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Health Care Prosecutions Continue in New Administration

Speculation is rampant concerning if and how the priorities of the U.S. Department of Justice will change under Attorney General Sessions. Looking at it from a different perspective, it is likely that certain priorities of the Obama administration will remain. Below I highlight a few recent cases involving healthcare prosecutions – an area that is likely to remain active over the next four years.

The investigation of these matters undoubtedly took place prior to the current administration. Nevertheless, the significant dollars spent on healthcare by private insurers and the federal government alike will require the DOJ to be focused on allegations of healthcare fraud in the future. A link to the DOJ press release follows each bullet.

  • On March 6, the operator of a Los Angeles rehabilitative clinic was sentenced to 63 months imprisonment for a $3.4 million Medicare fraud scheme. The defendant, Simon Hong, pled guilty based on the allegation that he billed for occupational therapy services that were not medically necessary and not provided. Instead, patients received acupuncture and massage therapy, which were not properly reimbursable by Medicare. At Hong’s direction, co-conspiring therapists inappropriately billed the “treatment” as legitimate occupational therapy.  LINK
  • In early-March, a federal jury convicted Rex Duruji for his role in a healthcare fraud and conspiracy totaling $1.3 million. During the four-day trial in Houston, Texas, the government presented evidence that Mr. Duruji posed as a physician to induce Medicare beneficiaries to sign up for home-health services that were not provided. There was also evidence admitted at trial that Medicare beneficiaries were paid kickbacks for those claims.  LINK
  • On March 1, two Florida residents pled guilty for their role in a $20 million healthcare fraud conspiracy that paid for referrals for patients to home-health care.  Mildrey Gonzalez and Milka Alfaro, co-owners and operators of seven health agencies in the Miami area, were alleged to have paid bribes and kickbacks to physicians and other health professionals for prescriptions for home-health services and for referral of Medicare patients to their home-health agencies.  LINK



Sexual Harassment Claims at Educational Institutions, including Medical Residence Programs, Covered by Both Title VII and Title IX

On March 7, 2017 the Third Circuit issued its opinion in Doe v. Mercy Catholic Med. Ctr., 16-1247, --- F.3d ----, 2017 WL 894455 (3d Cir. Mar. 7, 2017) addressing two matters of first impression in the Third Circuit: (a) whether a hospital’s residency program was an education program under Title IX of the Education Amendments of 1972; and (b) whether an employee of an educational program covered by Title IX could seek relief for sex discrimination despite the availability of relief under Title VII. 

In Doe, plaintiff, a former medical resident of the defendant medical center, a private teaching hospital with a medical program, brought a claim of sex discrimination against Defendant.  The District Court dismissed plaintiff’s complaint, finding that Mercy was not an “education program or activity” under Title IX. 

The Third Circuit found that Title IX applied to Mercy’s medical residency program.  The Court recognized that “education program or activity” was left undefined by statute but that Mercy’s position that the statute only applies to entities (unlike Mercy), principally engaged in providing educational offerings was untenable given the wide breadth of Title IX.  The Third Circuit found that a “program or activity” is covered by Title XI “if it has features such that one could reasonably consider its mission to be, at least in part, educational.” Id. at *6 (internal quotation marks and citations omitted).  The holding is in accord with case law from the First, Second, Eight, and Ninth Circuits as well as the interpretations of twenty-one federal agencies.  Id. at *6.  

In analyzing the framework for the “educational program or activity” inquiry, the Court considered whether:

(A) a program is incrementally structured through a particular course of study or training, whether full- or part-time; (B) a program allows participants to earn a degree or diploma, qualify for a certification or certification examination, or pursue a specific occupation or trade beyond mere on-the-job training; (C) a program provides instructors, examinations, an evaluation process or grades, or accepts tuition; or (D) the entities offering, accrediting, or otherwise regulating a program hold it out as educational in nature.


The Court noted that Mercy’s program had various trappings of an educational program (e.g. lectures, exams, and a general focus on regimented training and studying) which showed that its mission was, at least in part, educational.  The Court also found that that Mercy’s association with Drexel University’s medical school (where plaintiff, in fact, took certain classes) supported a finding that Mercy was covered by Title IX.  Id. at *7.   

The Third Circuit then addressed whether plaintiff’s discrimination claims were cognizable as private causes of action under Title IX.  Id. at *8.  The Court noted, pertinently, that Title IX, unlike Title VII, does not require administrative exhaustion as prerequisite of suit, potentially putting the statute in tension with Title VII’s exhaustion requirements.  While plaintiff may have been a student as well as an employee, plaintiff still fit the bill of employee: she provided various services to Mercy as a medical resident; she received a work schedule; and, the Court presumed, she received taxable payments from Mercy for her services.  The Court concluded that Plaintiff could pursue a Title IX claim despite her ability to also pursue relief under Title VII.  The court therefore found that Title IX protects both students and employees and that Plaintiff’s Title IX claims were legally cognizable. 

The Third Circuit noted that its decision was in line with decisions from the First and Fourth Circuits but at odds with decisions from the Fifth and Seventh Circuits, the latter Circuits holding that Title VII is the exclusive federal remedy for sex discrimination claims by employees against their employers. Given the widening circuit split on this crucial issue, it is likely only a matter of time before the issue comes before the U.S. Supreme Court.  In the interim, employers whose mission, at least in part, may be deemed educational may incur exposure under Title IX from sex discriminations claims without the protections of administrative exhaustion requirements.    


Mobile Health App Makers Investigated for Fraud Enter into Settlement With the Office of the Attorney General for the State of New York

New York State Attorney General, A.G. Schneiderman, has put mobile health application developers on notice - “We won’t tolerate non-evidence-based apps that threaten the wellbeing of New Yorkers”.

On March 23, 2017, AG Schneiderman announced settlements with three mobile health application developers after a year-long investigation into the marketing of mobile health applications distributed through Apple’s App Store and Google Play.  Three of the companies targeted in the investigation Cardiio, Runtastic, and Matis each entered into settlement agreements that require the companies to: (1) provide additional information about the testing of their apps; (2) change their ads to make them non-misleading; (3) post clear and prominent disclaimers informing consumers that the apps are not medical devices and are not approved by the FDA; and, (4) to pay $30,000 in combined penalties to the Office of the Attorney General.

The settlements also require the developers to make certain fundamental changes to their apps to protect consumers’ privacy. The developers are now required to (1) secure affirmative consent to their privacy policies for these apps; and (2) disclose what information they collect and share that may be personally identifying, including a users’ GPS location, unique device identifier, and “deidentified” data that third parties may be able to use to re-identify specific users.

Cardiio is an app “downloaded hundreds of thousands of times that claims to measure heart rates” during rigorous exercise, yet the accuracy of the app had not been tested for that purpose.  The Runtastic app “purports to measure heart rate and cardiovascular performance under stress” and again, as noted by the N.Y. AG’s office, the developer had failed to test the apps accuracy with users who had engaged in vigorous exercise.  Matis, an app downloaded hundreds of thousands of times, had previously claimed that its app could turn any smartphone into a fetal heart monitor, despite the fact that: (1) it had never been approved by the FDA; and, (2) it never conducted a comparison to an FDA approved fetal heart monitor or any other device that had been scientifically proven to amplify the sound of a fetal heartbeat.

In announcing the settlement with these three companies, AG Schneiderman noted that “Mobile health apps can benefit consumers if they function as advertised, do not make misleading claims, and protect sensitive user information”.

Although the Cardiio, Runtastic and Matis settlements primarily involved issues of fraudulent advertising and privacy --- developers of health care apps and software should take notice of the U.S. Food and Drug Administration regulations and guidance’s pertaining to certifications of “Mobile Medical Applications”. Generally speaking, the U.S. Food, Drug and Cosmetic Act prohibits manufacturers from distributing in interstate commerce any new medical device for any intended use that the FDA has not approved as safe and effective or cleared through a substantial equivalence determination. The FDA has determined that mobile medical applications, including those used on mobile phones (“MMA”), are in fact medical devices if they are intended to either: (1) be used as an accessory to a regulated medical device; or (2) to transform a mobile platform into a regulated device. Further, if a MMA is intended for use in performing a medical device function (i.e. for diagnosis of disease or other conditions, or the cure, mitigation, treatment, or prevention of disease) it is a medical device regardless of the type of platform on which it is run.

The Cardiio, Runtastic and Matis settlements are an important reminder that as technology, including the use of telemedicine, continues to integrate steadily into the provision of all manner of patient care, depending upon a health care application’s intended use, the developer of an app could quickly find itself involved in claims that go well beyond false advertising and privacy concerns. Rather, it could get caught up in more serious claims of civil and criminal health care fraud based upon the use of the MMA in treating a patient if there is a submission of a claim for reimbursement under a government health care program.


Telemedicine Alert


The State Medical Board of Ohio (SMBO) has released Rules 4731-11-01 and 4731-11-09 which take effect March 23, 2017.  As previously reported in Ohio Medical Board Telemedicine Prescribing Rule Update, the SMBO has chosen to take an approach consistent with several other states’ more recent statutory/regulatory amendments to their telemedicine rules.  That is, rather than delineating a set of specific  requirements as to how a physical exam should be conducted remotely, the SMBO has taken a more balanced approach focusing instead on documentation of the visit, informed consent, follow-up care, etc.  With regard to the issue of how to properly conduct a remote physical exam, the rule leaves the discretion of whether or not telemedicine is the appropriate forum for the patient visit where it belongs, with the provider. 

As an initial matter, Rule 4731-11-09 defines “informed consent” as:

[a] process of communication between a patient and physician discussing the risks and benefits of, and alternatives to, treatment through a remote evaluation that results in the patient's agreement or signed authorization to be treated through an evaluation conducted through appropriate technology when the physician is in a location remote from the patient.

Further, a “patient” is defined as:

[a] person for whom the physician provides healthcare services or the person's representative.

Additional definitions and references of importance are contained within Rule 4731-11-01.

With regard to the central purpose of 4731-11-09, Prescribing to persons not seen by the physician, the rule now authorizes a provider to prescribe non-controlled substances to a patient whom the provider has never physically examined and who is in a remote location from the provider, when the provider:

  • 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 contraindications to the recommended treatment;
  • Documents the consent to remote care, pertinent history, contraindications and referrals made to other providers;
  • Provides appropriate follow-up care or recommended 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.   

In a departure from other states, Ohio’s new regulation also permits prescribing of controlled substances to a patient located remotely from the provider in the following instances:

  • On-call/cross-coverage arrangements of active patients of a physician and the physician complies with the standards of prescribing non-controlled substances to remotely located patients;
  • The patient is: (1) physically located in a hospital/clinic that is DEA registered to personally furnish or provide controlled substances; (2) is being treated by a healthcare provider acting in the usual course of their practice and within the scope of their license, and they are DEA registered to prescribe controlled substances in Ohio;
  • The patient is being treated by, and in the physical presence of, a healthcare provider acting in the usual course of their practice and within the scope of their professional license, and is DEA registered to prescribe controlled substances in Ohio;
  • The physician has obtained from the DEA a special registration to prescribe or otherwise provide controlled substances in Ohio; and
  • The physician is: (1) the medical director, hospice physician, or attending physician for a "hospice program" licensed in Ohio or, (2) is a medical director or attending physician for an "institutional facility" licensed in Ohio, and (3) in either instance: (a) the patient is enrolled in that hospice program or is an inpatient at the institutional facility, and (b) the prescription is transmitted to the pharmacy consistent with Ohio board of pharmacy rules.

Interestingly, the regulation points out that “[n]othing in this rule shall be construed to imply that one in-person physician examination demonstrates that a prescription has been issued for a legitimate medical purpose within the course of professional practice.”  Again, in my opinion, this emphasizes that the burden is on the provider to demonstrate that the appropriate standard of care has been met for each patient seen, whether or not in-person or remotely.

With regard to disciplinary enforcement by the SMBO, the regulation notes that “A violation of any provision of this rule, as determined by the board, shall constitute any or all of the following”:

  1. "Failure to maintain minimal standards applicable to the selection or administration of drugs," as that clause is used in division (B)(2) of section 4731.22 of the Revised Code;
  2. "Selling, prescribing, giving away, or administering drugs for other than legal and legitimate therapautic purposes," as that clause is used in division (B)(3) of section 4731.22 of the Revised Code; or
  3. "A departure from or the failure to conform to minimal standards of care of similar practitioners under the same or similar circumstances, whether or not actual injury to a patient is established," as that clause is used in division (B)(6) of section 4731.22 of the Revised Code.

For a copy of the new rule, click on the following embedded links: 4731-11-09 and 4731-11-01.


Odebrecht and Braskem to Pay Record-Setting FCPA Penalty

Brazilian conglomerate Odebrecht S.A., and its affiliated petrochemical company, Braskem S.A., agreed to pay at least $3.2 billion combined to resolve criminal charges that the companies conspired to violate the anti-bribery provisions of the Foreign Corrupt Practices Act.  The scheme, as described by the government in documents filed in the U.S. District Court for the Eastern District of New York, ran from 2001 to 2015, during which time the companies employed “an elaborate, secret financial structure” to pay almost $800 million in bribes on three continents. Odebrecht kept Brazilian politicians on retainer, and the politicians favored the company with the passage of friendly tax legislation and contracts with the state-owned oil firm, Petrobras. Set forth below are the most interesting aspects of the largest anti-corruption settlement history:

  • The U.S. Sentencing Guidelines call for an even larger payout. The parties agreed that, under the Guidelines, Odebrecht’s base penalty is $3.336 billion and the appropriate multiplier is between 1.8 and 3.6, for a total range of between $6.0048 and $12.0096 billion. For Braskem, the Guidelines establish a base penalty of more than $465 million, a multiplier of between 1.6 and 3.2, and a total penalty of between $744 million and almost $1.5 billion.
  • The government agreed to a below-Guidelines fine based on cooperation and ability to pay. Because of Odebrecht and Braskem’s cooperation in ongoing investigations, the government agreed to recommend reductions for both companies. Odebrecht got a 25% reduction beyond the bottom end of the Guidelines range to $4.5 billion, while Braskem received a 15% discount to $632 million.  The government agreed to further reduce Odebrecht’s penalty based on the company’s attestation that it cannot pay all $4.5 billion and stay afloat.
  • The exact amount of the fine will not be determined until sentencing. To secure the ability-to-pay settlement, Odebrecht has opened its books to the government, which could advocate for a larger amount at sentencing if it feels the company can pay more while remaining in business.  During the plea hearing, U.S. District Judge Raymond Dearie expressed skepticism about letting the company plead guilty without knowing what the penalty would be, but defense counsel assured the Court that Odebrecht understood the parameters of the deal.
  • Braskem also resolved a civil case filed by the SEC based on the same allegations. The company agreed to disgorgement of $325 million in profits, bringing the total recovery from Odebrecht and Braskem to approximately $3.6 billion.
  • Most of the recovery will go to Brazil. As Brazilian authorities led the investigation and the Brazil suffered most of the loss, the Brazilian government will recoup more than 70% of the total penalty.  The rest will be split between the United States and Switzerland. 

SCOTUS Asked to Determine Third Party Subpoena Standard in Criminal Cases

A petition for writ of certiorari to the U.S. Supreme Court filed on October 18 could lead to much-needed guidance on the circumstances under which criminal defendants can serve subpoenas on third parties. Michael T. Rand, a former Beazer Homes USA executive convicted of conspiring to commit securities and accounting fraud and sentenced to 10 years’ imprisonment, asked the Court to consider whether the standards set forth United States v. Nixon, 418 U.S. 683 (1974), apply to subpoenas served on third parties pursuant to Federal Rule of Criminal Procedure 17.

Under Rule 17(c)(1), “[a] subpoena may order the witness to produce any books, papers, documents, data, or other objects the subpoena designates.” On a timely filed motion, “the court may quash or modify the subpoena if compliance would be unreasonable or oppressive.” Id. 17(c)(2).

In Nixon, the Supreme Court articulated a heightened standard for subpoenas served on the prosecuting authority, requiring that such subpoenas seek specific, relevant, and admissible evidence. 418 U.S. at 700.  In so holding, the Court recognized that Federal Rule of Criminal Procedure 16 entitles the defendant only to limited discovery from the government. If Rule 17 expanded those limits, it reasoned, Rule 16 would have no meaning.

The Nixon Court expressly left open the question whether “a lower standard exists” when the subpoena “is issued to third parties.” Id. at 699 n.12.  However, many – if not most – courts have applied the heightened Nixon standard to third party subpoenas.  That includes the U.S. District Court for the Western District of North Carolina, which denied Rand’s request to subpoena accounting records from his former employer, and the U.S. Court of Appeals for the Fourth Circuit, which affirmed the denial of the subpoena and Rand’s conviction and sentence.

Other courts have applied a more permissive standard – i.e., the plain language of Rule 17(c) – when evaluating requests to issue third party subpoenas. While no Circuit Court has held that Nixon does not extend to such subpoenas, there are intra-circuit disagreements as to the appropriate standard.  Indeed, even intra-district divisions persist, with judges in districts that handle a substantial number of white collar criminal matters, such as the Southern District of New York and the Western District of North Carolina, imposing different standards on third party subpoenas.

Moreover, there is a strong textual argument that the Fourth Circuit and the other cases that have applied Nixon to third party subpoenas have gotten it wrong. Rule 16’s limitations apply only to the defendant’s right to seek discovery from the government and the government’s reciprocal right to seek discovery from the defendant.  No rule curbs the parties’ ability to seek discovery from third parties; indeed, as stated above, Rule 17 requires the production of “any books, papers, documents, data, or other objects the subpoena designates” and permits court intervention, on timely motion, only when “compliance would be unreasonable or oppressive.”  

The Supreme Court declines many more cases than it hears.  In the last decade, it has granted between 1% and 7% of petitions for a writ of certiorari in criminal cases, depending on the year.  While any individual case is a long shot for high court review, (1) the division among lower courts on whether to apply Nixon to third party subpoenas, and (2) the viable argument that such an application offends the plain language of Rule 17 – and impermissibly curbs a defendant’s right to acquire evidence that would assist in his defense – hopefully will increase the odds that the Court considers this important issue.         


The Yates Memo in Healthcare: Pursuing Civil, Criminal, and Administrative Penalties

It has been a year since the Yates Memo memorialized and clarified the government’s policy on individual accountability for corporate wrongdoing.  Initially, there was some debate whether the Yates Memo would change government practice, as many government officials and others saw it as a continuation of policy, rather than a significant departure from prior practice.  But a year in, it has become apparent that the government has placed a greater emphasis on pursuing individuals.  One arena where that emphasis is particularly apparent is healthcare. Below is a brief summary of some of most significant actions – both criminal and civil – that the government has taken against individuals in the healthcare industry. 

In United States v. Facteau, Case No. 1:15-CR-10076 (D. Mass.), the government charged former Acclarent executives, William Facteau and Patrick Fabian, with felonies relating to the off-label marketing of a nasal device, which the defendants allegedly promoted in an aggressive fashion to make the company attractive for purchase or an initial public stock offering.  On July 20, 2016, Facteau and Fabian, who succeeded in selling the company to Johnson & Johnson, were acquitted of the felony charges but convicted of misdemeanors.

On September 27, 2016, the former CEO of Tuomey Healthcare System, Ralph J. Cox, III, agreed to pay $1 million and to a four-year exclusion from participation in federal healthcare programs to settle claims involving his role in that system’s violation of the Stark Law.  As part of the settlement, Cox did not admit liability.  The resolution against the individual came after Tuomey suffered defeat in a jury trial and the district court entered a judgment under the False Claims Act in favor of the United States for $237.4 million. United States ex rel. Drakeford v. Tuomey Healthcare System, Inc., Case No. 3:05-CV-02858 (D.S.C.). The government later agreed to resolve the judgment against Tuomey for $72.4 million. 

On October 12, 2016, four former executives of American Senior Communities, an Indiana nursing home chain, were indicted for their alleged roles in a kickback and fraudulent overbilling scheme. United States v. Burkhart, Case No. 1:16-CR-212 (S.D. Ind.).  It is unclear whether an investigation against the corporate entity persists.

June 22, 2016, saw an unprecedented nationwide sweep led by the multi-agency Medicare Fraud Strike Force that resulted in the arrest of 301 individuals, including 61 healthcare professionals, in 36 districts.  The individuals were all charged with participating in various fraudulent schemes, which allegedly resulted in approximately $900 million in false billings to Medicare.

Finally, though the case has not yet yielded actions against individuals, Pfizer and Wyeth’s $785 million settlement to resolve allegations of reporting false drug prices to Medicaid included cooperation provisions. United States ex rel. Kieff v. Wyeth Pharmaceuticals Inc., Case Nos. 03-CV-12366, 06-CV-11724 (D. Mass.) Under those provisions, the companies must: cooperate with investigations concerning “individuals and entities not released” from liability in the settlement; make “former directors officers and employees available for interviews and testimony”; and produce to the government non-privileged documents concerning the conduct covered in the settlement.  Thus far, the government has required cooperation provisions in 46% of all corporate settlements in Fiscal Year 2016. 


Telemedicine- Just a Fancy Word for Plain Old Medicine?

Although “telemedicine” is not some new type of medical breakthrough but rather a vehicle for the delivery of “medicine”, its wide-spread use in delivering medical care in many different scenarios can get bogged down by serious regulatory issues such as: the lack of medical license reciprocity among the states (notwithstanding an increasing number of states adopting the Federation of State Medical Boards Interstate Medical Licensure Compact); the type of informed consent that needs to be given before care is rendered via telemedicine; differing opinions from state-to-state about the standards of care specific to medical care delivered via “telemedicine”; inefficient availability of patient’s medical records and the privacy of those records from state-to-state; requirements for certificates of need in some states to practice even basic forms of medicine; even the types of entities that can legally employ doctors varies among the states.  A high profile example of the challenge of standard of care issue’s confronting medical boards is well documented in the high-profile Texas cases involving Teladoc.

But numerous other states are having their own challenges that are not much different from Texas.  For example, Ohio and Arkansas have had their own challenges.

Even in the absence of these regulatory issues in some states, you still have the fact that health insurers’ payment for telemedicine services currently amounts to less than 1 percent of all of the reimbursements paid to health care providers and health care facilities, although there is some movement on these fronts too.

While the promise of telemedicine technology as a form of connecting providers with their patients continues to innovate exponentially, adoption is way behind innovation.  The hot topic for the past several years that garners the most news coverage is “convenience care”, but that is just one aspect of the true value that telemedicine can bring to the table in the delivery of medical care.  The real value of telemedicine can already be seen in “tele”stroke, “tele”pathology, and “tele”radiology programs that have well-documented success in larger health systems and even smaller ones too.  And the good news about the “non-convenience care” telemedicine programs is that they have fewer regulatory hurdles to address.  Curiously though, even these programs have not had universal adoption.

Still, there is one place in the United States where telemedicine is really taking off unencumbered and leading the way.  The United States Department of Veterans Health Administration (“VA”). 

In a recent article written by Greg Slabodkin and published in Health Data Management, it was reported that “2015 was a banner year for telemedicine at the VA, which conducted 2.14 million telehealth visits, reaching more than 677,000 veterans—or 12 percent of all vets—using real-time telemedicine, home telehealth care, and store-and-forward telemedicine”.  The article also points out that the “VA reported that home telehealth reduced hospital bed days of care by 58 percent, hospital admissions by 32 percent, while telemental health reduced psych bed days of care by 35 percent” and, according to the acting Executive Director of telehealth at the VA, Dr. Kevin Galpin, telemedicine is “mission critical”.

Mr. Sladbodkin’s article also points out the skepticism of some members of Congress about the VA’s telemedicine program.  Skepticism notwithstanding, it is nonetheless remarkable that the VA can even consider such an ambitious telemedicine program at all, let alone deem it to be “mission critical”.   Yet, when you think about it for a moment, it is not really that remarkable at all, because unlike everyone else, the regulatory hurdles that the VA faces in its embrace of telemedicine are few. 

For example:    

  • Cross-Border Licensure:  VA providers are only required to have one state-issued medical license to practice in any state if both the physician and patient, at the time of the telemedicine visit, are located in federally-owned facilities.
  • Other Regulatory Issues: Either non-existent due to federal preemption or certainly less of a hindrance.
  • Medical Records Interoperability: For the most part, active military and veteran medical records are available regardless of where they are located at the time care is sought.
  • Reimbursement:  The VA is funded by an annual budget from Congress enabling the VA to utilize telemedicine in the absence of reimbursement concerns.     

The early success of the VA’s telemedicine program is not really all that surprising.  It is the same type of care that you would receive had it been done in-person, but in this case, delivered via a different (and more modern) method of communication.  It enables the VA to harness telemedicine’s potential for efficiencies and better quality of care, which the VA desires to demonstrate and achieve.  The VA’s telemedicine program is detailed at  

If you would like to watch just one aspect of the VA’s use of “telemedicine” in the context of veteran’s continued mental well-being while in a VA facility, watch this VA produced video.

As the VA continues to document the successes of telemedicine across many different disciplines of medicine, their successes should advance telemedicine as being “mission critical” for all health care providers throughout the United States.       


SEC Announces Enforcement Results for FY 2016

This week, the Securities and Exchange Commission (“SEC”) announced its enforcement statistics for Fiscal Year (“FY”) 2016.  All told, the agency filed 868 enforcement actions, including a record 548 independent actions for violations of federal securities law, and recovered more than $4 billion in disgorgement and penalties.  The number of independent enforcement actions represents an 8% increase over the number of such actions filed in FY 2015 (507) and a 32% increase over those filed in FY 2014.

The agency has yet to release its Select SEC and Market Data, the report that will break down the quantity and types of enforcement actions pursued.  However, the overview contained in this week’s announcement provides some insight into the agency’s foci for the past year, and likely going forward. 

Foreign Corrupt Practices – The SEC filed 21 actions to enforce the Foreign Corrupt Practices Act (“FCPA”) and announced two non-prosecution agreements with companies that self-reported FCPA violations.  The 21 actions are a high-water mark for FCPA enforcement for the SEC.  The agency’s increased efforts to pursue American companies for conduct committed overseas is consistent with public statements made by SEC officials throughout FYs 2015 and 2016.  Businesses should anticipate that the SEC will increase its FCPA enforcement in the upcoming fiscal year.

Rewarding Whistleblowers – The SEC whistleblower program distributed to 13 recipients more than $57 million – more money than the program has distributed in all other years combined since its 2011 inception, and a 50% increase over its payouts from FY 2015 ($38 million). 

The SEC also brought the agency’s first-ever standalone action for retaliation against a whistleblower and charged three companies with violating Exchange Act Rule 21F-17, which prohibits the use of confidentiality agreements to impede a whistleblower from communicating with the SEC.  These protective actions on behalf of whistleblowers, coupled with ever-growing distributions, signal that the SEC has an increased sense of purpose surrounding the development of its whistleblower program.

Gatekeepers – The SEC publicized its efforts to hold so-called “gatekeepers,” such as attorneys, accountants, and auditors, accountable for the failure to comply with professional standards.  It filed actions against auditing firms for violating auditor independence rules and conducting deficient audits; it sanctioned a consultant for improperly evaluating the severity of the company’s internal control deficiencies; and it charged attorneys with allegedly offering EB-5 investments while not being registered brokers. 

The agency’s emphasis on such actions furthers a trend that began in 2014 with the SEC “Gatekeeper Enforcement Initiative.” The focus on gatekeepers also aligns with the SEC’s recent public statements regarding the importance of ensuring that these individuals are satisfying their professional obligations.



Georgia-Based Hospital Group to Pay Over $513 Million to Resolve Civil and Criminal Allegations Related to Illegal Payments for Patient Referrals

On Monday, the DOJ announced the resolution of criminal allegations and a False Claims Act (“FCA”) lawsuit a relating to a scheme to defraud the United States and obtain kickbacks in exchange for patient referrals.  A major U.S. hospital chain, Tenet Healthcare Corporation and two subsidiaries, Atlanta Medical Center, Inc. and North Fulton Medical Center, Inc., will pay over $513 million pursuant to a series of agreements, including a civil settlement agreement, non-prosecution agreement, and plea agreements:

FCA settlement:  Tenet Healthcare and related entities – described in the settlement as “the Tenet Entities – agreed to pay $368 million to the federal government and to Georgia and South Carolina to resolve claims brought by a Georgia whistleblower.  The FCA suit was filed in the Middle District of Georgia and claimed that Tenet Healthcare paid bribes and kickbacks to pre-natal clinics to unlawfully refer Medicare and Medicaid patients to its hospitals.  The whistleblower will receive $84 million under the agreement.  The agreement stated that the Tenet Entities denied any liability regarding the false claims allegations.

Non-prosecution agreement:  Tenet HealthSystem Medical Inc., the corporate parent of Tenet Healthcare, entered into a non-prosecution agreement (“NPA”) with DOJ based on similar allegations to those within the FCA case.  The NPA allows the two companies to avoid criminal prosecution in exchange for following the agreed-upon terms.  The criminal allegations at the heart of the NPA focused on an alleged conspiracy to defraud the United States and to violate the Anti-Kickback Statute, which bars illegal payments that induce patient referrals for services paid for by federal health care programs.  Under the NPA, Tenet HealthSystem and Tenet Healthcare will avoid criminal prosecution if they cooperate with the government’s prosecution and strengthen their internal controls, including their compliance and ethics programs.  The NPA is effective for three years, although it may be extended for an additional year if necessary.

Plea agreements:  Two subsidiaries of Tenet Healthcare, Atlantic Medical Center and North Fulton Medical Center, agreed to plead guilty to a criminal information for their role in the conspiracy, as referenced above, to defraud the United States and violate the Anti-Kickback Statute.  Under the plea agreements, the two healthcare will forfeit over $145 million to the United States, collectively representing the amount paid to the two entities by the federal Medicare and Georgia Medicaid programs for services paid to patients referred as part of the conspiracy.

Additional information, including the FCA settlement agreement, NPA, and criminal information can be found here.

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