Meet Our Contributors

Pietragallo's White Collar Criminal Defense Group

In today's environment, the government has never more aggressively regulated, investigated, pursued and prosecuted white collar crime. If you or your company becomes embroiled in any type of federal or state government investigation, you need experienced trial lawyers who have gone toe-to-toe with prosecutors and government agents.

E-Mail Alerts
This form does not yet contain any fields.
    Subscribe to RSS Feed
    Follow Us On Twitter
    Archives by Category
    Archives
    Thursday
    Aug112016

    U.S. Tax Court Includes Criminal Fines and Civil Forfeitures in $74 Million Recovery Under IRS Whistleblower Program  

    In Whistleblower 31276-13W v. Commissioner, 147 T.C. No. 4 (Aug. 3, 2016) filed last week, the U.S. Tax Court held that criminal fines and civil forfeitures constitute “collected proceeds” for the purposes of determining an award under IRS’s Whistleblower program.  Husband and wife whistleblowers – described only as “Ps” as their identities were under seal – reported tax offenses by the targeted taxpayer to the IRS Whistleblower Office which led to a guilty plea for tax evasion and payment of $74,131,694 in tax restitution, criminal fines, and civil forfeitures. 

    The $74 million collected from the taxpayer included $20 million in tax restitution, $22 million in criminal fines, and $32 million in civil forfeitures.  The IRS claimed that criminal fines and civil forfeiture amounts – totaling roughly $54 million – were not “collected proceeds” under the IRS whistleblower program and, thus, were not subject of an award to the whistleblower.

    Based on federal laws enacted in 1867, the IRS whistleblower program allows a whistleblower – also termed “claimants” or “informants” – to receive a portion of the money received by the IRS based on the whistleblower’s information.  The key provisions of the whistleblower program are found in Section 7623 of the Internal Revenue Code, which allows for either a mandatory or discretionary payment of an award depending on the amount of “collected proceeds.”  For instance, under Section 7623(a), a whistleblower may receive a discretionary award of up to 15% of the collected proceeds, capped at $10 million, for tax violations less than $2 million.  On the other hand, under Section 7623(b), a whistleblower is entitled to a mandatory award of 15% to 30% of the collected proceeds if the tax violation exceeds $2 million.  The IRS determines the amount of the award with limited input from the whistleblower. Only a mandatory payment under Section 7623(b) is subject to review by the U.S. Tax Court, provided the whistleblower appeals within 30 days of the IRS’s decision.

    A tax whistleblower claim typically begins with the filing of IRS Form 211 and supporting information with the IRS Whistleblower Office in Ogden, Utah.  The IRS performs an initial screening to determine whether to initiate an investigation of the allegation.  If so, the matter is forwarded to one of the IRS branches for further investigation, including potential administrative or judicial action.  The process typically takes several years from the initial filing until all proceeds are collected.  An award is not paid until all taxes, penalties, interest, or other amounts owed to the IRS are collected.

    In its ruling for the whistleblower, the Tax Court concluded that the statutory language requiring an award based on the “collected proceeds (including penalties, interest, additions to tax, and additional amounts)” extended to criminal fines and civil forfeitures.  The Court stated that permitting an award based on funds obtained via the criminal prosecution process was consistent with the purpose of the IRS whistleblower program – detecting tax underpayments and holding persons accountable through criminal prosecution.

    The IRS unsuccessfully argued that only amounts collected under Title 26 should be used to calculate an award and, thus, criminal fines and civil forfeitures are not relevant because they are based on Title 42, Section 10601 (criminal fines) and Title 31, Section 9703.1 (civil forfeitures).  However, the Court held that the whistleblower statute was “straightforward and written in expansive terms” with the intent of paying an award based on “administrative or judicial action.”  The Tax Court also relied on “broad and sweeping” nature of Section 7623 which uses phrases like “any administrative or judicial action”, “any related actions”, and “any settlement in response to any such action.”

    A full copy of the Tax Court’s opinion can be found here.   

    Friday
    Aug052016

    Informal Efforts to Influence Executive Action Are “Ambiguously Legislative,” Says the Third Circuit in Declining to Toss Menendez Case

    Senator Bob Menendez’s political corruption case will go forward under a ruling from the U.S. Court of Appeals for the Third Circuit.  In a 22-count indictment, the government alleges that, from 2006 to 2013, Menendez solicited and accepted gifts from a Florida opthalmologist in exchange for, among other favors, (1) influencing an $8.9 million enforcement action against the doctor by the Centers for Medicare and Medicaid Services (“CMS”), and (2) encouraging the U.S. Customs and Border Patrol to intervene on the doctor’s behalf in a contract dispute with the Dominican Republic.  Menendez allegedly wielded that influence by meeting with and speaking to – either personally or through staff – high-ranking Executive Branch officials, including then-Secretary of Health and Human Services, Kathleen Sebelius, and Assistant Secretary of State, William Brownfield, on the doctor’s behalf.

    Menendez moved the U.S. District Court for the District of New Jersey to dismiss the indictment.  He argued, in part, that his interventions were legislative acts protected from prosecution by the Speech and Debate Clause of the U.S. Constitution.  The district court denied the motion, and the Third Circuit affirmed.

    Before the Third Circuit, Menendez contended that the Speech and Debate Clause protects any effort by a legislator “to oversee the Executive Branch.” Conversely, the government argued that legislative attempts to impact executive action are never protected by the Speech and Debate Clause.  The Court spurned both “all-encompassing” positions, holding that informal efforts to influence executive action are “ambiguously legislative in nature and therefore may (or may not) be protected legislative acts depending on their content, purpose, and motive.”

    Applying “clear error” review to the district court’s factual findings, the Court rejected Menendez’s characterization of his conduct as legislative fact-finding and efforts to change executive policy.  The district court found that Menendez’s actions were tied to a specific individual, and the Third Circuit panel determined that ample record evidence supports that conclusion.  Thus, under the deferential standard of review given to findings of fact, the conduct alleged in the indictment amounts to lobbying on the behalf of an individual, activity that the Speech and Debate Clause does not protect.

    According to a statement on his defense counsel’s website, Menendez plans to petition the Third Circuit for a rehearing en banc.  Such petitions are rarely granted and even more rarely result in a different outcome. Thus, Menendez likely will have to pursue an acquittal before a jury.

     

    Friday
    Jun032016

    South Carolina Legislature Sends Overhaul of its Telemedicine Laws to Governor Haley for Her Approval

    South Carolina, in a move that is becoming increasingly common among various state legislatures (or their medical boards), is on the verge of completely re-writing its telemedicine law – including the often murky issue of when it is appropriate for physicians to prescribe medications (especially non-narcotic) via telemedicine visits in the absence of a prior in-person physical exam being performed by the prescribing physician.

    On May 25, 2016, the South Carolina legislature sent to Governor Nikki Haley Senate Bill 1035, which facilitates the use of telemedicine by establishing certain recordkeeping requirements.  SB 1035 also defines “telemedicine” and details the requirement of a physician-patient relationship, so as to allow the prescribing of medication when the physician-patient relationship is established solely via telemedicine. 

    More specifically, the bill provides the following details:

    • ‘Telemedicine’ means the practice of medicine using electronic communications, information technology, or other means between a “licensee” in one location and a patient in another location with or without an intervening practitioner.
    • A physician may prescribe for a patient whom the physician has not personally examined, when the physician has established a physician-patient relationship solely via telemedicine, and so long as the physician complies with Section 40-47-37 of the act.
    • A physician who establishes a physician-patient relationship solely via telemedicine shall adhere to the same standard of care as a physician employing more traditional in-person medical care and shall be evaluated according to the standard of care applicable to the physician’s area of specialty. 
    • A physician shall not establish a physician-patient relationship via telemedicine for the purpose of prescribing medication when an in-person physical examination is necessary for diagnosis.
    • A physician who establishes a physician-patient relationship solely via telemedicine shall generate and maintain medical records for each patient in compliance with any applicable state and federal laws, rules, and regulations.  Records shall be accessible to other practitioners and to the patient in a timely fashion when lawfully requested.
    • Prescribing of lifestyle medications is expressly prohibited (i.e. erectile dysfunction drugs or abortion inducing drugs) unless permitted by the medical board.
    • A simple questionnaire without an appropriate evaluation is prohibited.
    • A physician, practitioner, or any other person involved in a telemedicine encounter must be trained in the use of the telemedicine equipment and competent in its operation.
    • Moreover, a physician who establishes a physician-patient relationship solely via telemedicine has numerous additional requirements:    
    1. adhere to current standards for practice improvement and monitoring of outcomes and provide reports containing such information upon request of the board;
    2. provide an appropriate evaluation prior to diagnosing and/or treating the patient utilizing technology sufficient to accurately diagnose and treat the patient or, in the alternative, use of a licensed healthcare professional as a telemedicine presenter is permitted in order to provide various physical findings the physician may need to complete an adequate assessment;
    3. verify the identity and location of the patient and be prepared to inform the patient of the physician’s name, location, and professional credentials;
    4. establish a diagnosis through the use of accepted medical practices, which may include patient history, mental status evaluation, physical examination, and appropriate diagnostic and laboratory testing in conformity with the applicable standard of care;
    5. ensure the availability of appropriate follow-up care;
    6. Schedule II and Schedule III prescriptions are not permitted unless specifically authorized by the board;
    7. maintain a complete record of the patient’s care according to prevailing medical record standards that reflects an appropriate evaluation of the patient’s presenting symptoms;
    8. maintain the confidentiality of the patient’s records;
    9. have a valid, current South Carolina medical license;  and
    10. discuss with the patient the value of having a primary care medical home and provide assistance in identifying available options for a primary care medical home.

    SB 1035 is set to take effect upon approval by the Governor (which, at the time of this entry, has not yet occurred).

    How does the recent activity in South Carolina, and several other states, impact the bigger picture of telemedicine?  For starters, as more states adopt standards for conducting telemedicine, a loose uniformity emerges amongst the states as to what the appropriate standard of care is when conducting telemedicine visits.  The more familiar themes are: (1) stating exactly what is not permitted; (2) a telemedicine encounter must approximate an in-person visit (i.e. sufficient information must be secured in order to render a diagnosis and/or prescribe a medication for the patient); (3) the type of communication system that is required to be used; and (4) failure to adhere to the standard of care will be subject to discipline (which initially may result in a physician being subjected to more harsh penalties).  Second, it appears that for most states (but not all) a reasonable recognition is taking hold that telemedicine is not a different form of medical care, but rather a different method of delivery of the same medical care (with the same standard of care) that would have, in the absence of modern technology, been provided in-person.  

    Which state is next and what approach will they take?  Stay tuned!

    Wednesday
    Jun012016

    Trials Must Be Speedy, Sentencings Not So Much

    The Sixth Amendment to the U.S. Constitution guarantees the “right to a speedy and public trial” to those accused in criminal proceedings.  Federal and state courts have long grappled with the question whether speedy trial rights protect defendants from inordinate delays in sentencing.  Recently, in Betterman v. Montana, Case No. 14-1457, the U.S. Supreme Court answered that question in the negative.

    The Trial in “Speedy Trial” Means Trial (or Plea)

    Brandon Betterman pleaded guilty to bail-jumping in Montana state court and was held in county detention for fourteen months between the entry of his plea and sentencing date, largely because of institutional issues and through no fault of his.  Although Betterman was sentenced to seven years’ imprisonment, with four of those years suspended, he argued that the fourteen-month delay offended his Sixth Amendment rights because, had he been sentenced in a timely fashion, he could have been eligible for conditional release through the state prison system’s procedures.

    But the Supreme Court decided unanimously that the Sixth Amendment guarantee to a speedy trial cuts off at, well, trial, or the defendant’s entry of a guilty plea.  It does not govern post-conviction or pre-sentencing delays.

    If the result was not a surprise, the 8-0 final score was. At oral argument, some Justices seemed supportive of Betterman’s argument that the Court should apply the balancing test it uses in evaluating pre-trial delays to the sentencing context.  That test, which the Court announced in Barker v. Wingo more than four decades ago, considers the length of the delay, the reason for the delay, the prejudice that the delay imposed on the defendant, and the manner in which the defendant has asserted his right.  Regarding the application of the test post-conviction, Justice Kagan said, “I guess I just wouldn’t see why there’s any need for a different rule, especially given the level of flexibility that Barker gives.” Apparently, it is not flexible enough to stretch past the point of conviction.

    What Could Have Been?

    The majority of states and the federal courts were operating as though the Sixth Amendment had nothing to say about sentencing delays, so Betterman will mostly preserve the status quo.  In most jurisdictions in the federal system, local rules require (or local practices compel) the court to set a sentencing date a certain number of days – typically 90 or 120 – from the entry of a guilty plea or a guilty verdict at trial.  But in some jurisdictions, sentencing is not set until the U.S. Probation Office completes the defendant’s presentence report – a practice that can drag on for months if the Court does not impose deadlines.  In the Western District of North Carolina, for instance, defendants can wait a year or more between entry of plea (or loss at trial) and sentencing. And that timeframe can expand for defendants involved in complex fraud cases or expansive conspiracies.  A contrary outcome in Betterman could have put an end to such systematic delay.

    Lengthy lapses between findings of guilt and sentencings have the most profound effect on defendants who are detained pending the resolution of their cases. For every day they are not sentenced (and thus not designated to the agency that administers their punishment), those individuals face time in county facilities, which generally have far fewer resources than federal or even state prisons. The result is typically poorer medical care, less or non-existent programming, and little if any recreation.

    But delay can negatively impact even defendants on bond pending sentencing as well.  It elongates a stressful period – often the most stressful period in one’s life; it forestalls closure. And, where a sentence of imprisonment is possible or likely, an uncertain sentencing date, or a sentencing date subject to continuance because of institutional delay, makes it difficult to finalize the arrangements of one’s affairs.

    And, for all defendants, an extended delay in sentencing can complicate presenting a case for mitigation. In the federal system and in many states, sentencing courts consider a defendant’s history and characteristics and the circumstances surrounding the offense in fashioning a punishment. As time passes, recollections fade, and it can become more difficult to locate witnesses that could provide the court with information supporting a favorable outcome.

    To be sure, a defendant can find ways to use the delay in sentencing to his advantage – by engaging in conduct that demonstrates rehabilitation or that the offense he committed was uncharacteristic. But, for most, the negative impact of delay overwhelms the positives that can be drawn from it.  Thus, courts and legislatures should endeavor to provide speedy sentencing, even if the Sixth Amendment does not.

     

    Thursday
    May052016

    Calling All Wrongdoers! 

    On Thursday, April 28, 2016 Assistant Attorney General Leslie Caldwell addressed the American Bar Association’s Institute on Internal Corporate Investigations regarding the Department of Justice’s Voluntary Disclosure Program.  In a room full of defense attorneys, this pilot program was surely received with some skepticism.  This new initiative is aimed to encourage corporate counsel to report potential wrongdoing under the Foreign Corrupt Practices Act.  The Department assumes that counsel will have conducted an internal investigation and implemented remedial procedures when it received notice of potential violations.  But instead of shelving the report of the investigation in the hopes that the government never finds out, the Voluntary Disclosure Program provides an incentive for prompt disclosure.

    The prize for a company participating in this program could be fines cut in half from the lowest amount recommended by the federal sentencing guidelines, as well as a dispensation from hiring an expensive compliance monitor.  Assistant Attorney General Caldwell was clear to point out that reporting potential violations on the eve of a government investigation is not sufficient.  However, the government will not punish companies for failing to report potential violations that were unknown – for example, if a whistleblower reported directly to the government without notifying the company first.

    The defense bar has been on guard following the so-called Yates Memo written by Deputy Attorney General Sally Quillian Yates directing the government’s civil and criminal attorneys to pursue individuals and discouraging corporate settlements in exchange for immunity for executives.  How does a company self-disclose and cooperate fully knowing the government would like to prosecute individual executives?  How is a company to cooperate while maintaining the sanctity of the attorney-client privilege?  Assistant Attorney General Caldwell acknowledged these issues during her remarks.  And although she was not in a position to propose specific solutions, Assistant Attorney General Caldwell credited the defense bar and its skilled attorneys with the capacity to structure cooperation in a way that does not waive the privilege. 

    Given the relatively recent publication of the Yates Memo and introduction of the Voluntary Disclosure Program, only time will tell how successful counsel will be in negotiating this new terrain.

    Wednesday
    May042016

    Twenty-Five Individuals Indicted in “Ground Zero” for Medicare Fraud

    The United States indicted twenty-five defendants in three Medicare Fraud cases, recently filed in the U.S. District Court for the Southern District of Florida.  William Maddalena, Assistant Special Agent in Charge of the FBI’s Miami Division, dubbed South Florida “ground zero” for health care scams.

    These indictments detail two purported schemes involving Medicare Part D, the voluntary prescription drug benefit. In the first, alleged in U.S. v. Hevia et al. (Case No. :16-cr-20267) and U.S. v. Fernandez (Case No. :16-cr-20268), the government claims that two defendants hired co-conspirators to run pharmacies and employed other co-conspirators as “patient recruiters.” The recruiters referred Part D beneficiaries to the pharmacies, which filled prescriptions that were not medically necessary and submitted false and fraudulent claims for the prescriptions to Medicare.  Twenty-two defendants are charged with various offenses, including Conspiracy to Commit Health Care and Wire Fraud, in violation of 18 U.S.C. § 1349; Health Care Fraud, in violation of 18 U.S.C. § 1347; Conspiracy to Pay and Receive Kickbacks, in violation of 18 U.S.C. § 371; and Receipt of Kickbacks from a Health Care Provider, in violation of 18 U.S.C. § 1320a-7(b)(1)(A). In addition to the criminal charges, the government filed notices of forfeiture seeking in excess of $16 million from the defendants. The government claims that figure represents the total loss to the Medicare program resulting from the conspiracy, and it seeks to hold the defendants jointly and severally liable for the sum.

    The second scheme, alleged in U.S. v. Diaz (Case No. 1:16-cv-20251), involves similar, though unrelated, claims that a pharmacy owner and co-conspirators bilked Medicare for beneficiaries’ medically unnecessary prescriptions. Three defendants are charged with Conspiracy to Commit Health Care and Wire Fraud;  Health Care Fraud; and Money Laundering, in violation of 18 U.S.C. § 1957. The government seeks forfeiture of approximately $10.5 million. 

    The government has identified Part D, the fastest-growing component of the Medicare program, as a vulnerable target for fraud.  According to the Government Accountability Office, of the $120 billon that the government spent on Part D in Fiscal Year 2015, up to $10 billion was for fraudulent claims.  Because of the money expended on Part D and its susceptibility to fraud, the Department of Justice and the Office of the Inspector General, Department of Health and Human Services have signaled efforts to ramp up Part D prosecutions through various press releases and policy statements, as well as the 2016 OIG-HHS Work Plan.  

    Wednesday
    Apr272016

    Ohio Medical Board Telemedicine Prescribing Rule Update

    . . . with a Seussian Twist (Strictly for Fun)


     Background - “From There To Here, From Here To There. . . “[1]

    Currently, Ohio Admin. Code 4731-11-09 entitled “Prescribing to persons the physician has never personally examined” requires an in-person physical examination to be performed by a physician prior to the physician issuing a prescription for any drug, with limited exceptions (e.g., institutional settings, on-call situations, cross-coverage situations, certain hospice settings, etc.).  This requirement has been the subject of a fair amount of review and debate over the past four to five years by the State Medical Board of Ohio (SMBO), the Ohio Legislature, Ohio Governor John Kasich, and other interested parties. 

    Without any change to Rule 4731-11-09, the SMBO in a 2012 interpretive guideline addressing Rule 4731-11-09, opined that when remotely prescribing a non-controlled substance, “[t]he examination need not be in-person if the technology is sufficient to provide the same information to the licensee as if the exam had been performed face-to-face.”  In this interpretive guideline, the technology that is considered “sufficient” is medical equipment capable of transmitting in real-time the patient’s vital signs and other physical data, and requires appropriate diagnostic medical equipment capable of transmitting in real-time high-quality images (including the ability to adjust images to conditions) of the patient’s symptoms. 

    In mid-2014, the SMBO began the process of formally reviewing Rule 4731-11-09 with the intention of updating this rule, seemingly to bring it in line with the aforementioned 2012 interpretative guideline.  The SMBO issued an initial draft release of the rule on October 8, 2014, and subsequently released a revised draft on December 17, 2014.  These two drafts of the rule both allowed for a physician to prescribe non-controlled substances to a patient that the physician had not previously examined, provided the physician utilized medical equipment to secure vital signs and images in real-time prior to writing the prescription.  The rule also contained a limited number of exceptions which, for the most part, were consistent with the current set of exceptions set forth in Ohio Admin. Code 4731-11-09. 

    Disagreements Arise - “You Do Not Like Them, So You Say. . . .”[2]

    On February 11, 2015, the Ohio House of Representatives introduced the State’s biennial budget, H.B. 64.  Interestingly, the biennial budget bill contained an amendment to the Ohio Revised Code definition of “Telehealth Service” and certain provisions that addressed the standard of care for remote prescribing by physicians. 

    Specifically, the proposed amendment to the Ohio Revised Code authorized a physician to:

     “ C)    [* * * *] prescribe, dispense, or otherwise provide, or cause to be provided a prescription drug that is not a controlled substance to a person on whom the physician has never conducted a medical evaluation, and who is at a location remote from the physician, if the physician meets all of the following requirements:

        (1) In a manner that is consistent with the standard for in-person care by a physician, the remote physician shall complete and document a medical evaluation of the patient and collect clinical data as needed to establish a diagnosis, identify any underlying conditions, and identify any contra-indications to the treatment that is recommended or provided.

         (2)(a) Except as provided in division (C)(2)(b) of this section, the remote physician shall complete an examination of the patient using appropriate technology that is capable of all of the following:

             (i) Transmitting images of the patient’s condition in real time;

             (ii) Transmitting information regarding the patient’s physical            condition and other relevant clinical data needed for compliance            with division (C)(1) of this section;

             (iii) Being adjusted for better image quality and definition.”

    See Ohio H.B. 64.

    On May 13, 2015, while H.B. 64 was still pending in the legislature, the SMBO revised Rule 4731-11-09 a third time.  This version of the proposed rule deleted the words “vital signs” and replaced them with the words “physical data” as being required to be transmitted to a remote prescribing physician.    

    The proposed draft of Rule 4731-11-09 read in relevant part:

           (1) A physician shall complete and document a clinical assessment and collection of relevant clinical history which conforms to minimal standards of care consistent with an assessment that was completed in a face-to-face interaction necessary to establish the diagnosis and identify any underlying condition and/or contra-indications to the treatment recommended or provided; 

           (2) The physician shall complete an examination of the patient using appropriate diagnostic medical equipment that meets both of the following criteria:

               (a) The diagnostic medical equipment is capable of transmitting in            real-time the patient’s physical data;

               (b) The diagnostic medical equipment is capable of transmitting in            real-time images of the patient’s physical condition and also            has the ability to be adjusted for better quality and definition.

    “A Person’s a Person, No Matter How Small . . . “[3]

    As a result of the dueling attempts by the SMBO and the Ohio Legislature to set forth the standard of care for remote physician prescribing, two factions came to the fore:  (1) Those that believe a physical examination (regardless of whether it is done in-person or via video conferencing with the patient) requires a physician to secure basic vital signs (or stated another way “physical data”), and (2) Those that believe that the need for such information should be left to the discretion of the treating physician on a case-by-case basis depending upon the symptoms the patient is presenting with.

    For example, the Ohio Academy of Family Physicians believes that the amendment was written to accommodate a specific telemedicine company that wished to do business in the Ohio Market.  In a May 27, 2015 letter from the Academy directed to Ohio State Senator David Burke, the Academy expressed its opposition to the telemedicine amendment added to H.B. 64. 

    The Academy, in its letter, advised Senator Burke that the Academy had been working along with physician organizations and stakeholders with the SMBO to draft rules and interpretive guidelines that provide safeguards for the use of telemedicine, “and that a lot of time and energy has been invested into drafting Rule 4731-11-09, which was approved during the Medical Board’s meeting held May 13, 2015”.

    Similarly, the SMBO forwarded a letter to Representative Ryan Smith expressing its opposition to the amendment.  In its letter, the Executive Director of SMBO noted that in order “[t]o ensure a high quality of remote medical care” the provider/prescriber should, among other things, have appropriate diagnostic medical equipment capable of transmitting:

              • In real-time, the patient’s vital signs and other physical data;

               • A real-time image of the patient’s symptoms and that also has the ability to adjust for better image quality and definition. 

    Notwithstanding the opposition by the Ohio Academy of Family Physicians and the SMBO, H.B. 64 was reported out of conference committee and ultimately sent to Governor Kasich with the legislature’s language regarding telehealth and the standard of care for remote prescribing intact. 

    On June 30, 2015, Governor Kasich exercised his right of line-item veto to the biennial budget, and in doing so, struck, among other provisions, the specific provisions relating to the amendment to the definition of “telehealth service”, including the prescribing language.

    At around the same time period H.B. 64 was making its way through the legislative process, the SMBO approved on May 13, 2015 a third revised draft of Rule 4731-11-09 and announced that it was being forwarded to Ohio’s Common Sense Initiative for administrative review (and public comment).  However, the SMBO subsequently pulled the Rule from consideration by the Common Sense Initiative.  It seems plausible that this third proposed rule was pulled from further consideration in light of the legislative activity surrounding H.B. 64 and the Governor’s subsequent line-item veto of the telehealth provisions.

    What’s a Board to Do? - “The more that you read, the more things you will know, The more that you learn, the more places you’ll go”[4]

    On December 22, 2015, Governor Kasich signed H.B. 188 into law with an effective date of 90 days.  This law enacted Section 4731.74, Ohio Revised Code, which requires, among other things, the SMBO to adopt revised rules governing the prerequisites for a physician to prescribe, personally furnish, otherwise provide, or cause to be provided a prescription drug to a person on whom the physician has never conducted a physical examination and who is at a location remote from the physician.  The rule is required to be adopted not later than March 23, 2017.  The new rule will be applicable to physician assistants who have prescriptive authority.

    After enactment of Section 4731.04, the SMBO acted swiftly. On February 10, 2016, the board convened a hearing, inviting interested parties to present information to the board about the adoption of appropriate rules for physician prescribing for patient’s not previously seen by a physician.  Several diverse interests were represented at the hearing and there was a fair amount of productive dialog exchanged between board members and the different speakers.

    Last week, the SMBO released a complete overhaul of its proposed Rule 4731-11-09.  In its latest draft, the SMBO has seemingly taken the same approach that many other progressive states recently have taken with their telemedicine rules: rather than delineating a set of specific rules, SMBO has reverted to a more neutral and balanced approach, focusing on minimal standards of care applicable to the condition for which the patient presents to the physician.  In other words, the onus is on the physician to conduct a proper telemedicine visit (and proper prescribing) depending upon the facts and circumstances for which the patient presents.  Should the physician fail, the physician could be the subject of disciplinary review by the SMBO.  This is, in reality, the standard that all physicians are subject to in order to maintain their license in any given state.

    Specifically, the proposed rule would now authorize a physician to prescribe non-controlled substances to a person whom the physician has never conducted a physical examination on and who is at a remote location from the physician when the physician: 

    • Establishes the patient’s identity and physical location;
    • Obtains the patient’s informed consent for treatment through remote examination;
    • Obtains the patient’s consent to forward the medical record to the patient’s PCP or other healthcare provider;
    • Completes a medical evaluation through interaction with the patient that meets the minimal standards of care appropriate to the condition for which the patient presents;
    • Establishes a diagnosis and treatment plan, including documentation of necessity for the utilization of a prescription (non-narcotic) drug; including contra-indications to the recommended treatment;
    • Documents the care provided and referrals made to other providers;
    • Provides appropriate follow-up care or recommend follow-up care;
    • Makes the medical record of the visit available to the patient; and
    • Uses appropriate technology that is sufficient for the physician to conduct all of the above steps and as if the medical evaluation occurred in-person;

    The proposed rule also addresses prescribing of controlled substances in a telemedicine context and limits such prescriptions to on-call/cross-coverage arrangements, consistent with telemedicine practice as defined under federal law (21 CFR 1300.04), or the patient is an inpatient or resident of an “institutional facility”.

    What is the next step you ask?  The SMBO seeks public input on proposed rules several times during the rule-making process.  Public input is sought after the SMBO has conducted its initial review of rules, after rules are filed with the Common Sense Initiative Office, and at the public hearing that occurs after the rules are formally filed with the Joint Committee on Agency Rule Review.

    The SMBO is currently seeking public comment on the proposed Rule 4731-11-09.  Comments are due by May 12, 2016.  Comments that are received will be reviewed by the SMBO and could possibly result in changes to the initially proposed language before the rule is filed with the Common Sense Initiative Office. 

    While it remains to be seen what the final result will be, the SMBO (along with many other state medical boards) is certainly to be commended for continuing to tackle this issue in a forthright manner - seeking to balance its mandate to protect the interests of the public on the one hand, with the current and future status of the daily practice of medicine on the other.  With disquieting projected physician shortages, increasing financial burdens on government and family budgets, and inconceivable technological advances being made at precipitous pace, telemedicine is destined to become indispensable to the provision of medical care in all settings and circumstances.

    Stay tuned!


    [1] One Fish Two Fish Red Fish Blue Fish, by Dr. Seuss

    [2] Green Eggs and Ham, by Dr. Seuss

    [3] Horton Hears a Who!, by Dr. Seuss

    [4] I Can Read with My Eyes Shut, by Dr. Seuss

    Thursday
    Apr212016

    South Florida Physician Sentenced to Nine Years in Medicare Fraud Conspiracy

    Miami-area physician Henry Lora was sentenced to 108 months’ imprisonment and ordered to pay more than $30 million in restitution pursuant to his guilty plea to one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349; and one count of conspiracy to defraud the United States, receive health care kickbacks, and make false statements regarding health care, in violation of 18 U.S.C. § 371.

    According to the factual basis, which was signed by all parties and filed with the court in support of Lora’s guilty plea, Lora was a physician at, and for a time the medical director of, Merfi Corp, a now-defunct clinic that employed physicians, physician assistants, and other medical professionals. In exchange for bribes and kickbacks, Lora and his co-conspirators wrote prescriptions for home health care services, pharmaceuticals, and laboratory and diagnostic tests that were medically unnecessary. Lora and his co-conspirators also falsified patient records to make it appear as if Medicare beneficiaries qualified for these services, and caused the submission of claims for the unnecessary services to Medicare, which ultimately paid the claims.

    One of Lora’s co-conspirators was Isabel Medina, who owned Merfi Corp.  She pleaded guilty to her role in the conspiracy and was sentenced to 108 months’ imprisonment in March 2014.  Other co-conspirators, who worked primarily as patient recruiters, received sentences ranging from 24 to 27 months’ imprisonment. 

    Wednesday
    Apr202016

    Alert - West Virginia Updates its Telemedicine Law

    The telemedicine market is growing at an astonishing rate in the United States with more providers jumping on the band-wagon on a daily basis.  The advances in telemedicine technologies hold great promise to address some of the ailments within the healthcare market place, such as the increasing costs of healthcare, an aging population looking to stay in their own homes longer, and mounting incidences of chronic and lifestyle associated diseases. 

    The promise of telemedicine notwithstanding, obstacles abound and one misstep could be a costly one.  Not only is there a lack of uniform telemedicine laws among the states, within each state there is no single statute or regulation governing the practice of telemedicine.  Rather, in each state an assemblage of outdated and/or irreconcilable statutes and regulations (if there are any in the first place) must be divined including those addressing physician-patient relationships; teleprescribing; standards of care; consent issues; licensure requirements; pharmacy prohibitions; scope of practice; certificates of need; fee-splitting prohibitions; state privacy laws; and corporate practice of medicine prohibitions, just to name a few.   As a result, there has been a flurry of activity within various states seeking to address some of the main obstacles to telemedicine.  West Virginia is no exception.

    On March 24, 2016, West Virginia Governor Earl Tomblin signed into law House Bill No. 4463.  HB 4463 is, comparatively speaking, fairly comprehensive telemedicine legislation, addressing  standards of care issues, types of technologies that are permitted to be utilized, remote prescribing, and other general requirements relating to a proper telemedicine encounter.  The bill also authorizes the Board of Medicine and the Osteopathic Board to propose joint rules that implement further the statutory provisions contained with HB 4463.  The bill has an effective date of June 11, 2016. 

    Some of the highlights from the bill include:

     I.    Definition of Telemedicine. 

    • "Telemedicine" is defined as “the practice of medicine using tools such as electronic communication, information technology, store and forward telecommunication, or other means of interaction between a physician in one location and a patient in another location, with or without an intervening healthcare provider.”
    • “Telemedicine technologies" are defined as “technologies and devices which enable secure electronic communications and information exchange in the practice of telemedicine, and typically involve the application of secure real-time audio/video conferencing or similar secure video services, remote monitoring, or store and forward digital image technology to provide or support healthcare delivery by replicating the interaction of a traditional in-person encounter between a physician and a patient.”

     II.   Establishing the Physician-Patient Relationship through Telemedicine.

    (1) A physician-patient relationship may not be established through:

    • Audio-only communication;
    • Text-based communications such as e-mail, internet questionnaires, text-based messaging or other written forms of communication; or
    • Any combination of the above.

    (2) If there is no existing physician-patient relationship prior to the utilization of telemedicine technologies, or if services are rendered solely through telemedicine technologies, a physician-patient relationship may only be established:

    • Through the use of telemedicine technologies which incorporate interactive audio using store and forward technology, real-time videoconferencing or similar secure video services during the initial physician-patient encounter; or
    • For the practice of pathology and radiology, a physician-patient relationship may be established through store and forward telemedicine or other similar technologies.
    • Once a physician-patient relationship has been established, either through an in-person encounter or in accordance with either of the above, the physician may utilize any telemedicine technology that meets the standard of care for the particular patient presentation.

      III.   Additional Requirements to Practice Telemedicine. A physician using telemedicine technology shall:

    • Verify the identity and location of the patient;
    • Provide the patient with confirmation of the identity and qualifications of the physician;
    • Provide the patient with the physical location and contact information of the physician;
    • Establish or maintain a physician-patient relationship that conforms to the standard of care;
    • Determine whether telemedicine technologies are appropriate for the particular patient presentation for which the practice of medicine is to be rendered;
    • Obtain from the patient appropriate consent for the use of telemedicine technologies;
    • Conduct all appropriate evaluations and history of the patient consistent with traditional standards of care for the particular patient presentation; and
    • Create and maintain healthcare records for the patient which justify the course of treatment and which verify compliance with the requirements of this section,
    • The above requirements do not apply to the practice of pathology or radiology medicine through store and forward telemedicine.

      IV.    Standard of Care.  The practice of medicine via telemedicine technologies is subject to the same standard of care, professional practice requirements and scope of practice limitations as traditional in-person physician-patient encounters. Treatment, including issuing a prescription, based solely on an online questionnaire, does not constitute an acceptable standard of care.

      V.     Patient Records. The patient record established during the use of telemedicine technologies shall be accessible and documented for both the physician and the patient. All laws governing the confidentiality of healthcare information and governing patient access to medical records shall apply to telemedicine patient encounters. A physician must make the documentation of the telemedicine encounter easily available to the patient, and subject to the patient's consent, to any identified care provider of the patient.

      VI.    Prescribing Limitations.

    • A physician-patient relationship that utilizes telemedicine technologies only (no in-person encounter) may not prescribe to that patient any controlled substances listed in Schedule II of the Uniform Controlled Substances Act.
    • A physician may not prescribe any pain-relieving controlled substance listed in Schedules II through V of the Uniform Controlled Substance Act as part of a course of treatment for chronic non-malignant pain solely based upon a telemedicine encounter.

    However, a physician is not prohibited from using audio-only or text-based communications to:

    • Responding to call for patients with whom a physician-patient relationship has been established through an in-person encounter by the physician;
    • Providing cross coverage for a physician who has established a physician-patient relationship with the patient through an in-person encounter; or
    • Providing medical assistance in the event of an emergency situation.
    Thursday
    Apr142016

    SCOTUS Holds Pre-Trial Freeze of Defendant’s “Untainted” Assets a Violation of Sixth Amendment

    In 2012, a federal grand jury indicted Sila Luis, along with two other individuals, for paying and conspiring to pay kickbacks for patient referrals and conspiring to defraud Medicare. Allegedly, Luis was orchestrating a Medicare fraud scheme that involved giving kickbacks to nurses for recruiting patients who enrolled with her home healthcare companies. Patients who did enroll were also allegedly paid a kickback. Moreover, Luis' home healthcare companies allegedly billed Medicare for either unnecessary or unprovided medical services to patients in the home healthcare network. The government alleged that, even though Medicare had paid out an astonishing $45 million to Luis over the course of her alleged fraudulent activity, her total assets were valued at just $2 million at the time of her indictment.

    Hoping to preserve the availability of Luis' assets for potential restitution and the payment of fines if Luis was convicted, the government brought a civil action under 18 U.S.C. 1345, which allows for a pretrial motion to restrain assets of a defendant accused of particular types of criminal fraud, such as those underlying Luis' indictment. Accordingly, upon the government’s request, the District Court for the Southern District of Florida issued a pretrial order to restrain all of Luis’ assets, including those substitute assets not directly connected to the alleged crimes. Luis appealed to the Eleventh Circuit Court of Appeals, arguing that restraining her “untainted” assets prevented her from hiring a criminal defense attorney of her choosing, in violation of her right to counsel under the Sixth Amendment to the Constitution. In arguing that the order was constitutional, the government asserted that Luis’ Sixth Amendment rights do not give her a right to counsel that she cannot afford, and that the government has a strong interest in ensuring money is available to fulfill a criminal judgment, whether from directly forfeitable assets or substitute assets.

    The Eleventh Circuit affirmed the district court’s decision, and the Supreme Court granted a writ of certiorari on June 8, 2015 to resolve the circuit court split on the question of whether the pretrial restraint of assets that are not directly related to the underlying fraud and are needed to retain defendant’s counsel of choice violate the Fifth and Sixth Amendments. In a plurality opinion with a 5-3 ruling, Chief Justice Roberts and Justices Breyer, Ginsburg, and Sotomayor voted to upend the judgment, and Justice Thomas concurred in a separate opinion. Writing for the Court’s main opinion, Breyer reasoned that although a defendant’s right to counsel is not unlimited, it is fundamental and protects Luis from a court freezing her “untainted” assets. According to the Court, Luis’ right to counsel should not be undermined or outweighed by the governmental interest of ensuring a defendant’s assets are available to pay fines or restitution.

    The impact of the Luis ruling remains unclear, however, considering that the government remains free to restrain assets connected to the underlying crime, and courts remain free to use tracing rules to differentiate tainted from untainted assets if and when they appear intermingled. Nonetheless, the Luis decision remains a win for the criminal defense bar.