Volume 7 | July 2020
DOJ Announces $729 Million False Claims Act Settlement with Pharmaceutical Company

On July 1, the U.S. Department of Justice (“DOJ”) announced two separate settlements with Novartis Pharmaceuticals Corporation (“Novartis”), totaling more than $729 million, involving allegations that Novartis paid kickbacks to doctors and patients.

In the first settlement, Novartis agreed to pay $51.25 million to resolve federal False Claim Act (“FCA”) allegations that Novartis illegally paid patients’ copays. The DOJ alleged that Novartis coordinated with and funneled money to charitable foundations to pay the copay for patients who otherwise could not afford Novartis’ drugs. “As a result, the Novartis’ conduct was not ‘charitable,’ but rather functioned as a kickback scheme,” according to U.S. Attorney Andrew E. Lelling for the District of Massachusetts. Federal regulations have long barred the routine waiver of coinsurance and copayments for federal healthcare program beneficiaries.  

In the second settlement, Novartis agreed to pay more than $591.4 million to resolve FCA allegations that Novartis paid kickbacks to doctors. Specifically, the government alleged that Novartis spent hundreds of millions of dollars on bribes under the guise of speaker programs or sham educational events. Novartis will also pay $48.1 million to resolve state Medicaid claims and forfeit more than $38.4 million under the Civil Asset Forfeiture Statute. The second settlement resolves  United States ex rel. Bilotta v. Novartis Pharmaceuticals Corp. , filed in the Southern District of New York under the  qui tam (whistleblower) provisions of the FCA. These provisions allow private parties to file FCA lawsuits on behalf of the government and, in return, receive anywhere between 15 and 30 percent of the government’s recovery. The amount the private party receives in the Novartis matter has not been determined. 

“The government’s resolution of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act,” according to the government’s press release, which can be read  here .   
Georgia Legislation Limits Liability for Healthcare Providers and Businesses for COVID-19-Related Claims

On Sine Die (the last day of the legislative session), the Georgia General Assembly passed SB359 to provide liability protections to healthcare providers and businesses in the state. As COVID-19 continues to attack the community, healthcare facilities and providers find themselves on the front lines of the defense and are being impacted in myriad ways, thus the immunity would provide significant relief from litigation. The legislation, which was a compromise between interested groups such as healthcare providers, businesses, and the plaintiffs’ bar, creates an extremely high hurdle for lawsuits brought by an individual or their estate seeking to recover damages from a COVID-19 liability claim.  The legislation started out as providing immunity for only hospitals and healthcare providers, but evolved to become much broader. The law will become effective either upon the Governor’s approval or on August 7, 2020, whichever occurs first.

Protections for Healthcare Facilities and Providers

The liability shield in Senate Bill 359 protects healthcare facilities and providers against three types of COVID-19-related claims:

  • Transmission, infection, exposure or potential exposure of COVID-19

  • Medical malpractice related to COVID-19

  • Product liability claims related to personal protective equipment (PPE) or sanitizer

For each of those categories, a person bringing a claim against a healthcare facility or provider must show a heightened standard of gross negligence, willful or wanton misconduct, recklessness, or intentional infliction of harm. For medical malpractice claims, the heightened standard applies to both the treatment of COVID-19 and when “the response to COVID-19 reasonably interfered with the arranging for or the providing of healthcare services.”

For example, if a stroke patient presents at the ER but is unable to receive a timely CT scan because the machine is being disinfected after use by a COVID-19 patient, the hospital would likely not be liable for the failure to provide appropriate medical care to the stroke patient. The liability shield is not intended to be a blank slate to commit malpractice, and some cases will inevitably revolve around what is considered reasonable under the circumstances, but the bill should provide peace of mind to medical providers that they will not face a litany of lawsuits so long as their actions are justifiable in light of a global pandemic.

Senate Bill 359 also creates a rebuttable presumption that a person assumes the risk of transmission or infection of COVID-19 upon entering a healthcare facility, so long as the healthcare facility posts proper notice. Proper notice must be posted at a point of entry in 1 inch Arial font, separated from all other text, and include the following language:

Under Georgia law, there is no liability for an injury or death of an individual entering these premises if such injury or death results from the inherent risks of contracting COVID-19. You are assuming the risk by entering these premises.

The rebuttable presumption, however, does not apply to claims involving gross negligence, willful and wanton misconduct, recklessness, or intentional infliction of harm. 

Protections for Other Entities

In addition to protections for healthcare providers, the legislation also contains significant protections for other entities. Except for situations of “gross negligence, willful and wanton misconduct, reckless infliction of harm, or intentional infliction of harm,” the legislation provides that a person bringing a claim based on the “transmission, infection, exposure, or potential exposure” to COVID-19 faces a rebuttable presumption of assumption of risk in two situations. First, the rebuttable presumption of assumption of risk arises if the business or entity states on any receipt or “proof of purchase for entry” (such as a ticket or wristband) in at least ten-point Arial font:

Any person entering the premises waives all civil liability against this premises owner and operator for any injuries caused by the inherent risk associated with contracting COVID-19 at public gatherings, except for gross negligence, willful and wanton misconduct, reckless infliction of harm, or intentional infliction of harm, by the individual or entity of the premises.

Second, in other situations the business or entity is entitled to the rebuttable presumption of risk if the business posts warning language (see warning above in healthcare liability section) in at least one-inch Arial font. 

The legislation is broad in several respects. First, the legislation defines entities to which the liability protection applies to include:

any  association, institution, corporation, company, trust, limited liability company, partnership, religious or educational organization, political subdivision, county, municipality, other governmental office or governmental body, department, division, bureau, volunteer organization; including trustees, partners, limited partners, managers, officers, directors, employees, contractors, independent contractors, vendors, officials, and agents thereof, as well as any other organization other than a healthcare facility. (emphasis added).

Second, the law does not limit or define the relationship between the claimant who may file such a suit and the entity entitled to the limited liability. The definition of claimant does not contemplate the relationship between the claimant and the business, such as an employer/employee, guest, licensee, agent, etc.  Though the first instance of the rebuttable presumption (which requires warning on a receipt or proof of entry) contemplates that the claimant is guest or licensee of entity, the second instance of the rebuttable presumption (requiring the warning language at the entry of the entity) is broad and does not consider the relationship between the claimant and the entity.

The legislation states that it does not modify or supersede the criminal code, the health code and regs, workers comp laws, or emergency management. The limited liability protections apply to causes of action that accrue through July 14, 2021.

Eleventh Circuit Partially Reinstates $348 Million False Claims Act Verdict Against Nursing Homes

On June 26, 2020, the Eleventh Circuit Court of Appeals reinstated part of a $348 million verdict awarded pursuant to the False Claims Act (FCA). The court also held that a qui tam plaintiff may have standing to bring an FCA claim even after entering into a litigation funding agreement.

In 2011, a registered nurse brought a qui tam (whistleblower) action against two skilled nursing facilities, alleging violations of the FCA. Specifically, the plaintiff alleged that the skilled nursing facilities engaged in “upcoding” their Medicare claims to indicate that they “provided more services—in quantity and quality—than they, in fact, provided.” The plaintiff also alleged that the skilled nursing facilities engaged in “ramping,” a practice that involves artificially timing certain services to coincide with Medicare’s regularly scheduled assessment periods. Finally, the plaintiff alleged that the skilled nursing facilities caused fraudulent Medicaid claims to be submitted by failing to maintain a “comprehensive care plan,” as required by Medicaid. 

After a month-long trial, a jury determined that the nursing homes violated the FCA and found them liable for the submission of 420 fraudulent Medicare claims and 26 fraudulent Medicaid claims. The jury awarded $115 million in damages, with $85 million for fraudulent Medicare claims and $30 million for fraudulent Medicaid claims. After applying statutory trebling and per-claim penalties pursuant to the FCA, the district court entered judgment in an amount of $348 million. 

The defendants asked the court to set aside the verdict and moved for judgment as a matter of law, or in the alternative, a new trial. But before the district court ruled on defendants’ motion, the plaintiff entered into a litigation funding agreement, wherein she agreed to sell less than 4% of her interest in the award. Under the agreement, the plaintiff did not cede any power to influence or control the litigation.

The district court ultimately granted the defendants’ motion and vacated the jury’s verdict, arguing that the evidence presented at trial was insufficient to prove that the government regarded the billing practices at issue as material to its decision to pay the claims at issue, which is required under the U.S. Supreme Court opinion in United Health Services, Inc. v. Escobar . In Escobar , the U.S. Supreme Court stated, “if the Government pays a particular claim in full despite its actual knowledge that certain requirements were violated, that is very strong evidence that those requirements are not material.” The district court pointed out that even after the government found out about the alleged upcoding and ramping, it did not stop paying “or even threaten to stop paying” the skilled nursing facilities for the services at issue. As a result, the plaintiff could not meet the materiality requirement established under Escobar .

The plaintiff then appealed to the Eleventh Circuit and defendants moved to dismiss the appeal. The defendants argued, among other things, that the plaintiff’s entry into a litigation funding agreement constituted a partial assignment of her interest in the action, which precluded her from acting as a whistleblower under the FCA.

In its partial reversal of the district court’s order, the Eleventh Circuit first addressed the defendants’ standing argument. It pointed out that, although the FCA does not explicitly permit a whistleblower to assign her interest to another party, it does not bar such an assignment either. The Eleventh Circuit also noted that the whistleblower assigned only a small fraction of the award and retained full control over the litigation. As a result, the court held that the plaintiff had standing to bring her FCA claim.

The Eleventh Circuit then addressed the substance of the appeal. The court held that, although the government’s decision to pay a claim despite knowledge that a requirement was violated is “very strong evidence that those requirements are not material,” it is not dispositive. The Eleventh Circuit noted that the practices of upcoding and ramping, for which the plaintiff offered substantial evidence, are both inherently material as they result in the government paying more than what it actually owes.

“Drawing all inferences in favor of the [whistleblower],” the Eleventh Circuit determined that “a reasonable jury could conclude” that the nursing homes engaged in both upcoding and ramping. Thus, “the evidence at trial permitted a reasonable jury to find that the defendants committed Medicare-related fraud.” With respect to the whistleblower’s Medicaid fraud claims, the Eleventh Circuit upheld the district court’s order vacating the jury’s verdict because the whistleblower never presented evidence that the government would decline to pay claims if it knew that the skilled nursing facilities lacked a “comprehensive care plan.”

The opinion is captioned Angela Ruckh v. Salus Rehabilitation LLC et al., No. 18-10500, 2020 WL 3467393, United States Court of Appeals, Eleventh Circuit, June 25, 2020.  A copy of the Eleventh Circuit’s decision can be read here .
Chilivis Grubman News
Free Webinar on July 21

On July 21 at 11:00 am EST, Chilivis Grubman attorneys Lauren Warner and Brittany Cambre will present a webinar entitled The New Normal: Reopening Amidst COVID-19.

Now nearly four months into the COVID-19 pandemic, reality has set in that we are in a "new normal" and businesses must find ways to reopen in the midst of the continued chaos.

This one-hour webinar will discuss the various considerations that businesses should take into account when creating reopening plans, including guidance from government agencies.

The webinar is free of charge. Please register by clicking here .

New Publication

This month, Chilivis Grubman attorney Scott Grubman published an article in Law360, wherein he explores whether a prosecution witness in a criminal trial may, consistent with the Sixth Amendment's Confrontation Clause, wear a mask while testifying.

Courts around the country have, in large part, put jury trials on hold since mid-March, but once criminal jury trials resume, this question will almost certainly arise. There are a number of pre-pandemic cases from around the country, mainly dealing with religious scarfs and facial disguises for witnesses. In the 1990 case Maryland v. Craig , the Supreme Court of the United States held that obstructions to face-to-face confrontation must be necessary to further an important public policy, and can only be permitted where the reliability of the testimony is otherwise assured.

Scott's article can be read here .
HHS-OCR Issues Guidance Related to Contacting Patients Regarding COVID-19 Blood and Plasma Donation Opportunities

Last month, the Office for Civil Rights at the U.S. Department of Health and Human Services (OCR) issued guidance on how healthcare providers may, consistent with the HIPAA Privacy Rule, contact patients who have recovered from COVID-19 to inform them about how they can donate their blood and plasma containing antibodies to help other COVID-19 patients.

Pursuant to OCR's guidance, healthcare providers are permitted to identify and contact such patients but, without the patient's authorization, cannot receive any payment from or on behalf of a blood or plasma donation center in exchange for such communications with recovered patients. The guidance also makes clear that communications with such patients cannot involve marketing efforts (i.e., encouraging the patient to purchase or use a product or service), and that when using or disclosing PHI for these purposes, the provider must make "reasonable efforts to limit the use or disclosure of PHI to the minimum necessary to accomplish the intended purpose of the use or disclosure."

According to Roger Severino, OCR's Director, the guidance was designed to make sure that " misconceptions about HIPAA do not get in the way of a promising COVID-19 response. This guidance explains how health care providers can connect COVID-19 survivors with blood and plasma donation opportunities and further public health consistent with patient privacy."


Law is whatever is boldly asserted and plausibly maintained

Aaron Burr

Two Georgia U.S. Attorney's Offices Announce Separate Seven-Figure False Claims Act Settlements with Georgia Hospitals in Same Week

In the same week last month, two Georgia U.S. Attorney’s Offices announced multi-million dollar False Claims Act (FCA) settlements with major health systems. 

First, on June 24, the U.S. Attorney’s Office for the Southern District of Georgia announced that Augusta University Medical Center (AUMC) had agreed to pay over $2.6 million to settle an FCA investigation involving allegations of false billing. Specifically, the government alleged that AUMC knowingly submitted false claims to federal healthcare programs for a procedure that was not covered by Medicare or Medicaid. According to the government’s  press release , from the early stages of the investigation, AUMC “actively cooperated and fully committed to both monetary and non-monetary corrective actions for the alleged misconduct.”

The next day, the U.S. Attorney’s Office for the Northern District of Georgia  announced  that Piedmont Healthcare agreed to pay $16 million to settle two separate FCA allegations brought in a  qui tam  (whistleblower) lawsuit. The first allegation was that Piedmont “allegedly overturned the judgment of its treating physicians on numerous occasions and billed Medicare and Medicaid at the more expensive inpatient level of care even though the treating physicians recommended performing the procedures at the less expensive outpatient or observation level of care.” The second FCA allegation against Piedmont related to the acquisition of a physician practice group in 2007. According to the allegations, Piedmont paid a commercially unreasonable and above fair market value for a catheterization lab partly owned by the practice group. The DOJ stated that the whistleblower would receive just under $3 million of the settlement.
EEOC Announces Two Pilot Programs to Increase Pre-Litigaton Resolutions

On July 7, 2020, the U.S. Equal Employment Opportunity Commission (“EEOC”)  announced new mediation and conciliation pilot programs designed to increase voluntary resolutions of discrimination charges. 

Mediation Pilot Program
Under the traditional mediation program, the EEOC evaluates whether a charge of discrimination is appropriate for mediation based on the allegations, the parties' relationship, the case size, the case complexity, and the relief sought by the charging party. If appropriate, the EEOC usually offers mediation early in the process before an in-depth investigation. The EEOC’s mediation program has been popular for both employers and complainants. The EEOC charges no fee for mediation and employers may avoid costly litigation and resource-consuming investigations. Importantly, information disclosed in mediation is confidential and is not shared with EEOC investigators and lawyers.

The Access, Categories, Time (“ACT”) Mediation pilot program “expands the categories of charges eligible for mediation and, generally, allows for mediation throughout an investigation.” In addition, “[t]he pilot will also expand the use of technology to hold virtual mediations.” The EEOC’s ACT Mediation pilot began on July 6, 2020, and will last six months.

Conciliation Pilot Program
The Conciliation process begins after the EEOC determines that there is reasonable cause to believe discrimination occurred. In the EEOC’s Letter of Determination, in which the EEOC explains its belief that discrimination occurred, the EEOC invites parties to participate in the voluntary and informal conciliation process. During the conciliation process, the EEOC seeks to resolve the charges of discrimination before considering litigation.

The EEOC’s conciliation pilot program adds “a requirement that conciliation offers be approved by the appropriate level of management before they are shared with respondents.” This new requirement is in line with the EEOC’s effort to “drive accountability” and is part of the EEOC's broader effort to “ emphasize the importance of conciliation as a tool for remedying complaints of discrimination .” The EEOC’s conciliation pilot program began on May 29, 2020, and will last for six months.

The EEOC’s pilot programs may provide employers more opportunities to resolve charges early and without the costs and operational impact associated with defending lawsuits. 

ABA Report on Women of Color Lawyers -- What About Small Firms?

Women of color lawyers are far more likely to leave the profession than their white colleagues according to a recent report by the ABA Commission on Women in the Profession, Left Out and Left Behind: The Hurdles, Hassles, and Heartaches of Achieving Long-Term Legal Careers for Women of Color .

“Seventy percent of female minority lawyers report leaving or considering leaving the legal profession,” a sobering statistic based on a survey of participants that isn’t even statistically significant because the researchers were unable to locate enough women of color in longtime practice to conduct the requisite analysis. Not surprisingly, women of color have the highest rate of attrition from law firms and were more likely to be subjected to both implicit and explicit biases. According to the report, only 2% of equity partners at large law firms are women of color, a statistic that hasn’t changed in 20 years. A copy of the report can be found here .

What about small law firms? The focus of the report is on large law firms, but women of color lawyers who leave those large law firms often find success at smaller law firms or as solo practitioners. Although the report makes clear that far more work needs to be done by large law firms to retain and promote women of color attorneys to equity partnership, smaller law firms should be part of the discussion. 

In fact, small law firms are an important, but underused, asset in the battle for corporate legal departments to increase their use of diverse lawyers. Programs like the National Association of Minority & Women Owned Law Firms (NAMWOLF) Inclusion Initiative, wherein companies commit to a significant calendar-year-stretch goal of legal spend with diverse law firms, are a start. But there is more that can be done. Corporate legal departments and allies at larger law firms should make focused efforts to identify and send business to small law firms with diverse equity partners.

Please visit our website to learn more about our diverse attorneys and their vast array of experience in litigation, internal investigations, other areas. 
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