MSP Recovery LLC, a law firm out of Miami, Florida has been initiating class action litigation country-wide as assignees on behalf of Medicare Advantage Plans (MAPs) alleging that various primary payers have failed to reimburse MAP conditional payments allegedly giving rise to a Private Cause of Action under the Medicare Secondary Payer Act (MSP), specifically located at 42 USC §1395y(b)(3)(A).

In a decision just issued out of the Third Circuit Court of Appeals, Ocean Harbor Cas. Ins. v. Claims, 2018 Fla. App. LEXIS 13569 (September 26, 2018), the Court found that the trial court erred in certifying the class of Florida MAPs. Because MSP Recovery asserts that Ocean Harbor was responsible as a primary plan not due to pre-existing settlements, but simply due to the entry of no-fault insurance contracts under Florida’s no-fault statutes, this would involve a series of mini-trials which would need to be assessed on a case by case basis, and accordingly class certification was not appropriate.

Franco Signor LLC notes that there are a few interesting discussions in this 3rd Circuit decision which primary plans should take away, particularly if the primary plan is currently subject to litigation by MSP Recovery involving no-fault claims:

–  MSP Recovery (or Medicare Advantage Plans) recovery rights are not automatic without “demonstrated responsibility.” The MSP does not eliminate the terms and conditions of an underlying state No-Fault law or supersede an existing state insurance policy. Here, MSP Recovery has attempted to show “demonstrated responsibility” under the MSP by “the other means” language of the MSP (since there is no settlement, judgment or award). Demonstrated responsibility by other means must be demonstrated under the state’s no-fault laws and the actual no-fault policy and must be proven on a case-by-case basis.

–  What is also interesting about this decision is the discussion of whether Ocean Harbor failed to exhaust administrative remedies. MSP Recovery claims that it made an “organization determination” that Ocean Harbor owed the conditional payments and it could have challenged these payments pursuant to 42 CFR § 422.566. The court noted that there is nothing in the regulations that provides a federal administrative remedy for a primary plan like Ocean Harbor to challenge such an “organization determination.” The regulation cited by MSP Recovery only applies to claims by an enrollee (MAP beneficiary) against the MAP. While the SMART Act did finally afford primary plans with formal appeal rights, this appeals process only applies to conditional payments made under traditional Medicare Parts A and B. Accordingly, there is no method for primary plans to administratively contest an allegation by MSP Recovery/MAPs that it was responsible to make a particular payment.

This decision reinforces the current conundrum facing primary plans in MAP private cause of action double damages litigation. Medicare Advantage Plans desire the benefits of acting like traditional Medicare in seeking the ability to sue and recover double damages for unreimbursed conditional payments.

But, MAPs cannot have the benefits of acting like Medicare without carrying the burdens and providing due process to primary plans. MAPs need to afford primary plans with a formal appeal process if they want to act like Medicare.

And even more importantly, primary plans need a reliable source to determine whether their claimants are enrolled in a MAP. Currently, Medicare only returns traditional Medicare enrollment to primary plans.

On Wednesday, the United States Senate accomplished a rare feat – passing a bipartisan bill with a vote of 98-1. The bill now heads to President Donald Trump’s desk, following the vote in the Senate and a prior vote in the House of Representatives of 393-8.  This legislation adds multiple resources to the opioid epidemic as well as restrictions intended to aid in the fight against the spread of the epidemic. The bill is a combination of dozens of smaller proposals sponsored by hundreds of lawmakers. Here are some of the 41 key components of the Opioid Package (H.R. 6):

Law Enforcement

• Reauthorization of Key Law Enforcement Programs (Section 8205-8212) – Reauthorizes law enforcement programs through the Office of National Drug Control Policy, such as programs such as the High Intensity Drug Trafficking Area programs, drug courts, COPS Anti-Meth Program, and COPS anti-heroin task force program;
• First Responder Training (Section 7002) – Expands first responder training, authorized through the Comprehensive Addiction and Recovery Act, to include training on safety around fentanyl and other synthetic and dangerous substances;
• Public Health Laboratories Detecting Fentanyl and Other Synthetic Opioids (Section 7011) – Improves coordination between public health laboratories and laboratories operated by law enforcement to improve detection of fentanyl and other synthetic opioids;
• Synthetics Trafficking and Overdose Prevention (Section 8006, 8007) – Improves Federal agencies ability to detect synthetic opioids and other substances from entering the United States through the mail;
• Opioid Addiction Recovery Fraud Prevention (Sections 8021-8023) – Subjects those who engage in unfair or deceptive acts with respect to substance use disorder treatment services or substance use disorder treatment products to civil penalties for first time violations by the FTC; includes a savings clause for existing FTC and FDA authorities.
• Reauthorization of the comprehensive opioid abuse grant program (Section 8092) – Reauthorize the comprehensive opioid abuse grant program at the Department of Justice;

Ending Illegal Patient Brokering

• Criminal penalties (Section 8122) – This provision makes it illegal to pay or receive kickbacks in return for referring a patient to recovery homes or clinical treatment facilities;

Healthcare Integration

• Treatment, Education, and Community Help To Combat Addiction (Section 7101) – Expands medical education and training resources for healthcare providers to better address addiction, pain, and the opioid crisis;
• Preventing Overdoses While in Emergency Rooms (Section 7081) – Improves emergency departments ability to effectively screen, treat, and connect substance use disorder patients with care;
• Alternatives to Opioids in the Emergency Department (Section 7091) – Explores alternative pain management protocols in order to limit the use of opioid medications in emergency departments;
• Inclusion of opioid addiction history in patient records (Section 7051) – Requires HHS to develop best practices for prominently displaying substance use disorder treatment information in electronic health records, when requested by the patient;

Treatment Capacity Expansion

• IMD CARE Act (Section 5052) – Expands Medicaid coverage up to 30 days for individuals between 21 and 65 years old receiving care in a treatment facility for all substance use disorders, lifting the 16 bed restriction;  
• Expansion of Telehealth Services (Section 1009, 2001, 3232) – Expands access to substance use disorder treatment and other services through the use of telehealth;
• Comprehensive Opioid Recovery Centers (Section 7121) – Establishes model comprehensive treatment and recovery centers to ensure individuals have access to quality treatment and recovery services;
• Supporting family-focused residential treatment (Section 8081, 8083) – Enhanced family-focused residential treatment; $20 million in funding for HHS to award to states to develop, enhance, or evaluate family-focused treatment programs to increase the number of evidence-based programs;

Medication Assisted Treatment

• More Flexibility for Prescribing Medication Assisted Treatment (Section 3201, 3202) – Increases the number of waivered health care providers that can prescribe or dispense treatment for substance use disorders, such as certified nurses and accredited physicians;
• Grants to enhance access to substance use disorder treatment (Section 3203) – authorizes grants to support the development of curriculum that will help health care practitioners obtain a waiver to prescribe MAT;
• Delivery of a Controlled Substance by a Pharmacy to be Administered by Injection or Implantation (Section 3204) – Allows pharmacies to deliver implantable or injectable medications to treat substance use disorders directly to health care providers;
• Expanding Access to Medication in In-Patient Facilities (Section 5052) – Expanded Medicaid coverage up to 30 days for inpatient facilities applies to providers who provide a minimum of two types of medicines to treat opioid use disorder;

Prescription Medication Safety and Disposal

• Empowering Pharmacists in the Fight Against Opioid Abuse (Section 3212) – Develops and disseminates training resources to help pharmacists better detect fraudulent attempts to fill prescription medications;
• Safe Disposal of Unused Medication (Section 3222) – Allows hospice workers to dispose of unused medications on site or in patients homes;
• Access to Increased Drug Disposal (Section 3251-3260) – Awards grants to states to enhances access of prescription drug disposal programs;    
• Safety-enhancing Packaging and Disposal Features (Section 3032) – Requires certain opioids to be packaged into 3 or 7 day supplies and requires safe prescription drug disposal options to be given to patients upon receiving medications;

“We have an urgent, bipartisan consensus, a virtually unanimous agreement, to deal with the most urgent public health epidemic facing our country today in virtually every community,” said Senator Lamar Alexander, chairman of the Senate health committee and lead sponsor of the bill.

.

Sam Sarkis Solakyan operated diagnostic imaging facilities throughout California, including in Richmond, Hayward, San Jose, Garden Grove, Anaheim, Burbank, and San Diego.

His companies allegedly included Vital Imaging, San Diego MRI Institute, Global Holdings LLC, Empire Radiology LLC, Access Integrated Healthcare LLC, d.b.a  AIH Imaging, Access Imaging LLC, Paramount Management Services LLC, and Capital Edge Holdings, LLC.

Solakyan was indicted by an April 2018 federal grand jury which was unsealed on September 27.

The indictment alleges that Solakyan intentionally conspired with Dr. Steven Rigler, Fermin Iglesias, Providence Medex Solutions, Carlos Arguello, Alexander Martinez, and others to commit Honest Services Mail Fraud, that is, to knowingly and with the intent to defraud, devise and participate in a material scheme to defraud and to deprive patients of the intangible right to their physicians’ honest services,

And that the “defendant and his conspirators offered to pay, and paid, compensation to physicians (and those acting on their behalf) to refer Workers’ Compensation patients to Solakyan’s Companies for MRI and other services.”

And they allege that he entered into various sham agreements such as contracts for “marketing,” “administrative services,” and “scheduling,” when in reality the money paid by defendant amounted to volume-based, per-scan bribes and kickbacks to induce physicians to refer patients to Solakyan’ s Companies.

It was a further part of the alleged conspiracy that, over the course of their scheme, defendant, using bank accounts in the names of Global Holdings and Empire Radiology, paid Iglesias and Arguello, through their company MedEx, over $8.8 million to obtain MRI referrals from physicians compensated by Iglesias and Arguello.

It was a further part of the conspiracy that defendant allegedly submitted and caused to be submitted over $284 million in claims for ancillary medical services procured through the payment of bribes and kickbacks.

Solakyan was arrested, and his defense counsel’s requested a “Nebbia Hearing” which was set for 10/3/2018 04:00 PM in Courtroom 2B before Magistrate Judge Stanley A. Boone.

Many federal courts add a bail sufficiency requirement to the bond, also known as a “Nebbia, Nebia Hearing, bail source hearing or 1275 bail sufficiency hearing.”

The defendant must show that the source of the bail premium and collateral are from a legitimate source and were not acquired through illegal activities, or from the profits of a crime such as drug trafficking, money laundering, theft or fraud. Testimony, accounting documents, tax returns, banking records, and business records are a few things a court may consider in determining the sources of the finances are legitimate.

AmerisourceBergen Corporation (ABC), one of the nation’s largest wholesale drug companies, and some of its subsidiaries entered into a settlement with the United States in which it agreed to pay $625 million to resolve civil liability under the False Claims Act. The claims against ABC arise from its repackaging and distributing of Pre-Filled Syringes (PFS) that were not approved for sale or use by the U.S. Food and Drug Administration (FDA).

The term “overfill” is a frequently used term in the pharmaceutical industry generally meaning the amount of extra drug above and beyond the labeled dose that is contained in an FDA-approved vial of drug. The overfill is not listed on the FDA-approved drug label. The reason manufacturers put overfill in each vial of drug is to ensure that the health care provider administering the drug will be able to extract the full labeled dose from the vial to give to the patient.

ABC admitted its subsidiaries operated a program that created, packed and shipped millions of PFS to oncology practices after the drug product was removed from the original glass vials and multiple vials of the product were pooled in untested plastic containers. Then the drug, including the overfill, was extracted and repackaged into syringes.

By harvesting the overfill, ABC was able to create more doses than it bought from the original vial manufacturers and avoid opening some of the vials. ABC retained the unopened vials and sold them to other customers and to its subsidiary for resale. These syringes were sold throughout the United States.The profit from the PFS Program was between $2.3 and $14.4 million annually for a total profit of at least $99.6 million.

ABC’s scheme enabled it to bill multiple health care providers for the same vial of drug, causing some of those providers to bill the Federal Health Care Programs for the same vial more than once. The scheme also enabled ABC to increase its market share by offering various product discounts, which it leveraged to obtain new customers and to keep existing customers who purchased its entire portfolio of oncology drugs.

This civil settlement brings to $885 million the total penalties that ABC has paid to resolve liability resulting from the PFS Program.

The settlement also resolves allegations that ABC gave kickbacks to physicians to induce them to purchase drugs through the PFS program. The alleged kickbacks were in the form of general pharmacy credits provided to the customer.

AmerisourceBergen said in a statement that the settlement reflects its acknowledgment that some practices at the now-closed Medical Initiatives unit “were not consistent with AmerisourceBergen’s approach to corporate compliance.”

Four whistleblowers including Michael Mullen, the former chief operating officer of a subsidiary of AmerisourceBergen Corporation, played an instrumental role in the civil settlement. His amended qui tam complaint filed in the United States District Court for the Eastern District of New York, details AmerisourceBergen’s overfill laundering scheme and the executives who knew about the oncology business model and regulatory issues, including the former and current AmerisourceBergen CEOs.

The whistleblowers will share $99 million from the settlement.

The DWC has posted proposed amendments to the Pharmaceutical Fee Schedule to its online forum where members of the public may review and comment on the proposal.

Under the California Labor Code, the fee schedule for pharmaceuticals is based primarily upon the Medi-Cal pharmacy payment system. Medi-Cal is now implementing a revised payment methodology approved by the Centers for Medicare and Medicaid Services (CMS). Background information on the Medi-Cal changes can be reviewed on the Department of Health Care Services (DHCS) Pharmacy Reimbursement Project web page.

Due to requirements of federal law, the DHCS will implement Medi-Cal pharmacy fee schedule changes retroactively to April 1, 2017. For workers’ compensation, fee schedule changes will not be retroactive; the draft regulations propose that the new methodology become effective for pharmaceuticals dispensed on or after January 1, 2019.

The following regulation changes are proposed to implement Labor Code section 5307.1 and to align the fee schedule with the new Medi-Cal system:

• Elimination of the Average Wholesale Price (AWP) minus 17 percent as a benchmark for the drug ingredient;
• Revised methodology for payment of the drug ingredient, which sets the maximum at the lower of the following:
• National Drug Acquisition Cost (NADAC) or Wholesale Acquisition Cost (WAC) for drugs lacking a NADAC price;
• Federal Upper Limit;
• Maximum Allowable Ingredient Cost (MAIC);
• Usual and Customary Charge;
• Adoption of the revised two-tier Medi-Cal dispensing fee structure for pharmacies (which increases the dispensing fee from the current $7.25 to $10.05, or to $13.20 for those pharmacies listed by Medi-Cal as eligible for the higher fee);
• Rules addressing fees for compounded drugs and repackaged drugs

The forum can be found on the DWC forums web page under “current forums.” Comments will be accepted on the forum until Monday, October 8.