Medtronic Inc. to Pay Millions to Resolve False Claims Act Allegations

Medical device manufacturer Medtronic Inc. has agreed to pay the United States $2.8 million to resolve allegations under the False Claims Act that Medtronic caused certain physicians to submit false claims to federal health care programs for a medical procedure known as “SubQ stimulation,” the Justice Department announced today. Medtronic Inc. is a medical technology company based in Minnesota.

“Today’s settlement demonstrates our commitment to ensure that beneficiaries of federal health care plans, including Medicare recipients and military families, receive medical treatments that have been proven safe and effective,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country’s health care resources.”

The United States alleged that from 2007 through 2011, Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable. In these procedures, Medtronic’s spinal cord stimulation devices were placed just beneath the skin near an area of pain, most often in the lower back, where the devices could provide electrical impulses to create a “tingling” sensation intended to alleviate chronic pain. The United States alleged that even though the safety and efficacy of SubQ stimulation had not been established as required by the Food and Drug Administration (FDA), the company promoted this procedure by, among other strategies, arranging to have physician-customers attend Medtronic-sponsored “on-site training programs” regarding the use of Medtronic spinal cord stimulation devices for SubQ stimulation. 
      
“Patients should be able to trust that their health care providers only use – and bill Medicare for – medical procedures that have been shown to be safe and effective,” said Special Agent in Charge Scott J. Lampert of the Department of Health and Human Services’ Office of Inspector General (HHS–OIG). “Our agency will continue to pursue medical device makers that ignore requirements designed to protect patient health and federal health care programs.”

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The lawsuit was filed by Jason Nickell, who formerly worked as a Medtronic sales representative. Nickell will receive $602,000.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. 
One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with Medtronic was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch, HHS–OIG, the Defense Health Agency, the FDA’s Office of Chief Counsel and the FDA’s Office of Criminal Investigations.

Source: DOJ

This information is intended to be educational and should not be considered legal advice on any specific matter.

   

OFCCP Issues Directive 2014-01: TRICARE Subcontractor Enforcement Activities

Recent events have brought to OFCCP’s attention that there has been a difference in understanding between the Department of Labor and some entities affiliated with the TRICARE community as to who is a covered subcontractor under the laws we enforce. In light of that confusion, the agency has decided through the exercise of prosecutorial discretion to limit its enforcement activities of TRICARE subcontractors over the next five years.  

On May 7, 2014, OFCCP posted on its website Directive 2014-01: TRICARE Subcontractor Enforcement Activities, http://www.dol.gov/ofccp/regs/compliance/directives/dir2014_01.htm which establishes a five-year moratorium on enforcement of obligations related to affirmative action programs and recordkeeping under Executive Order (E.O.) 11246, as amended, Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), as amended. However, the moratorium does not apply to the investigation of complaints of discrimination under 41 CFR 60-1.24; 41 CFR 60-300.61 and 41 CFR 60-741.61. The moratorium directive is effective immediately and applies to all health-care entities that participate in TRICARE as subcontractors under a prime contract between the Department of Defense (DoD) TRICARE Management Activity and one of the prime managed-care contractors.

During the moratorium period, OFCCP staff will engage in outreach and technical assistance to provide greater clarity to the TRICARE subcontractor community about their obligations to prohibit discrimination and take affirmative action to improve employment opportunities for qualified women, minorities, people with disabilities and protected groups of veterans. In addition, we will continue to work with other federal agencies to clarify the coverage of health care providers under the laws we enforce. 

Source: OFCCP

This information is intended to be educational and should not be considered legal advice on any specific matter.

 

OFCCP Scores Surprising Victory in its Continuing Battle for Jurisdiction Over Healthcare Providers Based on TRICARE Participation

On July 22, 2013, the Office of Federal Contract Compliance Programs (OFCCP) won a surprising victory before the Department of Labor’s (DOL) Administrative Review Board (ARB), breathing new life into the agency’s efforts to assert jurisdiction over healthcare providers.

For nearly five years, OFCCP has been tenaciously pursuing jurisdiction over healthcare providers based on the theory that providers participating in, and receiving more than $50,000 in reimbursement from, the Department of Defense’s (DOD) TRICARE program qualify as federal government subcontractors required to comply with the agency’s regulations.

In December 2011, when Congress passed legislation apparently designed to reject OFCCP’s position, the agency’s director, Patricia Shiu, responded that “this is not over yet,” and continued to pursue an action against Florida Hospital of Orlando arguing that the Congressional action had not divested the agency of its jurisdiction.

And in October 2012, after the ARB ruled in favor of Florida Hospital, OFCCP again refused to accept defeat. OFCCP filed a motion before the ARB asking it to reconsider its decision and stating in its brief that notwithstanding the ARB’s decision in Florida Hospital, OFCCP “intends to continue to schedule and attempt to review hospitals because they are TRICARE network providers.”

The ARB, in an extremely unusual move, granted OFCCP’s request for reconsideration and then issued a new opinion last week holding, by a three-to-two vote, that the 2011 legislation did not foreclose all of OFCCP’s arguments for jurisdiction. The case has now been remanded back to an administrative law judge (ALJ) for further proceedings.

Significant legal questions remain unanswered by this new decision, and years of additional litigation may still lie ahead for Florida Hospital and the OFCCP. It is not clear whether the agency will now resume aggressively scheduling TRICARE participants for audits or wait for a more final resolution. Given this uncertainty, prudent health care providers should be thinking carefully about their options now and deciding whether to challenge OFCCP jurisdiction or avoid litigation by either ending their participation in TRICARE or complying with OFCCP’s requirements. Continue reading about this development here.

By David Goldstein

This information is intended to be educational and should not be considered legal advice on any specific matter.

Federal District Court Affirms U.S. Department of Labor’s Position that Healthcare Providers Participating in HMOs for Federal Employees are Subject to Federal Contractor Affirmative Action Requirements

In a long-awaited decision, the Federal District Court for the District of Columbia has ruled that three hospitals that provide medical services through a Health Maintenance Organization (HMO) to individuals covered by the Federal Employees Health Benefits Plan (FEHBP) are subject to the Office of Federal Contract Compliance Program’s (OFCCP) jurisdiction and reporting requirements.

Background

The case, UPMC Braddock, et al. v. Harris, involves three hospitals (the Hospitals) affiliated with the University of Pittsburgh Medical Center, which entered into contracts with the UPMC Health Plan (the Health Plan), an HMO to provide medical services to individuals enrolled in its coverage program. UPMC Health Plan, in turn, contracted with the U.S. Office of Personnel Management to provide coverage to federal employees who participate in the FEHPB. OFCCP attempted to assert jurisdiction over the Hospitals and the Hospitals refused to comply, arguing that they were not federal government subcontractors.

In support of their position, the Hospitals argued that their agreement with the Health Plan did not fit the definition of a “subcontract” because the services provided by the Health Plan were not “necessary to the performance” of the Health Plan’s contract with the federal government. The Hospitals argued that the Health Plan contracted to provide only insurance coverage to the federal employees enrolled in the FEHBP, and not medical services. In making their argument, the Hospitals relied on the decision in OFCCP v. Bridgeport Hospital, ARB Case No. 00-034. In that case, OFCCP attempted to obtain jurisdiction over Bridgeport Hospital based on its medical services agreement with Blue Cross/Blue Shield (Blue Cross), which had contracted with the U.S. Office of Personnel Management to provide health insurance to federal government employees. In that case, the Administrative Review Board agreed with that the hospital was not a federal subcontractor because Blue Cross’ contract with the federal government did not obligate Blue Cross to provide medical services to Blue Cross’ policyholders, only insurance.

In UPMC Braddock, however, the court disagreed with the Hospitals’ assertion that the Bridgeport decision controls, holding that the UPMC Health Plan had agreed to serve the function of an HMO rather than that of a traditional insurer, and thus had agreed to provide medical services to federal government employees. In making the distinction between traditional insurers and HMOs, the Court held that the Hospitals are, as a result, federal government subcontractors who must submit to OFCCP’s jurisdiction.

Impact of Decision?

According to Braddock, healthcare providers who subcontract with insurance companies that provide traditional insurance coverage fall outside of OFCCP’s jurisdiction, while those that subcontract with HMOs doing business with the FEHBP must comply with Executive Order 11246 and its statutory counterparts. Thus, while the Braddock decision does not impact the 2012 National Defense Authorization Act’s exemption of TRICARE providers from OFCCP jurisdiction, it reinforces that there are many other potential bases upon which OFCCP may– and likely will – assert jurisdiction over healthcare providers. Among these bases are contracts through Medicare Advantage programs and any direct contracts with federal agencies for healthcare services. The Department of Veterans Affairs and the Federal Bureau of Prisons are two agencies that commonly enter into direct contracts for healthcare services. It is likely that OFCCP will continue to aggressively assert jurisdiction over employers in the healthcare industry and will use contracts with an HMO to provide coverage to federal employees who participate in the FEHBP, as well as these other types of contracts, as bases for asserting jurisdiction over the employers in the healthcare industry.

Source: Healthcare Employment Counsel

This information is intended to be educational and should not be considered legal advice on any specific matter.

OFCCP Directive 293 rescinded - TRICARE Jurisdiction "on hold"

During the Office of Federal Contract Compliance Programs (OFCCP) webinar "Status of Pending Compliance Evaluations of Entities that Participate in TRICARE Networks" held on April 25th, it was announced that Directive 293,  "Coverage of Health Care Providers and Insurers" was rescinded due to  "recent legislation and related developments in pending litigation."   

Recent legislation passed; the National Defense Authorization Act (NDAA)  specifically removes TRICARE network providers from being designated as Federal subcontractors for purposes of OFCCP jurisdiction.  The OFCCP has advised that scheduled compliance evaluations where the sole basis for jurisdiction is participation in TRICARE will be "put on hold".  OFCCP will continue to use a case-by-case approach to make coverage determinations. 

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Status of Pending Compliance Evaluations of Entities that Participate in TRICARE Networks

On March 27, 2012, OFCCP Director of Program Operations Tom Dowd and Counsel Consuela Pinto will conduct a webinar to explain how the OFCCP is moving forward with compliance evaluations of entities that participate in TRICARE and also hold another federal contract or subcontract.

The webinar also will explain how OFCCP is putting compliance evaluations of those entities for which a TRICARE subcontract is the only basis of jurisdiction “on hold,” in light of the fact that this issue is currently being litigated in the Florida Hospital case.

Click here for more information and to register.