United States: 2019 Mid-Year FDA And Health Care Compliance And Enforcement Update – Providers

Last Updated: August 16 2019
Article by Gibson, Dunn & Crutcher

Halfway through 2019 and the third year of the Trump Administration, we continue to observe complex trends in the health care regulatory and enforcement environment impacting providers. The Trump Administration continues to aggressively pursue its high priority initiatives, such as combatting the opioid crisis and reducing health care costs, through various measures extending to many types of providers. And the U.S. Department of Justice ("DOJ") continues to pursue and announce significant civil and criminal enforcement actions against health care providers. But in certain other ways, the government has also signaled a softening of its health care enforcement agenda. For example, DOJ has taken a more aggressive approach to reining in non-meritorious qui tam suits brought under the False Claims Act, one of the government's primary tools for enforcing the health care laws and recovering government health program funds. In a speech at the 2019 Advanced Forum on False Claims and Qui Tam Enforcement earlier this year, Deputy Associate Attorney General Stephen Cox described the DOJ as a "gatekeeper" against frivolous or even low-value qui tam cases, and stated that DOJ attorneys have been instructed to consider dismissal when a qui tam case is not in the government's interest.1 This shift in tone is further reflected in the issuance of recent guidance and Justice Manual revisions, discussed in more detail below, that incentivize cooperation and voluntary disclosure by entities under investigation in False Claims Act cases, suggesting a more collaborative, thoughtful, and less rigid overall enforcement approach.

Consistent with this shift, the overall number of DOJ and U.S. Department of Health and Humans Services ("HHS") resolutions involving health care providers, while still reflecting historically high levels of recoveries, continues to decrease from its peak during the Obama Administration. HHS similarly saw a decrease in enforcement efforts against health care providers, continuing the downward trend we've observed since 2017. However, opioid enforcement efforts are unwavering, and we continue to see substantial civil and criminal cases being brought against a variety of health care entities as part of combating the opioid crisis. We review recent opioid-related enforcement actions and other health care enforcement developments below. Additionally, we provide updates on other HHS activity, including efforts surrounding conscience and religious freedom protection as they pertain to health care providers.

Also addressed in this update are recent case law developments particularly salient to health care providers, including several related to False Claims Act interpretation and application and continued litigation regarding the Affordable Care Act. Finally, we discuss recent developments related to the Anti-Kickback Statute ("AKS") and the Stark Law, key statutory schemes for health care provider compliance.

A collection of recent publications and presentations on health care issues impacting providers is available on our website. As always, we are eager to discuss these recent developments, and their relevance to your business, with you.

I.   DOJ Enforcement Activity

A.   False Claims Act Enforcement Activity

Between January 1 and June 30, 2019, the DOJ announced approximately $645 million in FCA recoveries from settlements with health care providers. This figure is more than triple the DOJ's recovery of $201 million from settlements from January 1 through June 30, 2018, but it still marked a reduction from the $817 million the DOJ recovered during the same period of 2017.2 The DOJ's significant recovery during the first half of 2019 can likely be attributed to the fact that the DOJ reached several particularly large resolutions with providers during this period, including one $269 million settlement and four others over $35 million each. Of note, however, the 33 total health care provider settlements the DOJ announced during the first half of 2019 fell below the 40 health care provider settlements it announced during the first half of 2018 and considerably below the 54 health care provider settlements the DOJ announced during the first half of 2017.3

The DOJ's lower count of health care provider settlements during the first half of 2019 could reflect the shift in enforcement tone at the top, except that the amount of recoveries reflected in those settlements have been at historic highs: the DOJ's average FCA settlement against a health care provider in the first half of 2019 was $19.5 million, nearly four times the average provider settlement the DOJ recovered against health care providers during the same time period last year.4 Even excluding from this calculation the DOJ's largest provider settlement of the period—an outlier $269 million settlement in January—the average settlement with a health care provider in the first six months of 2019 was still more than twice the average settlement reached during the same period last year.5 Consistent with the DOJ's new approach to using its dismissal authority for more declined qui tams, these numbers could reflect an attempt to put the government's resources into higher-value cases.

The FCA settlements the DOJ has announced this year featured many of the same legal theories the government has used to support actions against providers in years past. Also as in prior years, the DOJ's provider settlements in the first six months of 2019 featured actions against a wide range of types of providers, including hospitals, clinics and single providers, providers of skilled nursing and rehabilitation services, and pharmacies. The DOJ also announced several settlements with entities we've classified as providers of "other" medical services, such as providers of medical records software. It remains to be seen whether this data point is an anomaly or whether it marks an increasing focus by the DOJ on providers of medical technology as the health care field continues to digitize and undergo technological innovation.

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1 Press Release, Office of Pub. Affairs, U.S. Dep't of Justice, Deputy Associate Attorney General Stephen Cox Delivers Remarks at the 2019 Advanced Forum on False Claims and Qui Tam Enforcement (Jan. 28, 2019), https://www.justice.gov/opa/speech/deputy-associate-attorney-general-stephen-cox-delivers-remarks-2019-advanced-forum-false.

2 See Gibson Dunn 2018 Mid-Year FDA and Health Care Compliance and Enforcement Update – Providers (July 26, 2018) [hereinafter "Gibson Dunn 2018 Mid‑Year Update"]; See Gibson Dunn 2017 Mid-Year FDA and Health Care Compliance and Enforcement Update – Providers (Sept. 4, 2017) [hereinafter "Gibson Dunn 2017 Mid‑Year Update"].

3 Gibson Dunn 2018 Mid-Year Update; Gibson Dunn 2017 Mid-Year Update.

4 See Gibson Dunn 2018 Mid-Year Update.

5 Id.

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