Healthcare Fraud & Abuse Review 2021

records. 200 The relator alleged that HCI, an organization focused on coordinating services to enable low-income seniors to continue living at home, allowed a management company and its affiliated home health agency and physician practice access to HCI’s patient records to identify, solicit and obtain patients in need of home healthcare. The district court found that the defendants had violated the AKS because the defendants intended the $5,000 monthly payments pursuant to the management agreement to be remuneration for access to HCI’s patient records used to solicit clients, which the district court had previously concluded constitutes a referral under the AKS. The district court noted that the management company’s owner testified that the monthly payments were payments for access to the patient data, and he believed the management services

In U.S. v. Blair , the defendant, a non-pharmacist owner of Blair Pharmacy, was indicted and later charged for allegedly devising a scheme in violation of the AKS. 202 Blair allegedly created modified compound drug prescription forms with modified lists of chemical ingredients and also paid independent sales marketers, such as Atlas Group, LLC, to market his compound drugs and provide prescription forms to doctors. Blair then allegedly paid a 50% commission for each successfully reimbursed prescription claim Atlas referred to the pharmacy. Blair also allegedly failed to bill for and collect co-payments and co-insurance from beneficiaries of federal healthcare programs. The district court denied Blair’s motion to dismiss holding, among other things, that waivers of co-payments and co-insurance can be viewed as remuneration under the AKS and can form the basis of a criminal AKS action. Blair also unsuccessfully argued that the AKS is impermissibly vague and does not provide fair warning of what constitutes illegal conduct. At least one case resulted in the government bringing an action against an alleged co- conspirator. In U.S. v. Taneja, the government brought a two-count complaint against the defendant alleging he violated and conspired to violate the FCA for causing claims to be submitted to TRICARE in violation of the AKS. 203 The government alleged that Oldsmar Pharmacy (in which the defendant had a financial interest), paid kickbacks to a marketing company, that in turn marketed compound medications (pain and scar creams) to patients and then referred those patients to Oldsmar Pharmacy for fulfillment of the prescriptions for those medications. The defendant sought dismissal of these claims arguing that the complaint did not sufficiently plead that he caused the presentment of false claims to TRICARE. The district court denied the defendant’s motion noting that the government’s complaint alleges that the defendant was a substantial factor in bringing about the false claims by: (1) initiating the discussions with the marketing company; (2) proposing a referral arrangement whereby Oldsmar Pharmacy would pay the marketing company a percentage of the amount insurance paid to Oldsmar Pharmacy for prescriptions referred by the marketing company; (3) meeting with the owner of Oldsmar Pharmacy and the marketing company to discuss how they “were going to distribute the money,” resulting in a handshake agreement between the three of them; (4) subsequently emailing the marketing company and disputing its characterization of the agreed financial terms; and (5) being involved in all of the discussions with counsel about how to solve the problem of Oldsmar Pharmacy paying the marketing company for TRICARE claims. The district court also highlighted that the government’s complaint alleged that the defendant was an experienced healthcare executive who was aware of the AKS prohibitions and that the submission of claims to TRICARE as a result of the kickback arrangement was reasonably foreseeable when the defendant began consulting with counsel regarding the arrangement given that TRICARE prescriptions were being referred under the scheme. In U.S. ex rel. Heller v. Guardian Pharmacy, LLC , the relator alleged that Guardian Pharmacy of Atlanta, LLC (Guardian) and its parent company provided various free or below FMV services to assisted living communities and personal care homes to induce them to select Guardian as their preferred pharmacy, in violation of the AKS and the FCA. Guardian allegedly provided free services for electronic systems used to maintain

agreement gave the management company the right to solicit HCI’s clients. Further, the district court determined that the arrangement did not meet the AKS personal services and management contracts safe harbor because the management services agreement did not specifically identify accessing client data or soliciting HCI’s clients as covered within the agreement such that the agreement did not include all of the services provided under the arrangement, as required by the safe harbor.

Alleged pharmaceutical marketing schemes also continued to be a focus in FCA litigation.

PHARMACEUTICAL MARKETING PRACTICES Alleged pharmaceutical marketing schemes also continued to be a focus in FCA litigation. In U.S. ex rel. Gharibian v. Valley Campus Pharmacy, Inc. , the relator alleged his former employer, Campus Pharmacy, engaged in certain marketing schemes resulting in prohibited kickbacks to physician offices in violation of the AKS and FCA. 201 Specifically, the relator alleged that prior authorization services provided by the defendant to physicians conferred a substantial pecuniary benefit to prescribers. The relator also alleged that other forms of remuneration induced referrals, such as cultivating relationships through providing free lunches to providers and purchasing needed software for physician offices. The relator claimed the defendants actively instructed sales staff to circumvent limits on gifts to physicians by instructing employees to assign “every other purchase you make to another [physician] in that facility within that practice.” The district court held the prior authorization services did not constitute remuneration because the defendant, among other factors, offered this service openly to all. The district court also concluded that, while the lunch and software purchases could constitute potential remuneration under the AKS, the relator failed to address the defendant’s argument and thus waived the issue. Additionally, the district court noted the relator failed to adequately plead scienter and granted the defendant’s motion to dismiss on the basis that the relator failed to plead allegations sufficient to support a claim that the defendants violated the FCA.

200 2021 WL 2331338 (N.D. Ill. June 8, 2021). 201 2021 WL 4816648 (C.D. Cal. June 23, 2021).

202 2021 WL 4339132 (D. Md. Sept. 23, 2021). 203 2021 WL 3518206 (M.D. Fla. Aug. 4, 2021).

STARK LAW/ANTI-KICKBACK STATUTE BASS, BERRY & SIMS | 34

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