Kusserow on Compliance: DOJ ‘Brand’ memorandum

One of the topics discussed at the recent HCCA Compliance Institute related to current DOJ positions regarding compliance guidance. Many questions have been raised since Atty. Gen. Sessions issued a memorandum at the end of last year that intended to implement the new administration’s goal of reducing overregulation. The AG stated, in the past, the DOJ had published guidance documents binding parties outside of the rulemaking process. Additionally, the AG stated that the DOJ was no longer engaged in this practice. Going forward, the DOJ is not to issue guidance documents that purport to create a right or obligation binding a person or entity outside the executive branch of the federal government. As such, guidance documents provided by the DOJ setting up voluntary standards need to clearly state that compliance with such standards would be voluntary—that failure to comply would not, in itself, result in enforcement action.

Earlier this year, Associate AG Rachel Brand issued a memo on behalf of the DOJ prohibiting certain DOJ uses of federal agency guidance documents in affirmative civil enforcement (ACE) cases (the “Brand Memo”). ACE cases include lawsuits brought by the DOJ on behalf of the United States to recover money lost to fraud or other misconduct, or to impose penalties for violations of Federal health, safety, civil rights or environmental laws, for example, False Claims Act (FCA) enforcement by the DOJ.  The Brand Memo stated that the DOJ is now prohibited from using its enforcement authority to effectively convert agency guidance documents into binding rules; and DOJ litigators may not use noncompliance with agency guidance documents as a basis for proving violations of applicable law in these cases. It also prohibits the DOJ from “using its guidance documents to coerce regulated parties into taking any action or refraining from taking any action beyond what is required by the terms of the applicable statute or lawful regulation.” The primary focus of the memorandum was on government contractor cases.

The long and short of this memorandum is that the DOJ can continue to use agency guidance documents  for “proper purposes,” but should not treat a party’s noncompliance with an agency guidance document as presumptively or conclusively establishing that the party violated the applicable statute or regulation.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2018 Strategic Management Services, LLC. Published with permission.

Doctor, nurse indicted for fraudulent schemes involving unnecessary compounded medications

Separate indictments brought against a nurse practitioner and doctor by the Department of Justice (DOJ) alleged that the two individuals participated in separate but similar schemes to defraud TRICARE. Under the schemes, the nurse practitioner and doctor prescribed medically unnecessary compounded medications to individuals they had not examined, had a compounding pharmacy dispense the medications, and seek reimbursement from TRICARE.

The indictment against the nurse practitioner

According to the indictment, TRICARE reimbursed the compounding pharmacy more than $3.3 million for compounded medications prescribed by the nurse practitioner between February 2013 and October 2016, In addition, the nurse practitioner allegedly received more than $50,000 in kickback payments from a marketer for the compounding pharmacy in return for prescribing the compounded medications and making false statements to the FBI. The nurse practitioner was charged with conspiracy to commit health care fraud and wire fraud; wire fraud; conspiracy to distribute and dispense a controlled substance; distributing and dispensing of a controlled substance; conspiracy to solicit and receive health care kickbacks; soliciting and receiving health care kickbacks; and making false statements.

The indictment against the doctor

The indictment against the doctor stated that TRICARE reimbursed the compounding pharmacy more than $2.3 million for compounded medications prescribed by the doctor between October 2014 and December 2015. In response to an audit conducted by TRICARE, the doctor allegedly submitted falsified patient records to make it appear as though he had examined patients before prescribing the compounding medications. He was charged with conspiracy to commit health care fraud and wire fraud, wire fraud, conspiracy to distribute and dispense a controlled substance, distributing and dispensing a controlled substance, conspiracy to falsify records in a federal investigation and falsification of records in a federal investigation.

Sessions creates opioid fraud detection unit, focuses on 12 districts

Twelve federal districts have been selected to participate in an Opioid Fraud and Abuse Detection Unit, created by the Department of Justice (DOJ). The DOJ will fund twelve Assistant United States Attorneys for three year terms to focus solely on investigating and prosecuting fraud related to prescription opioids. Attorney General Jeff Sessions announced the program’s formation at the Columbus Police Academy in Ohio.

Data analytics program

The unit will consist of a data analytics program, which will allow targeted investigation and prosecution. Sessions stated that the team would use such information as physicians who prescribe opioids at a higher rate than peers, the average age of patients receiving the prescriptions, and pharmacies dispensing large amounts of opioids to focus its investigation.

The federal prosecutors, located in districts across the country, will work with various agencies to investigate and prosecute opioid fraud, including pill mills and unlawful diversion of opioids. Most of the districts are located in the east and Midwest, such as Florida, Michigan, Alabama, Kentucky, Ohio, and West Virginia.

Atlanta pain clinic feels financial hurt after allegedly bending Medicare rules

Atlanta Medical Clinic (AMC) and its owner agreed to pay $250,000 to settle False Claims Act (FCA) (31 U.S.C. §3729 et seq.) allegations that the clinic billed Medicare for services performed by a suspended physician and for administering drugs that were not approved by the FDA.

Suspended physician

An AMC physician was suspended from the Medicare program in June 2013 for making false statements regarding his criminal history. Despite the suspension, AMC allegedly continued to claim and receive payment for medical services rendered by the physician. Because of the suspension, none of those services were eligible for Medicare reimbursement and, therefore, reimbursement claims related to those services constituted false claims. AMC allegedly circumvented the suspension by submitting claims for services performed by the physician as though they were performed by another physician.

Unapproved drugs

AMC also, allegedly, violated the FCA by seeking and obtaining reimbursement for a Canadian, non-FDA approved knee treatment drug—Orthovisc®. The alleged claims are false because Medicare does not cover the cost of foreign, non-FDA approved treatments.