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U.S. Supreme Court Issues Important Decision Regarding False Claims Act Liability

June 30, 2016 | Comments Off on U.S. Supreme Court Issues Important Decision Regarding False Claims Act Liability
Posted by Beth Christian

On June 16, 2016, the United States Supreme Court issued a unanimous decision which held that an implied false certification made for the purpose of claiming payment from the government can serve as a basis for False Claims Act liability. The court held that when an individual or entity submits a claim to the government making specific representations about goods or services provided, but fails to disclose noncompliance with material statutory, regulatory or contractual requirements that result in those representations being misleading, that individual or entity may be subject to liability under the False Claims Act.

The case involved claims for payment for mental health services provided to a teenage beneficiary of the Massachusetts Medicaid program. The patient received counseling services from Arbour Counseling Services, a mental health facility owned and operated by a subsidiary of Universal Health Services, Inc. (“Universal”). The patient had an adverse reaction to a medication that an Arbour employee had prescribed. The patient’s condition worsened and she eventually died of a seizure.

After the patient’s death, her mother and stepfather discovered that few of the employees of the mental health facility were licensed to provide mental health counseling services or authorized to prescribe medications. Thereafter, the parents of the deceased patient filed a qui tam lawsuit, alleging that Universal had violated the False Claims Act by submitting a false or fraudulent claim under an “implied false certification” theory of liability. Under this form of False Claims Act liability, the submission of a claim for payment to the government is treated as the claimant’s implied certification that they have complied with relevant statutory, regulatory or contract requirements that are material conditions of payment. The claimant’s failure to disclose a violation of applicable legal or contractual requirements is treated as a misrepresentation that renders the claims false or fraudulent. The qui tam relators alleged that Universal defrauded the Massachusetts Medicaid program by submitting reimbursement claims that made representations about the specific services provided by specific types of professionals, but failed to disclose serious violations of Massachusetts law regarding staff licensing qualifications for the provision of these services. The complaint also alleged that Universal defrauded the Medicaid program because Universal knowingly misrepresented its compliance with mental health facility requirements that are so central to the provision of mental health counseling services that the Medicaid program would have refused to pay the claims had they known the violations.

The trial court granted Universal’s motion to dismiss the complaint. While this could have been viewed as a reasonable decision by the trial court given the state of the law at that time, it is unlikely that similar claims would be dismissed today as a result of the Supreme Court’s decision in the Universal case. The case ultimately went to the United States Supreme Court, which held that the implied false certification theory can be a basis for False Claims Act liability when a defendant submits a claim which make specific representations about the goods or services provided, or which fail to disclose noncompliance with material statutory, regulatory or contractual requirements that make those representations misleading with respect to those goods or services. The court held that the claims at issue did more than merely demand payment, and omitted critical qualifying information. The court held that by submitting claims for payment using payment codes corresponding to specific counseling services, Universal represented that it had provided specific types of treatment. In addition, by using National Provider Identification numbers corresponding to specific job titles in the course of submission of its claims, Universal misrepresented the status of its service providers by failing to disclose its many violations of basic staff and licensing requirements. The court found that False Claims Act liability for failure to disclose violations of legal requirements do not turn upon whether these requirements were expressly designated as conditions of payment. The mere fact that the Medicaid claim form did not ask specific questions about staff qualifications did not mean that Universal could avoid liability. The court found that what matters is whether the defendant knowingly violated a requirement that the defendant knows is material to the government’s payment decisions.

The Supreme Court also held that a misrepresentation about compliance must be material to the government’s payment decision in order to be actionable under the False Claims Act. The court found that when evaluating the False Claims Act’s materiality requirement, the government’s decision to expressly identify a provision as a condition of payment is relevant, but is not automatically dispositive of whether or not there is a potential for False Claims Act liability. The court found that proof of materiality can include, but is not necessarily limited to, evidence that the defendant knew that the government consistently refuses to pay claims based on noncompliance with the particular statutory, regulatory or contractual requirement.

The Supreme Court’s decision is important because it demonstrates that a health care provider, physician, advanced practice nurse or other individual may be held liable for violation of the False Claims Act under an implied false certification theory if they submit a claim for payment to the government knowing that they have not satisfied the standards for payment of such a claim. In other words, a “sin of omission” can provide a basis for False Claims liability. While an implied false certification standard may appear to create a vague standard for enforcement of potential False Claims Act liability providers and health care professionals must now operate under an assumption that when they file a claim for payment with a governmental payor, they are assumed to “know the rules.” If a health care provider submits a claim knowing that the provider has failed to meet certain statutory or regulatory requirements, they cannot hide behind the fact that the specific claim form that was submitted did not ask whether or not the provider complied with specific statutory and regulatory standards. On the other hand, the Supreme Court made it clear that the government’s reliance on an implied False Claims Act theory is not limitless, and that any noncompliance must be material before liability can be successfully asserted. Providers need to be aware that when they submit a claim for payment, not only are they certifying that the services contained in the claim form were actually rendered, but they are also certifying that they were rendered in compliance with applicable material legal requirements.

June 20, 2016 Regulatory Developments

June 23, 2016 | Comments Off on June 20, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on June 20, 2016:

  • On June 20, 2016 at 48 NJR 1049, the Department of Banking and Insurance published notice of its proposed readoption with amendments to its rules governing New Jersey Workers Compensation managed care organizations.
  • On June 20, 2016 at 48 NJR 1059, the Board of Nursing published notice of its proposal of amendments to its rules governing the dispensing of pharmaceutical samples to patients by advanced practice nurses. The proposed amendment would require advance practice nurses who dispense pharmaceutical samples to label the samples with the complete name of the medication dispensed, the strength, and quantity of the medication dispensed, instructions as to the frequency of use, special precautions if appropriate and the expiration date of the medication.
  • On June 20, 2016 at 48 NJR 1059, the Audiology and Speech-Language Pathology Advisory Committee published notice of its proposal of amendments to its rule governing continuing education courses. The proposed amendment would recognize the Accreditation Commission for Audiology Education as an accrediting entity for colleges and universities at which continuing education courses may be provided.
  • On June 20, 2016 at 48 NJR 1299, the Department of Health published notice of its readoption with amendments to its rules governing infection control reporting by hospitals. Under the amendments, the National Healthcare Safety Network (a secure, internet-based surveillance system managed by the Centers for Disease Control) is designated as the Internet-based surveillance system to which each health care facility must report health care associated infections.
  • On June 20, 2016 at 48 NJR 1300, the Higher Education Student Assistance Authority published notice of its adoption of amendments to its rules governing eligibility for participation in the Primary Care Practitioner Loan Redemption program. The requirements specify that applicants must maintain residency in the State of New Jersey throughout participation in the program and maintain a license to practice as a primary care practitioner during their participation in the program.
  • On June 20, 2016 at 48 NJR 1301, the Department of Human Services published notice of its readoption with amendments to its rules governing preplacement programs for individuals accessing mental health services. The amendment provides that whenever patients successfully completes a Pre-Placement with a provider, he or she shall be removed from that program status and, upon the treatment team’s approval, shall be discharged from the Hospital and no longer subject to return to the Hospital. If there is a potential need for subsequent psychiatric hospitalization, the patient must be screened in accordance with the procedures and standards contained in the mental health screening law.
  • On June 20, 2016 at 48 NJR 1305, the Board of Psychological Examiners published notice of the readoption of their rules governing practice by psychologists.
  • On June 20, 2016 at 48 NJR 1304, the Certified Psychoanalysts Advisory Committee published notice of its adoption of amendments to its rules governing requirements for certification as a psychoanalyst.
  • On June 20, 2016 at 48 NJR 1332, the Department of Health published two separate notices cancelling the Certificate of Need call for designation as a trauma center, as well as postponement of the Certificate of Need call for new Mobile Intensive Care Unit providers.

 

 

June 6, 2016 Regulatory Developments

June 7, 2016 | Comments Off on June 6, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on June 6, 2016:

  • On June 6, 2016 at 48 NJR 878, the Department of Health published notice of its proposed readoption with amendments to the standards for licensure of pediatric community transitional homes.
  • On June 6, 2016 at 48 NJR 911, the Department of Human Services published notice of its proposed readoption with amendments to its rules governing family support services offered through the Division of Mental Health and Addiction Services.
  • On June 6, 2016 at 48 NJR 945, the Board of Nursing published notice of its proposal of amendments to its rules governing license renewal and the educational requirements for certification of advanced practice nurses.
  • On June 6, 2016 at 48 NJR 946, the Board of Nursing published notice of its proposed repeal of a regulation which allowed advanced practice nurses who have submitted applications for advanced practice nurse certification, but who have not yet passed the certification examination, to apply to the Board for a work permit letter. The Board indicted that the regulation is no longer necessary because certification examinations are available at almost any time via computer, and applicants no longer have to wait an extended period before they can take the certification exam.
  • On June 6, 2016 at 48 NJR 947, the Board of Nursing published notice of its proposed amendments to its rules governing the course content for forensic nurse-certified sexual assault education programs.
  • On June 6, 2016 at 48 NJR 962, the Department of Human Services published notice of its adoption of amendments to its rules governing hospital services, physician services, advanced practice nurse services, independent clinic services, and special Medicaid programs to implement the use of the ICD-10 classification system for disease categories.

 

 

 

May 16, 2016 Regulatory Developments

May 24, 2016 | Comments Off on May 16, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on May 16, 2016:

  • On May 16, 2016 at 48 NJR 804, the Department of Banking and Insurance published notice of its readoption of its rules regarding managed care plans.
  • On May 16, 2016 at 48 NJR 822, the Division of Taxation published notice of its adoption of new rules governing business registration and tax clearance requirements for professional license holders. Under the new rules, the Director of the Division of Taxation may suspend the professional license of an individual with regard to the failure to satisfy a state tax indebtedness. If the individual does not pay the state tax liability in full within 60 days from the date of the demand letter, the Director of the Division of Taxation may suspend the professional license of the individual.

Appellate Division Accords Absolute Privilege To Patient Safety Act Materials

May 6, 2016 | Comments Off on Appellate Division Accords Absolute Privilege To Patient Safety Act Materials
Posted by Beth Christian

On May 4, 2016, the Superior Court of New Jersey, Appellate Division, issued a decision in Conn vs. Rebustillo which held that the  materials provided  to the Department of Health in the contact of a Patient Safety Act report and submission,  including  the root cause analysis prepared by the hospital in the context of an internal Patient Safety Act investigation, are subject to an absolute privilege and are not subject to disclosure in discovery.  The case was a medical malpractice action involving an inpatient at Newton Medical Center who fell out of bed while hospitalized, suffered a brain hemorrhage, and later died.  The hospital conducted an internal root cause analysis (which was submitted to the Department of Health)  and also submitted a Patient Safety Act report.  The wife of the hospital inpatient who died filed a medical malpractice lawsuit, and her attorneys sought to compel disclosure in discovery of the root cause analysis.  The plaintiff contended that disclosure of the documents in discovery was permitted because the hospital had not shown that it complied with all of the process requirements of the Patient Safety Act.  The trial court held that the underlying facts of the root cause analysis had to be disclosed, as well as any and all other documents withheld by the hospital on the basis that the documents were protected as a root cause analysis. The Appellate Division reversed the decision of the trial court, finding that the privilege set forth in the Patient Safety Act is an absolute privilege and protects all documents submitted to the Department of Health, including the root cause analysis.  Internal documents  prepared by the hospital as part of its Patient Safety Act investigation which are not submitted to the Department of Health are also subject to protection from disclosure if the hospital can show that the documents were developed as part of a Patient Safety Act plan which complies with the requirements of the Patient Safety Act.  The court concluded that the protection accorded to documents submitted to the Department of health is absolute, and that the privilege is not subject to review to determine whether or not the hospital complied with the process requirements of the Patient Safety Act.

May 2, 2016 Regulatory Developments

May 3, 2016 | Comments Off on May 2, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on May 2, 2016:

  • On May 2, 2016 at 48 NJR 673, the Department of Human Services published notice of its readoption with amendments to its rules governing patient supervision at state psychiatric hospitals.
  • On May 2, 2016 at 48 NJR 714, the State Board of Dentistry published notice of its adoption of new rules governing credit toward licensure as a dental hygienist and as a dental assistant for education, training and experience received while serving as a member of the Armed Forces.

April 18, 2016 Regulatory Developments

April 26, 2016 | Comments Off on April 18, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on April 18, 2016:

  • On April 18, 2016 at 48 NJR 619, the Department of Health published notice of its proposal of new rules implementing the Health Care Professional Responsibility and Reporting Enhancement Act. The proposed rules will establish reporting requirements, as well as penalties that may be imposed by the Department to ensure compliance.       The proposed rules would also establish a procedure for health care providers to request, and respond to requests for information from, other health care providers care professional regarding a health care professional’s conduct as it relates to patient safety during a period of previous employment.
  • On April 18, 2016 at 48 NJR 626, the Department of Health published notice of its proposal of a new rule which would require hospitals to post information regarding the Independent Health Care Appeals program in conspicuous places in each of their waiting rooms.

April 4, 2016 Regulatory Developments

April 21, 2016 | Comments Off on April 4, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on April 4, 2016:

  • On April 4, 2016 at 48 NJR 544, the Department of Human Services published notice of its proposal of amendments to the Manual of Standards for Community Care Residences.
  • On April 4, 2016 at 48 NJR 554, the Department of Banking and Insurance published notice of its proposal of amendments to its rules governing increases in capital and surplus requirements for health insurers, HMOs and licensed organized delivery systems.
  • On April 4, 2016 at 48 NJR 565, the State Board of Pharmacy published notice of its proposal of amendments to its rules and the proposal of a new rule which will establish standards for the control and monitoring of the temperature of prescription drugs and chemicals to ensure their integrity, stability and efficacy.
  • On April 4, 2016 at 48 NJR 596, the State Board of Polysomnography adopted amendments to its rules governing exemptions from the rules governing the unlicensed practice of polysomnography.

March 21, 2016 Regulatory Developments

March 30, 2016 | Comments Off on March 21, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on March 21, 2016:

  • On March 21, 2016 at 48 NJR 496, the Occupational Therapy Advisory Council published notice of its readoption of its rules governing the practice of occupational therapy.

March 7, 2016 Regulatory Developments

March 22, 2016 | Comments Off on March 7, 2016 Regulatory Developments
Posted by Beth Christian

Here are the most recent health care related regulatory developments as published in the New Jersey Register on March 7, 2016:

  • On March 7, 2016 at 48 NJR 374, the Board of Optometrists published notice of the proposal of an amendment to its rules governing the practice of optometry to authorize optometrists to prescribe oral therapeutic pharmaceutical agents containing hydrocodone.
  • On March 7, 2016 at 48 NJR 420, the Department of Health published notice of the readoption of its rules governing communicable diseases.
  • On March 7, 2016 at 48 NJR 423, the Board of Nursing published notice of its adoption of amendments to its rules and the adoption of new rules governing nursing practice.  Among other things, the Board adopted a new rule which will allow certified homemaker-home health aides to administer medication under delegation from a nurse and sets forth specific requirements with regard to such delegation.
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