daily medication administration records for each patient, free or below FMV medication management services, and free or below cost education classes and skills checks to the communities’ staff members. By providing such services, Guardian allegedly hoped to obtain preferred partner status with long- term care communities who could steer their residents to select Guardian as their pharmacy to fill their prescriptions, which were reimbursed by federal healthcare programs. In denying Guardian’s motion to dismiss, the district court found that the relator adequately pleaded that Guardian provided unlawful remuneration through its free or
The district court denied Teva’s motion to dismiss holding that the government sufficiently alleged that Teva’s scheme resulted in patients seeking prescription reimbursement from Medicare that were tainted by kickbacks. In Pfizer, Inc. v. U.S. Dep’t of Health and Hum. Servs. (further discussed in a later section), a district court dismissed Pfizer’s request for a declaratory judgment that its co-pay assistance program did not violate the AKS. 205 The court ruled that the AKS does
Support services and other payments offered by pharmaceutical and medical device companies also continued to draw scrutiny as potential improper inducements under the AKS.
not require a “corrupt” intent or quid pro quo, only “that payments are made with an intent to influence a decision about medical care or purchases.” The AKS applied to Pfizer’s program, the court held, simply because the co-pay assistance payments were intended to influence Medicare Part D participants’ decisions, which was sufficient to constitute inducement under the AKS. The court recognized that without co-pay assistance, some Medicare beneficiaries would forego tafamidis, the drug at issue which is the only one approved to treat Transthyretin Amyloid Cardiomyopathy, a rare but serious heart condition. Yet the court found it was bound by the statute to rule against Pfizer.
The government and relators continued to pursue FCA cases involving allegations of improper inducements to physicians and noncompliant physician compensation arrangements in violation of the Stark Law and AKS with mixed success.
discounted services because the complaint identified: (1) the independent value of several of these services to the communities; (2) the services were not integrally related to the other services Guardian offers, such as prescription fulfillment; and (3) the one purpose of providing these services was to induce communities to contract with Guardian as their preferred pharmacy. Further, the district court found that the relator sufficiently identified alleged false claims through estimates of the number of residents at each contracted community and annual sales revenue from federal payors for communities who received Guardian’s free or discounted services, as well as four customers and 20 specific representative claims submitted to federal payors. The district court granted the motion to dismiss filed by Guardian’s parent company because the relator did not plead allegations against it that were sufficiently particularized to pierce the corporate veil. CO-PAY ASSISTANCE AND CO-PAY ASSISTANCE DONATIONS BY PHARMA COMPANIES Support services and other payments offered by pharmaceutical and medical device companies also continued to draw scrutiny as potential improper inducements under the AKS. In U.S. v. Teva Pharms. USA, Inc. , the government filed suit against Teva Pharmaceuticals (Teva) alleging violations of the AKS and the FCA arising from Teva’s alleged conspiracy with pharmacy and charitable foundations to use donations from Teva to subsidize Medicare patients seeking co-pay assistance to purchase Teva’s multiple sclerosis drug, Copaxone, resulting in false claims. 204 While Teva asserted that it merely hoped that the donations would be used to cover patient co-pays, the government alleged that Teva structured donations to ensure that the donations were used solely for co-pay assistance associated with Copaxone. The government alleged that while Teva avoided a formal return on investment (ROI) analysis of its foundation support, handwritten notes from a meeting purportedly indicate that the company informally calculated its donations and substantial ROI.
PHYSICIAN INDUCEMENTS AND COMPENSATION ARRANGEMENTS The government and relators continued to pursue FCA cases involving allegations of improper inducements to physicians and noncompliant physician compensation arrangements in violation of the Stark Law and AKS with mixed success. Akron General Health System, Inc. (AGHS), a regional hospital system based in Akron, Ohio, agreed to pay $21.25 million to resolve FCA allegations of improper relationships with certain referring physicians. 206 AGHS was acquired at the end of 2015 by the Cleveland Clinic Foundation (Cleveland Clinic). Shortly after the acquisition, Cleveland Clinic found potential compliance concerns related to certain physician arrangements and made a self-disclosure to the government. In addition to this self-disclosure, the settlement also resolved allegations in U.S. ex rel. Brouse v. Akron General Health System, Inc. , in which the former compliance officer (as the relator) alleged AGHS had initiated an aggressive strategy to increase control over healthcare delivery around its hospital location by buying physician practices and/ or employing physicians to control patient referrals. AGHS allegedly paid the physicians
205 2021 WL 4523676 (S.D.N.Y. Sept. 30, 2021). 206 https://www.justice.gov/opa/pr/northern-ohio-health-system-agrees-pay-over-21-million-resolve-false- claims-act-allegations.
204 2021 WL 4132592 (D. Mass. Sept. 9, 2021).
STARK LAW/ANTI-KICKBACK STATUTE BASS, BERRY & SIMS | 35
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