New conflicts of interest disclosures will broaden physicians' reporting obligations.

Medical doctors face conflict of interest rules when they recommend dietary supplements to patients and profit from in-office sales of nutritional products.  (When Integrative Medicine Physicians Sell Dietary Supplements: Legal Issues).

But conflict of interest rules also apply to payments made to doctors for research, as well as for travel, consulting and speaking, and in other contexts.  New rules are likely to increase physicians' disclosure obligations.

According torecent reports,

Officials said the disclosures increased the likelihood that doctors would make decisions in the best interests of patients, without regard to the doctors’ financial interests.

Large numbers of doctors receive payments from drug and device companies every year— sometimes into the hundreds of thousands or millions of dollars— in exchange for providing advice and giving lectures.

... Under the new standards, if a company has just one product covered by Medicare or Medicaid, it will have to disclose all its payments to doctors other than its own employees. The federal government will post the payment data on a Web site where it will be available to the public.

Manufacturers of prescription drugs and devices will have to report if they pay a doctor to help develop, assess and promote new products— or if, for example, a pharmaceutical sales agent delivers $25 worth of bagels and coffee to a doctor’s office for a meeting. Royalty payments to doctors, for inventions or discoveries, and payments to teaching hospitals for research or other activities will also have to be reported.

Calls for increased transparency are part ofhealth care reform:

The"Physician Payment Sunshine" provisions of the Affordable Care Act (ACA), require that drug, medical device, biologic, and medical equipment manufacturers that produce any products covered by Medicare or Medicaid or the Children's Health Insurance Program must report all payments made to doctors and hospitals.

The government will post the financial relationship information on a public website where patients and anyone else can check what ties to the medical industry a given doctor has....

The law requires disclosure of payments for food, entertainment, gifts, consulting fees, honoraria, research funding or grants, education or conference funding, royalties or licenses, and charitable contributions.

Medical companies, as well as group purchasing organizations (GPOs), will also have to report stock ownership and investments held by doctors.

There are already existing legal obligations governing physician referrals to medical entities in which they have a financial interest.  The new rules add to these established self-referral and anti-kickback rules and also operate whether or not a referral is involved.

***

Michael H. Cohenis a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets.  As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era.Clients seek Michael H. Cohen's legal expertise on business structure andentity formation(corporations, partnerships, LLCs); health care licensing matters;employment contracts and independent contractor agreements;dispute resolution;e-commerce;intellectual propertyissues; informed consent and malpractice liability issues;HIPAA and confidentiality and privacy issues;Stark, self-referral, anti-kickback, patient brokering, and fee-splittingquestions;dietary supplement labeling; medical device and FDA matters;insurancereimbursement and Medicare issues;website disclaimers;concierge medicinelegal advice;telemedicine; and otherbusiness law and health care regulatory compliance arenas.  Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice law in California, Massachusetts New York, and Washington, D.C. Contact our attorneys  firm today.

Coordinated government enforcement targets fee-splitting, Stark and kickback fraud and abuse in health care.

Each day there are new reports of health care fraud enforcement actions, both under Medicare and state law. It is much easier to find and go after health care fraud and abuse than ever:

... in 1996, the federal government broadened the Health Insurance Portability and Accountability Act of 1996 [HIPAA] to extend criminal penalties to inducements to refer to any federal healthcare insurance program, including insurers and providers. Congress enacted Title 18, United States Code, Section 1347, which, for the first time, specifically criminalized any scheme to defraud a healthcare benefit program. By 1998, DOJ began to establish both criminal and civil healthcare fraud coordinators in all ninety-four U.S. Attorneys’ offices, beginning the trend to unify and standardize national healthcare investigations and prosecutions.

After a modest increase in healthcare costs in the mid-1990s, from 1999 through the first ten years of the twenty-first century, healthcare costs doubled in addition to growing again at twice the GDP.7 Again, much attention was focused on eliminating fraud from the national healthcare system. This time, with the underlying legal fabric in place, federal law enforcement established a unified, focused team of investigators and prosecutors to combat the problem. This tactic was new to healthcare prosecution, but had been effective in many other areas.

Modern computerized methods make it ever easier to conduct health care fraud investigations:

The philosophy was simple: analyze current billing data to find outliers—providers who were billing Medicare such exorbitant amounts that the only legitimate explanation was a fraudulent one... The data comes in many forms including provider claims, cost reports, prescription data, US. Securities and Exchange Commission, nonprofit, and UCC filings, among a myriad of other sources. Investigators analyze it in many ways through data queries, correlations, and trend analysis (by provider type, CPT code, locations, etc.). They perform peer  comparisons, statistical sampling, and conduct“impossible days” analyses—where providers billed for more than twenty-four hours of work in one day. They look for double billing and upcoding (billing for a more expensive service when a less expensive one was actually performed). These analyses help determine whether fraud is evident and if an investigation is warranted. 

(P. Katz, Medicare Strike Force). 

So it is no surprise that ourlaw officeis increasingly inundated with calls from various health care practitioners under investigation for various forms of health care fraud and abuse.  Some are medical doctors and osteopaths, while others are dentists, psychologists, nurses, or other kinds of health care professionals.

Practitioners are often unaware of how they have come to the attention of enforcement authorities or what they might have done to trigger an investigation.

We also receive calls aboutStark / self-referral, fee-splitting, and anti-kickbackconcerns from healthcare providers, institutions, and corporate entities as well as from entrepreneurs interested in launching multidisciplinary or other joint ventures. For example, we represent physicians who want to contract with chiropractors in professional medical corporations; practitioners of acupuncture and traditional oriental medicine; massage therapists; naturopathic doctors and naturopaths; herbalists; practitioners of homeopathy and physician homeopaths; healers; and others who want to know whether they could be engaging in illegal splitting or can find more legitimate ways of structuring their businesses.

All this enforcement activity also is increasing in the areas of unlicensed practice and scope of practice. Boards of medicine, nursing, psychology, and nutrition in particular are looking to investigate practitioners for unlicensed practice of medicine, unlicensed practice of psychology, and unlicensed practice of nutrition.  Practitioners who use touch but do not have a massage therapy license can also be at risk of unlicensed practice charges. 

And because the legal definitions of"diagnosis" and"treatment" are often interpreted so broadly, even licensed practitioners often find themselves under investigation by an enforcement agency for crossing the line into practice of medicine without a license, which is usually defined as a criminal activity.

More recently, we have represented clients under investigation for violation of laws relating to licensing of laboratories and laboratory tests.  Many are unaware of the federal Clinical Laboratory Improvements Act (CLIA) and of the need for CLIA certification or a CLIA waiver - particularly as these legal rules affect tests that are considered complementary or alternative to more accepted medical tests; or of state laws that track CLIA in terms of establishing parallel compliance parameters.

It is important to seek legal advice from a healthcare lawyer who knows the legal and regulatory enforcement landscape.  Federal law as well as state law can apply and the penalties can be severe. In many cases, there are coordinated enforcement efforts across agencies.

In addition, aiding and abetting charges can be brought to those who are helping practitioners engage in unlicensed practice.  Sometimes the activity might be thought of as innocent, but the practitioner or entrepreneur must understand that simply 'splitting the fee' and pocketing the difference can have legal consequences, as can hiring a practitioner who is trying to fit under a legal umbrella for non-licensed practice but engages in methods that can cross legal lines.

If you have questions about regulatory enforcement activities concerning multidisciplinary practices or healthcare enterprises involving a variety of disciplines, you may wish to consult our video resourcesor other materials, includinglegal referenceson this blog.

***

Michael H. Cohenis a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets.  As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era.Clients seek Michael H. Cohen's legal expertise on business structure andentity formation(corporations, partnerships, LLCs); health care licensing matters;employment contracts and independent contractor agreements;dispute resolution;e-commerce;intellectual propertyissues; informed consent and malpractice liability issues;HIPAA and confidentiality and privacy issues;Stark, self-referral, anti-kickback, patient brokering, and fee-splittingquestions;dietary supplement labeling; medical device and FDA matters;insurancereimbursement and Medicare issues;website disclaimers;concierge medicinelegal advice;telemedicine; and otherbusiness law and health care regulatory compliance arenas.  Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice law in California, Massachusetts New York, and Washington, D.C. Contact our attorneys  firm today.

Several medical device manufacturer executives were given long terms for rogue clinical trials.

Four executives in total weresentenced- they each had pleaded guilty to one misdemeanor count of shipping adulterated and misbranded Norian XR in interstate commerce.

Bohner is the last of four executives to be sentenced in the case....On November 21, 2011, Bohner’s former colleagues Thomas Higgins and Michael Huggins received sentences of nine months in prison while former executive John Walsh received a sentence of five months. The defendants, including Bohner, approved rogue clinical trials using the bone void fillers Norian SRS and Norian XR to treat vertebral compression fractures of the spine (“VCFs”) in elderly patients, without the permission of the FDA. Despite known and serious safety concerns that the products could cause fatal blood clots, and despite a warning on the label of XR that the product was not intended for treatment of VCFs, Synthes did not stop the illegal testing until after a third patient had died on the operating table during the space of one year. During a follow-up FDA inspection in May and June 2004, three of the executives– including Bohner– also lied to the FDA investigator.

The district judge apparentlytold one defendant: "you failed."

Under Section 301(a) of the FDCA, the“introduction or delivery for introduction into interstate commerce of any food, drug, device, or cosmetic that is adulterated or misbranded” violates the FDCA. Under Section 301(k) of the FDCA, misbranding also includes:“the alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to, a food, drug, device, or cosmetic, if such act is done while such article is held for sale (whether or not the first sale) after shipment in interstate commerce and results in such article being adulterated or misbranded.

In the latter case, the government must establish two separate elements: (1) that the act in question occurred while the drug was“held for sale after shipment in interstate commerce;” and (2) that the act resulted in the article being misbranded.          

Enforcement actions against manufacturers for misbranding have resulted in substantial civil and criminal penalties.

This includes an agreement by Otsuka Pharmaceutical to pay over $4 million in fines to resolve allegations of off-label marketing (drug approved to treat adult schizophrenia and bi-polar disorder, marketed for geriatric patients suffering from dementia-related psychosis), an agreement by Cephalon to pay $425 million for off-label drug marketing (narcotic drug approved for ppioid-tolerant cancer patients, marketed for migraines, sickle-cell pain crises, injuries, and other uses), a$1.415 billion settlement by Eli Lilly for off-label drug marketing (approved anti-psychotic drug marketed to doctors for patients with sleep orders and dementia), and a $600 million settlement by Allergan for marketing Botox® for headaches and pains.

Anyone involved with a potential"medical device" under the federal Food, Drug& Cosmetic Act should consult an experienced FDA attorney for appropriate food and drug law advice.

***

Michael H. Cohenis a thought leader in health care law, pioneering legal strategies and solutions for business law clients in traditional and emerging healthcare. wellness, and lifestyle markets.  As a corporate and regulatory attorney who has also handled litigation matters, Michael H. Cohen represents conscious business leaders in a transformational era.Clients seek Michael H. Cohen's legal expertise on business structure andentity formation(corporations, partnerships, LLCs); health care licensing matters;employment contracts and independent contractor agreements;dispute resolution;e-commerce;intellectual propertyissues; informed consent and malpractice liability issues;HIPAA and confidentiality and privacy issues;Stark, self-referral, anti-kickback, patient brokering, and fee-splittingquestions;dietary supplement labeling; medical device and FDA matters;insurancereimbursement and Medicare issues;website disclaimers;concierge medicinelegal advice;telemedicine; and otherbusiness law and health care regulatory compliance arenas.  Whether advising start-ups or established companies, he brings his entrepreneurial spirit and caring insight to cutting-edge legal and regulatory challenges. Attorney Michael H. Cohen is admitted to practice in California, Massachusetts New York, and Washington, D.C. Contact attorneysat our Beverly Hills, California law firm today.