. Attorney’s Office for the District of Massachusetts announced a $115,000 settlement with DJ Drugs & Surgicals Inc. “to resolve allegations that it altered patient medical records and submitted the altered medical records to Medicare in support of prior authorization requests. It should not be surprising that this type of settlement emerged out of D. Massachusetts given its 2016 settlement with Warner Chilcott in the amount of $125 million to resolve both criminal and civil liability arising from the illegal promotion of various drugs. Specifically:

From 2009 to 2013, Warner Chilcott paid remuneration to physicians in order to induce those physicians to prescribe Warner Chilcott drugs, which is illegal. Warner Chilcott provided payments, meals, and other remuneration associated with so-called “Medical Education Events.” These events, which were often held at expensive restaurants, frequently contained minimal or no educational component, and were instead used to pay prescribing physicians in an attempt to gain a competitive advantage over other pharmaceutical companies. Warner Chilcott also paid numerous high-prescribing physicians to be “speakers” for the company for the primary purpose of obtaining prescriptions.

During the same period of time, Warner Chilcott submitted false, inaccurate, or misleading prior authorization requests to federal health care programs for the osteoporosis medications Atelvia® and Actonel®. A prior authorization request contains protected health information, including biographical data and information concerning a patient’s medical condition. Warner Chilcott falsified and manipulated prior authorizations by providing false medical justifications for the prescriptions, often filling out the prior authorizations themselves. The fraudulent requests were provided to certain insurance companies in order to overcome restrictions that favored less expensive osteoporosis drugs. In some instances, Warner Chilcott sales representatives submitted these prior authorizations directly to insurance companies, holding themselves out to be physicians.

On July 22nd, the DOJ announced that Biotronik Inc. paid $12.95 million to resolve allegations that it violated the False Claims Act by “causing the submission of false claims to Medicare and Medicaid by paying kickbacks to physicians to induce their use of Biotronik’s implantable cardiace devices, such as pacemakers and defibrillators.” Moreover, several states also joined in the settlement given the types of payments that were made to physicians ranging from new employee training to holiday parties, winery tours, and lavish meals with no business purpose.

In sum, these types of fraud will continue to be a priority for the DOJ and Relators’ counsel alike. Having a robust and substantive compliance program in place can potentially mitigate the amount of a monetary penalty and/or criminal liability, as per the Justice Manual.

Rachel V. Rose, JD, MBA, advises clients on compliance, transactions, government administrative actions, and litigation involving healthcare, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.