Tag: 2016 News

According to a new study.more than 300 companies are marketing unapproved stem cell procedures at more than 500 clinics in the U.S.

Found in embryos, umbilical cord blood and adult bone marrow, stem cells have the potential to develop into any type of specialized cell in the body. Stem cells can be used to help repair areas damaged by disease or injury, according to the U.S. Department of Health and Human Services.

In the U.S., stem cell therapies generally require Food and Drug Administration approval before they can be marketed, and the FDA has only approved one product so far, for blood disorders.

But, according the study summarized in Reuters Health, many clinics in the U.S. now advertise a variety of stem cell treatments that have not been approved, ranging from cosmetic procedures like facelifts and breast enlargement, to therapies for neurological diseases or sports injuries, according to the new study. “Many of these marketing claims raise significant ethical issues given the lack of peer-reviewed evidence that advertised stem cell interventions are safe and efficacious for the treatment of particular diseases,” the researchers write in the journal Cell Stem Cell.

Searching the internet, the researchers found 351 companies marketing unapproved stem cell procedures at 570 clinics in the U.S., most commonly in California, Florida, Texas, Colorado, Arizona and New York.

These procedures are not heavily regulated because they use cells from a patient’s own body. But earlier this year, the FDA issued draft guidelines asserting that the stem cells used in most procedures are drugs and should require a rigorous approval process before they can be used. The draft guidelines will be discussed further at a public hearing in mid-September.

Unapproved stem cell therapies have no conclusive evidence of safety or effectiveness, Turner said. “If you’re thinking about having an unapproved stem cell treatment, there are things you can look for,” he said. “If a place offers one treatment for 30 to 40 diseases, it’s extremely unlikely that it’s going to be effective.”

He said he doesn’t mean to suggest that all uses of stem cells are dangerous or unethical, as approved stem cell treatments for conditions like leukemia can be life-saving.

“It is the wild west, there are lots of clinics making all kinds of promises they can’t necessarily deliver on,” said Mary Ann Chirba, professor of legal reasoning, research and writing at Boston College Law School, who was not part of the new study. “But that’s not to say that all clinicians who are working in this area are charlatans.”

There’s a “clumsy architecture” for regulating emerging therapies, Chirba told Reuters Health by email. “Any responsible person, myself included, wants regulation,” but the rules currently in place are not effective, and the draft FDA guidelines may actually be too restrictive, and make it too difficult for patients to get access to these types of treatment at all, she said.

In the meantime, the FDA cautions on its web site, “If you are considering stem cell treatment in the U.S., ask your physician if the necessary FDA approval has been obtained or if you will be part of an FDA-regulated clinical study. This also applies if the stem cells are your own. Even if the cells are yours, there are safety risks, including risks introduced when the cells are manipulated after removal.”

Medical treatment in the California Workers’ Compensation system is subject to the UR/IMR review process which will use evidence based treatment guidelines as a standard. Certainly, any request for authorization of a stem cell procedure should undergo review.

Insurers helped cheerlead the creation of Obamacare, with plenty of encouragement. Six years later, profit expectations have failed to materialize. Now some insurers want taxpayers to provide them the anticipated profits through lawsuits.

Earlier this month, Blue Cross Blue Shield of North Carolina and Moda Health Plan joined a growing list of insurers suing the Department of Health and Human Services in the U.S. Court of Federal Claims for more subsidies from the risk-corridor program. Congress set up the program to indemnify insurers who took losses in the first three years of Obamacare with funds generated from taxes on “excess profits” from some insurers. The point of the program was to allow insurers to use the first few years to grasp the utilization cycle and to scale premiums accordingly.

As with most of the ACA’s plans, this soon went awry. Utilization rates went off the charts, in large part because younger and healthier consumers balked at buying comprehensive coverage with deductibles so high as to guarantee that they would see no benefit from them. The predicted large windfall from “excess profit” taxes never materialized, but the losses requiring indemnification went far beyond expectations.

In response, HHS started shifting funds appropriated by Congress to the risk-corridor program, which would have resulted in an almost-unlimited bailout of the insurers. Senator Marco Rubio led a fight in Congress to bar use of any appropriated funds for risk-corridor subsidies, which the White House was forced to accept as part of a budget deal. As a result, HHS can only divide up the revenues from taxes received through the ACA, and that leaves insurers holding the bag.

They now are suing HHS to recoup the promised subsidies, Moda Health is seeking $180 million in Patient Protection and Affordable Care Act (PPACA) risk corridors program payments. North Carolina Blue is seeking $147.5 million in payments. Health Republic Insurance Company of Oregon was the first carrier to sue the USA over the USA’s PPACA risk corridors payment programs. Health Republic said it was owed a total of $22.1 million in risk corridors program money for 2014 and 2015, and it sued for about $5 billion in payments on behalf of all affected insurers. Highmark, a big Blue Cross and Blue Shield carrier in Pennsylvania, sued for $223 million in May.

But HHS has its hands tied, and courts are highly unlikely to have authority to force Congress to appropriate more funds. In fact, the Centers for Medicare and Medicaid Services formally responded by telling insurers that they have no requirement to offer payment until the fall of 2017, at the end of the risk-corridor program.

That response highlights the existential issue for both insurers and Obamacare. The volatility and risk was supposed to have receded by now. After three full years of utilization and risk-pool management, ACA advocates insisted that the markets would stabilize, and premiums would come under control. Instead, premiums look set for another round of big hikes for the fourth year of the program. Consumers seeking to comply with the individual mandate will see premiums increase on some plans from large insurers by as much as 30 percent in Oregon, 32 percent in New Mexico, 38 percent in Pennsylvania, and 65 percent in Georgia.

Thus far, insurers still claim to have confidence in the ACA model – at least, those who have not pulled out of their markets altogether. However, massive annual premium increases four years into the program demonstrate the instability and unpredictability of the Obamacare model, and a new study from Mercatus explains why.

The claims costs for qualified health plans (QHPs) within the Obamacare markets far outstripped those from non-QHP individual plan customers grandfathered on their existing plans – by 93 percent. They also outstripped costs in group QHP plans by 24 percent. In order to break even without reinsurance subsidies (separate from the risk-corridor indemnification funds), premiums would need to have been 31 percent higher on average for individual QHPs.

A federal judge reaffirmed the disqualification of the State Fund attorneys, Hueston Hennigan, from the $160 million medical fraud case it brought three years ago on behalf of its now-former client in the massive racketeering case.

The 75-page ruling filed last week details how the concurrent representation of the State Fund and at the same time defends Paul Randall in his criminal case betrayed both parties, created “incestuous” twists (Pg. 37) and was anathema to the adversarial legal system.

The defendants in the SCIF civil litigation that started in 2013 stand accused of conspiring to defraud the State Compensation Insurance Fund by submitting fraudulent insurance bills and providing or receiving illegal kickbacks. The litigation arising out of this purported scheme involves dozens of defendants, two civil suits and a criminal suit, and well over a thousand filings spanning three years and three dockets. SCIF was at first represented by law the firm of Irell & Manella LLP. In January 2015, John Hueston and Brian Hennigan, along with thirty or so other lawyers, left Irell & Manella to form Hueston Hennigan. There Hueston and other lawyers continued to represent SCIF.

The U.S. Department of Justice filed criminal charges against some of these defendants for the same kickback scheme. One of them, Paul Richard Randall, 56, of Orange, California, a health care marketer previously affiliated with Pacific Hospital and Tri-City Regional Medical Center in Hawaiian Gardens, pleaded guilty on April 16, 2012 to conspiracy to commit mail fraud. Randall has not been sentenced yet.

The most recent round of motions in the SCIF RICO case focused on the question about whether a law firm could represent a criminal and his victim. One of the civil defendants, Dr. Lokesh Tantuwaya, M.D., discovered that Hueston Hennigan had represented Randall in one of the criminal cases and possibly a related civil case. Tantuwaya filed the most recent motion for disqualification of the firm.

After considering about a thousand pages of documents and more than four hours of oral argument on this disqualification issue, “the Court confirmed that disqualification was appropriate and necessary here.” The ruling pointed out the following rationale.

“Being a defendant – particularly a criminal one – can be lonely. As a society, we don’t require a defendant’s friends to stand by the defendant. We don’t require a defendant’s parents to stand by the defendant. We don’t require a defendant’s children to stand by the defendant. We don’t even require a defendant’s spouse to stand by the defendant, though that spouse is often someone who took an oath to do so.”

“But a lawyer is different. Representing a client creates an unshakable loyalty that can still persist when bonds of friendship and family fail. There’s a practical reason for this. A lawyer needs to know the worst facts to give clients the best advice. Clients can’t feel comfortable providing such candor unless they know their lawyer is absolutely committed to advancing the clients’ interests and advocating against the conflicting interests of others. Though the rest of the world may be united against them, clients need to know that at least their lawyer will reliably remain in their corner, even in the face of great temptation.”

“The importance and impact of loyalty in the attorney-client relationship extends beyond the client and counsel, to courts too. Judges are often confronted with important issues and difficult disputes. Under our system of law, judges rely on adversarial advocates to help ensure that courts reach the right results in these situations. Adversarial advocacy assumes that lawyers are fiercely loyal in representing their clients. If that loyalty doesn’t exist, the engine of our legal system can’t run. Justice can’t be administered.”

And finally the court made note of the fact that this “disqualification likely caused and will continue to cause grief to lots of people. Of course there’s SCIF and Hueston Hennigan. SCIF is left trying to get its new counsel up to speed on about three years of litigation involving dozens of defendants and opposing attorneys, while Hueston Hennigan must drop a likely lucrative matter from its billing. But there are others too. Randall is left with uncertainty about his legal representation while he has to prepare for a life-altering sentencing hearing. And the Hueston Hennigan attorneys – in particular those in the trenches, who worked passionately on this case for years and who had nothing to do with the representation decisions – have had the rug pulled out from under them, and have had to drop a case they likely lived with for years. Even the civil defendants and their lawyers will have to do some shuffling to deal with the new folks on the other side of the courtroom.”

Hueston Hennigan spokeswoman Lisa Richardson said in a statement quoted by the Los Angeles Business Journal that outside experts have consistently validated the firm’s actions in dealing with the conflict. “After the court’s tentative ruling, State Fund obtained the guidance and opinions of two nationally recognized experts and a former state bar official; each has opined that conflicts were handled well within the ethical rules,” Richardson said. “No experts in this case have opined otherwise.”

Like many before it, this year has been one to watch in government health care fraud enforcement efforts. In September 2015, the Department of Justice (DOJ) released the “Yates Memo,” which reaffirmed the government’s commitment to investigating and prosecuting culpable individuals in cases involving suspected corporate fraud.

While the Yates Memo was not specific to health care companies, the health care industry was anxious to see how the government’s strong re-commitment to holding individuals accountable for corporate wrongdoing would play out given its aggressive pursuit of health care fraudsters. Perhaps the best known test case came when the government announced in October 2015 that it had arrested W. Carl Reichel, the former president of Warner Chilcott, a subsidiary of a pharmaceutical manufacturer. Reichel was indicted and charged with a single count of conspiring to pay kickbacks to physicians in violation of the Anti-Kickback Statute (AKS).

According to the story in the National Law Review, the DOJ announced the Reichel indictment on the same day that it released a statement reporting that the company had agreed to plead guilty to a felony charge of health care fraud. This plea agreement was part of a global settlement under which Warner Chilcott would pay $125 million to resolve criminal and civil liability arising from certain marketing activities. The government held up Reichel’s personal indictment as an example of its commitment to not only holding companies accountable, but also “identif[ying] and charg[ing] corporate officials responsible for the fraud.”

The government’s case did not go as anticipated and last week, given that a federal jury acquitted Reichel.

On October 28, 2015, a grand jury in the U.S. District Court for the District of Massachusetts returned an indictment charging Reichel with a single count of conspiring to pay kickbacks to physicians to induce them to order Warner Chilcott drugs.The alleged kickbacks were in the form of free dinners, “speaker fees” paid for speeches never given, and free food and drinks for physicians’ staff members who filled out prior authorizations for the company’s drugs. The indictment further alleged that Reichel, as the President of Warner Chilcott’s pharmaceuticals division, along with other senior executives, gave sales representatives nearly unlimited expense accounts to take physicians and their spouses out for bi-weekly “medical education programs,” which were in fact just free, expensive dinners with no educational component. Physicians who were especially high orderers were paid speaker fees of $600-$1,200 to speak at these medical educational programs, but, in reality, did not give any clinical lectures.

In return for these dinners and speaking fees, Reichel was alleged to have instructed sales representatives to follow up with the physicians who attended the dinners and ensure that they ordered a sufficient number of Warner Chilcott drugs. Physicians who did not do so were no longer invited to dinners or were terminated as “speakers” until their prescribing habits changed.

For months, the health care industry watched as Reichel battled with DOJ attorneys to gain additional information regarding the facts on which his indictment was based (e.g., the names of his alleged co-conspirators), requested information about plea agreements with potential witnesses against him, attempted to limit the evidence that would be used against him, and challenged the government’s proposed jury instructions as being too vague on the scienter required to prove an AKS violation. On May 23, 2016, the case went to trial and on June 17, 2016 – after two days of deliberations – the jury acquitted Reichel.

During the trial, the government presented evidence that under Reichel’s oversight, Warner Chilcott paid for 200,000 dinner tabs, provided clients with $100 steaks and sailing trips to Rhode Island, and paid $25 million in speaker fees. To make its case, the government relied upon testimony from members of Warner Chilcott’s sales staff, some of whom had entered into plea agreements with the government, expecting lesser sentences in exchange for their testimony against Reichel. Reichel, in turn, argued that the only quid pro quo at issue was the government’s deals with these witnesses, whom his lawyers characterized as admitted felons who ignored company policies.

Based on its verdict, it seems that the jurors may not have been convinced that the dinners and other payments to physicians and their staff were sufficiently tied to past or future prescriptions to constitute an AKS violation. Clearly the government did not meet its burden to prove that Reichel knew that his conduct was illegal. Whatever the reason, the Reichel acquittal may be an early sign that despite the government’s renewed commitment to prosecuting individuals, juries may be setting a higher bar for holding individuals responsible for corporate wrongdoing.

As questions mount over whether health insurer Anthem Inc’s proposed $48 billion purchase of Cigna Corp will win U.S. antitrust approval, an exclusive analysis produced for Reuters suggests the merger could lead to higher costs for large companies offering workplace medical benefits.

More than 154 million people receive health benefits through employers, many of them large national corporations. The large employer market is a top concern for U.S. Department of Justice regulators reviewing the Anthem deal, company officials say. The government could block a deal if it finds evidence it would drive up the cost of such coverage.

Anthem and Cigna, the nation’s No. 2 and No. 5 health insurers, are among a handful of carriers selling national coverage plans to employers with thousands of workers across many states.

Anthem has said the added heft will work for employers, not against them. A bigger Anthem, it emphasizes, could drive better deals from doctors and hospitals and pass savings onto these customers. In addition, Anthem has argued that there still will be plenty of competition: large employers pit smaller, local insurers’ bids against those of large national carriers in regional markets. Anthem officials told an investor conference last month that many employers include health plans from several smaller insurers to cover far-flung employees.

But an Aon Hewitt analysis of benefits data for Reuters found that a majority of large employers buy worker health benefits from just one or two insurers.Among 75 companies representing a cross-section of industries, 54 percent used a single insurer and 26 percent used two. Aon Hewitt, a unit of Aon Plc which helps employers select their benefit plans, based its analysis on data from over 400 customers that participate in healthcare cost research.

Spokeswoman Maurissa Kanter said Aon Hewitt did not conclude “whether or not carrier consolidation would be a competitive issue that could lead to higher prices for employers.” She also said that the data did not “support an argument for or against market consolidation.”

Several human resources directors from large corporations also told Reuters they review potential benefits contracts from only the biggest insurers, rather than regional players. UnitedHealth Group, Anthem, Aetna Inc and Cigna are the only national players in the employer health insurance market.

It is less efficient for companies to hire multiple regional insurers, and the merger could allow the few remaining national insurers to raise their rates, said Peter Carstensen, an antitrust expert and professor emeritus at the University of Wisconsin Law School. “The Aon Hewitt data on its face is bad for the deal and hurts their chances of getting approval,” Carstensen said.

A Justice Department official declined to comment on its review of the deal. It is also considering Aetna’s proposed $34 billion purchase of Humana Inc. If both acquisitions were approved, it would result in an unprecedented consolidation of the top insurers, from five to three.

Anthem has said that buying Cigna would help it drive deeper discounts from hospitals and doctors, holding down the price of medical coverage. “What the Department of Justice will see is that we are going to bring a better focus on managing the cost of care,” Anthem Chief Executive Joseph Swedish told an investor conference last month.

But at least some large U.S. employers fear they will face higher prices if the deal goes through, according to Wall Street analysts. Concerned employers include Detroit automakers, according to a person familiar with the industry’s position.

Other employers found merit in Anthem’s assertion that the deal could benefit customers by eliminating overhead. “There is some chance that consolidation could lower some of those costs,” said Michael D’Ambrose, chief human resources officer for Archer Daniels Midland Co (ADM.N), which buys coverage from Anthem and other Blue Cross Blue Shield plans.

The deal has raised opposition from leading medical groups, California’s insurance commissioner and Democratic lawmakers.