Category: Daily News

The U.S. Supreme Court on Thursday imposed some limits on the kind of fraud claims that can be brought against federal contractors in a case involving a suit against one of America’s largest hospital operators over a woman’s death at one of its facilities. More than a dozen major healthcare organizations and associations have jumped into the Supreme Court case over the validity of a legal theory now used to bring many fraud lawsuits against them.

But the 8-0 ruling was not the broad victory for business sought by the company, Universal Health Services, and other healthcare providers are fearful of suits under the U.S. False Claims Act, which lets individuals make claims that the federal government has been defrauded.

The case focuses on situations in which whistle-blowers allege providers have submitted false claims to government programs by failing to follow certain regulations. That legal theory is known as “implied certification” and has been accepted by some federal appeals courts and rejected by others. The justices threw out a 2015 appeals court ruling that had allowed the parents of Yarushka Rivera to sue Universal Health Services under the False Claims Act, but sent the case back to a lower court, meaning the suit could potentially still proceed.

Rivera suffered a fatal seizure in 2009 at age 19 a mental health facility owned by the company in Lawrence, Massachusetts. The lawsuit said the facility provided “gravely inadequate treatment” and used “unsupervised and unqualified personnel.” Rivera’s parents, Julio Escobar and Carmen Correa, accused the company of defrauding the government because it was getting federal Medicaid funding to provide treatment to low-income people and did not comply with personnel regulations at the Lawrence facility.

The ruling represented a partial victory for the business community because it rejected the lower court’s expansive view of a company’s liability under the False Claims Act. Roy Englert, King of Prussia, Pennsylvania-based Universal Health Services’ lawyer, said he was pleased the justices threw out the appeals court ruling and set a “new rigorous standard” for determining if the claims can move forward.

The ruling “accepts the basic notion that fraudsters can’t provide shoddy services to the government and expect payment without incurring significant liability,” said David Frederick, the lawyer for Rivera’s family.

Businesses had hoped the justices would put more limits, or disallow completely, lawsuits based on a federal contractor’s failure to meet certain legal or regulatory requirements not specifically outlined in a government contract. The court instead said such lawsuits can be filed as long as they are relevant to the government’s decision to make the payment to the company.

Justice Clarence Thomas, writing for the court, said the parents “may well have adequately pleaded a violation” of the fraud law, but added that the False Claims Act “is not a means of imposing treble damages and other penalties for insignificant regulatory or contractual violations.”

The Obama administration had backed the parents.

The DWC will enforce lien claimants’ use of a Uniform Assigned Name (UAN) beginning June 25, 2016. This is a uniform naming convention which ensures that parties are properly associated to cases in EAMS . The UAN is currently used by attorneys, claims administrators and lien claimants.

Effective June 25, 2016, lien claimants must use their UAN when filing a Notice and Request for Allowance of Lien and Application for Adjudication or their attempt to do so will result in failure. This requirement applies to all filing methods (OCR, EForm, and JET). It is advised that all lien claimants check the UAN Lien Claimants search page to verify their exact UAN name that must be used when filing documents.

Lien claimants who do not have a UAN should email the Central Registration Unit at CRU@dir.ca.gov. Please include an attachment with your business letterhead in the email request . The new assigned name or information will be posted within 10 business days of receipt of the request.

This new mandate is likely to become an additional tool in the claim administrator’s health care fraud prevention process. The true identity of fraudulent medical providers is often hidden behind fictitious business names, medical management companies who file liens in their name, as well as collection companies who do the same. In many instances the true identity of the perpetrator at the top of the pyramid scheme is not clearly visible. Forcing liens to be identified by a single unique number is a step forward since this would at least provide an investigatory thread that can be followed to the culprit’s doorstep.

The Center for Investigative Reporting current investigatory effort exposes fraud in California’s workers’ compensation system. An analysis of more than a million court cases details how workers have been swept into medical billing mills, prescribed unregulated medications and advised to undergo sometimes unneeded or high-risk surgery by doctors who were raking in bribes. The CIR report has now birthed follow up articles in many California leading publications.

The Sacramento Bee in a series of related articles points out that a review of thousands of criminal court records by The Center for Investigative Reporting shows a system in which pay-to-play schemes trump patient care, particularly in unregulated treatments rejected by insurers and “disputed in obscure courts throughout the state.” Prosecutors are pursuing charges against more than 80 medical professionals who have handled more than 100,000 injured-worker cases, most of them originating in Southern California. They allege that the cases account for $1 billion in fraud.

And the Sacramento Bee story suggests that “nobody cares about policing health care for injured workers.” Thousands of unregulated medical providers can spurn legislated checks and balances on medical care in the only-in-California network of 24 workers’ compensation courts. Anyone can demand money – a process known as filing a medical lien – for unregulated medical treatments that include the use of questionable devices, pain creams, shockwave therapies and DNA tests. And in an overburdened system that favors settlements over trials, they often succeed”.

The DWC had this response. “We know there’s a problem,” said Christine Baker, director of the state Department of Industrial Relations, which administers workers’ compensation. Baker’s agency worked with lawmakers on a 2012 law that was meant to limit the filing of medical liens. It established a $150 fee required to demand payment in workers’ compensation courts. It also gave insurers new powers to deny money to providers that aren’t approved to treat injured workers.

Yet claims for unapproved care still are cropping up, Baker said. And the number of liens filed last year is even higher than it was when one of Baker’s advisers initially concluded that the system “rewards bad behavior.” Baker said her department has begun reviewing the medical providers who currently file the largest number of liens. The result: “We do note that many are (criminally) indicted.”

Perhaps the DWC mandate that lien claimants must soon use a UAN is the aftermath of these stunning developments. It would seem at least that the DWC and claim administrators will soon be able to better track the identity of who it is that is asking to get paid.

Four U.S. senators – two Democrats and two Republicans – introduced a bill on Tuesday aimed at preventing big pharmaceutical companies from using safety rules to prevent generic drugs from coming to market.

Top leaders on the Senate Judiciary Committee led by Ranking Member Patrick Leahy (D-Vt.) introduced the new legislation to combat anticompetitive practices by brand-name drug companies that delay entry of lower-priced generic drugs. The issue will also be the subject of a Senate committee hearing next week.

The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act would deter pharmaceutical companies from blocking cheaper generic alternatives from entering the marketplace. The bill is cosponsored by Chairman Chuck Grassley (R-Iowa), and Senators Amy Klobuchar (D-Minn.) and Mike Lee (R-Utah), leaders of the Subcommittee on Antitrust, Competition Policy and Consumer Rights.

Leahy said: “the high cost of prescription drugs is preventing access to necessary medical care, and I share their concern that many pharmaceutical products are simply too expensive for consumers. Pharmaceutical companies should be compensated for their important work developing life-saving treatments, but predatory practices at the expense of consumers are unacceptable. Drug affordability is a bipartisan issue that affects each and every one of us.”

The CREATES Act targets abusive delay tactics that are being used to block entry of affordable generic drugs. The first delay tactic addressed by the CREATES Act occurs when brand- name drug companies prevent potential generic competitors from obtaining samples of the branded product, so the generic company cannot perform the testing necessary to show that its product is equivalent to the brand-name product, a prerequisite for FDA approval.

The second delay tactic addressed by the CREATES Act occurs when brand-name manufacturers whose products require a distribution safety protocol (known as a Risk Evaluation Mitigation Strategy with Elements to Assure Safe Use, or “REMS with ETASU” ) refuse to allow generic competitors to participate in that safety protocol, again undermining the generic’s ability to gain FDA approval.

The CREATES Act allows a generic drug manufacturer facing one of these delay tactics to bring an action in federal court for injunctive relief (i.e. to obtain the sample it needs, or to enter court- supervised negotiations for a shared safety protocol). The bill also authorizes a judge to award damages to deter future delaying conduct.

The CREATES Act is intended to provide an efficient, tailored path for generic drug manufacturers to obtain relief so they can continue working to bring their lower-cost product to market. The Congressional Budget Office has estimated that similar legislation would save the government over $2 billion in direct savings over 10 years. The savings to consumers and private insurance companies would likely be far greater.

There is a similar bill in the House of Representatives which addresses the same issue but uses a different strategy. For example, it requires the generic company seeking a REMS drug to get FDA authorization to obtain the sample.

As an example of one of the REMS disputes which is public, Mylan Pharmaceuticals filed a lawsuit in 2014 against Celgene Corp, accusing it of using REMS to prevent generic copies of Thalomid and Revlimid to market.

The Senate Judiciary Committee’s antitrust panel will hold a hearing on its bill on June 21.The Pharmaceutical Research and Manufacturers of America, or PhRMA, which counts major drugmakers among its members, said it had no immediate comment. The Generic Pharmaceutical Association was pleased to see the bill introduced.

Famous criminal defense lawyer Mark Geragos who has defended Michael Jackson, actress Winona Ryder, politician Gary Condit, Susan McDougal and Scott Peterson was likely bluffing last week when media sources quoted him as proclaiming that a plea agreement for his client, former State Senator Ron Calderon, was not being discussed and expected the case would proceed to trial. Within a week of this proclamation, Ron Calderon’s criminal plea agreement was signed by both of them and filed in federal court.

According to the signed document, Ron Calderon admitted that it must be true that he (1) “knowingly devised or participated in a scheme to defraud the public of its right to the honest services of the public official through bribery or kickbacks; (2) defendant did so knowingly and with an intent to defraud; (3) the scheme or artifice to defraud involved a material misrepresentation, false statement, false pretense, or concealment of fact; and (5) in advancing, or furthering, or carrying out the scheme to defraud, the defendant used, or caused someone to use, the mails to carry out or to attempt to carry out the scheme.”

Ron Calderon also agreed to a “statement of facts” recited in the agreement that included the following factual admission that are in part sufficient to support his pleas of guilty.

“In 2006, defendant was elected California State Senator for the 30th Senate District and held that office until in or around November 2014. As a public official, defendant owed a duty of honest services to his constituents as well as the citizens of California.”

“Defendant’s brother, defendant THOMAS M. CALDERON, served as a California State Assemblyman for the 58th Assembly District until in or around 2002. Shortly after leaving office, defendant THOMAS M. CALDERON founded the Calderon Group Incorporated (“the Calderon Group”) in the Central District of California, a political consulting company, and.also became an Executive Officer of Californians for Diversity (“CFD”), a tax exempt public benefits corporation under Title 26, United States Code, Section 501 (1) (c) (4), in or around 2008.”

“MICHAEL D. DROBOT (“DROBOT”) was one of defendant THOMAS M. CALDERON’s political consulting clients. DROBOT owned and operated the Pacific Hospital of Long Beach (“PHLB”) and other affiliated companies from in or around 1997 until in or around October 2013. One of the political issues for which defendant THOMAS M. CALDERON was providing consulting services to DROBOT had to do with “spinal pass-through” legislation in California. Specifically, DROBOT wanted to preserve the spinal pass-through legislation in California because it enabled DROBOT and his companies to make substantial amounts of money performing spinal implant surgeries on worker’s compensation patients. Defendant knew that DROBOT wanted to preserve the spinal pass-through legislation in California.”

“In or around June 2010, defendant told DROBOT that his son would be attending college and asked DROBOT to hire his son as a summer employee of PHLB while his son was in college. Defendant told DROBOT that his son would need to earn $10,000 per summer in order to pay his college tuition each year. DROBOT agreed to hire defendant’s son as a summer file clerk at one of his companies and to pay him $10,000 (take-home or net) per summer while defendant’s son was in college. Defendant accepted DROBOT’s offer to hire his son and to pay him $10,000 per summer knowing that as a result of those payments DROBOT expected defendant to perform official acts that benefited DROBOT, like voting against legislation that would eliminate the spinal (pass) through and supporting legislation that preserved it, and intending to perform those official acts in return, which defendant did. For example, defendant asked a fellow Senator to introduce SB 896, legislation favorable to DROBOT and the spinal pass-through, and voted against SB 863, legislation unfavorable to DROBOT and the spinal pass-through. DROBOT employed defendant’s son for the first three summers he was in college (2010, 2011, and 2012) and paid his son a total of approximately $30,000.”

Ron Calderon also agreed that he “understands that the statutory maximum sentence that the Court can impose for a violation of Title 18, United States 4 Code, Sections 1341 and 1346, is: 20 years imprisonment; a three-year period of supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $100.”

A new study summarized in Reuters Health says that doctors in states that track painkiller prescriptions were nearly one-third less likely to offer patients dangerously addicting opioids. The launch of drug-monitoring programs in 24 states led to an immediate 30 percent drop in prescriptions for Schedule II opioids, the most addictive, in patients with pain complaints, the study showed.

California is among the states that have such a monitoring program. CURES 2.0 (Controlled Substance Utilization Review and Evaluation System) is a database of Schedule II, III and IV controlled substance prescriptions dispensed in California serving the public health, regulatory oversight agencies, and law enforcement. California law (Health and Safety Code Section 11165.1) requires all California licensed prescribers authorized to prescribe scheduled drugs to register for access to CURES 2.0 by July 1, 2016 or upon issuance of a Drug Enforcement Administration Controlled Substance Registration Certificate, whichever occurs later. California licensed pharmacists must register for access to CURES 2.0 by July 1, 2016, or upon issuance of a Board of Pharmacy Pharmacist License, whichever occurs later.

Lead author Yuhua Bao, a health economist at Weill Cornell Medical College in New York, and colleagues analyzed 26,275 office visits for pain in 24 states that implemented prescription drug-monitoring programs from 2001 to 2010. As reported in Health Affairs, in these states the probability of a doctor prescribing a Schedule II opioid dropped from 5.5 percent to 3.7 percent – a more than 30 percent reduction. The results were immediate and held for three years.

The study confirmed Bao’s hypothesis that physician drug-monitoring programs, which have been implemented in a wide variety of forms in every state except Missouri, are an effective tool to combat the opioid drug epidemic. But she stressed the need for other means as well.

“There are no magic bullets here,” said Dr. Caleb Alexander, who directs the Johns Hopkins Center for Drug Safety and Effectiveness in Baltimore, in a phone interview. “The interventions are needed along the continuum here – from manufacturers to end-users. This is important to keep in mind given the magnitude of addiction, injuries and deaths,” said Alexander, who was not involved in the current study.

Overdose deaths, along with sales of prescription opioids, have quadrupled since 1999, the CDC estimates. More than 165,000 Americans died from overdoses related to prescription opioids from 1999 to 2014. Some of these deaths might have been avoided if doctors had been able to check a prescription drug-monitoring database, Alexander said.

A database could show when patients are obtaining opioids under their own name from multiple doctors, which might assist in identifying potential abuse and dependency, he noted.

Drug-monitoring databases may make doctors think twice before prescribing pain medications for a variety of reasons in addition to uncovering “doctor shopping” by patients, the study authors write. Knowing that they’re being watched may serve as a deterrent, and the programs may generally increase awareness of the dangers of prescribing opioids, they say.

Primary-care doctors treating adults for chronic pain write nearly half of opioid prescriptions, the CDC said. The new guidelines recommend non-opioids like acetaminophen and ibuprofen as the first line of pain treatment.