Category: Merle M. DeLancey Jr.

Compounding Pharmacies Should Expect Greater Scrutiny as Government Healthcare Budgets Get Squeezed

Merle M. DeLancey Jr.

As Congress continues to grapple over healthcare reform, there are many uncertainties. However, one thing is clear: as government healthcare funding shrinks, federal and state enforcement agencies will continue to target compounding pharmacies for potential fraud.

Compounded drug use and related government spending, particularly on topical creams and ointments, has skyrocketed. Many argue that drug compounding regulation remains murky, making it too easy to prosecute traditional compounders. Compounding advocates suggest regulation of compounders has been heavy-handed and ignores the multiple benefits associated with compounding. Continue reading “Compounding Pharmacies Should Expect Greater Scrutiny as Government Healthcare Budgets Get Squeezed”

Targeting Generic Drug Prices

Merle M. DeLancey Jr., James R. Staiger, and Jennifer J. Daniels

For years, states and the federal government focused their drug pricing enforcement efforts on higher priced and more expensive branded drugs. Not surprisingly, private qui tam lawyers followed on the coattails of these government enforcement efforts. The focus on branded drugs was not wrongheaded. States, the federal government, and qui tam plaintiffs were handsomely rewarded for such efforts, as in the multiple Average Wholesale Price (“AWP”) cases against brand manufacturers. However, while regulators focused on brands, they subsequently found that the pricing for generic drugs had increased unimpeded. In more recent years, the focus has shifted to generic drug price increases. For example, effective for the first time at the start of 2017, the Medicaid Program applied an inflation penalty component to Medicaid rebate payments for generic drugs. Historically, the inflation penalty applied only to branded drugs. The inflation penalty provides that when a drug’s price increases faster than the increases in the Consumer Price Index for All Urban Consumers, a manufacturer is required to pay an additional Medicaid rebate amount to state Medicaid programs. Continue reading “Targeting Generic Drug Prices”

DOJ’s New Healthcare Fraud Target—Medicare Advantage Insurers

Merle M. DeLancey Jr.

The government continues to seek ways to rein in healthcare costs. Now it has set its sights on the Medicare Advantage Program. Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. If you join a Medicare Advantage Plan, you still have Medicare, but you get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage from the Medicare Advantage Plan and not original Medicare. Medicare Advantage Plans may also offer extra coverage like dental, vision, hearing, and wellness programs. Continue reading “DOJ’s New Healthcare Fraud Target—Medicare Advantage Insurers”

Critical GAO Bid Protest Deadlines and Timeline

Merle M. DeLancey Jr.

Almost daily, clients call our office seeking to protest the award of a federal government contract. Unfortunately, sometimes these calls are too late. While contracts can be protested at the agency level, the Court of Federal Claims, and the Government Accountability Office (“GAO”), GAO protests are the most common. The deadlines by which a protester must take certain actions to file a timely protest are confusing. Below we address some of the trickier and/or mandatory deadlines a potential protester must meet to file a timely protest, and we provide a useful sample timeline for protesters to follow during this critical process. Continue reading “Critical GAO Bid Protest Deadlines and Timeline”

GSA’s Transactional Data Reporting Rule Ushers in a New Era

Merle M. DeLancey Jr. , Justin Chiarodo, and Philip Beshara

Last month, the General Services Administration (“GSA”) finalized a rule marking what the agency describes as the most significant development to its Schedules program in over two decades. The rule completely changes how GSA will analyze vendor pricing for products and services.

Under the rule, vendors will eventually be required to submit monthly transactional data reports with information related to orders and prices under certain GSA Schedule contracts and other vehicles. Along with the implementation of the new Transactional Data Reporting (“TDR”) requirement, GSA will relieve vendors from two preexisting compliance burdens—eliminating the Commercial Sales Practices (“CSP”) and Price Reductions Clause (“PRC”) reporting requirements when vendors begin submitting transactional data.

While vendors should welcome the relief provided from the elimination of two burdensome regulations, the shift to TDR will not be without cost and risk; and, the eventual efficiencies promised by GSA remain to be seen. Indeed, the impact of the change will likely extend beyond compliance burdens, with potential effects varying from the nature of False Claims Act suits to the potential publication of competitive information.

We summarize these and other key takeaways from the new rule below, and answer questions important to vendors as GSA rolls out this significant development. Continue reading “GSA’s Transactional Data Reporting Rule Ushers in a New Era”

Department of Labor Issues Final Rule Updating Sex Discrimination Guidelines

Merle M. DeLancey Jr. and Lyndsay A. Gorton

On June 15, 2016, the Department of Labor (“DOL”) Office of Federal Contract Compliance Programs (“OFCCP”) issued a final rule updating its 1970 sex discrimination guidelines. The final rule, available here, enforces Executive Order 11246, which prohibits federal contractors and subcontractors from employment discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. The rule applies to companies that have federal government contracts of $10,000 or more and will be effective on August 15, 2016. Continue reading “Department of Labor Issues Final Rule Updating Sex Discrimination Guidelines”

Supreme Court Affirms Small Business Preference Requirement in Veterans Affairs Contracts in Kingdomware Technologies, Inc. v. United States

Merle M. DeLancey Jr. and Lyndsay A. Gorton

On June 16, 2016, the Supreme Court issued a decision in Kingdomware Technologies, Inc. v. United States, available here, holding that the Veterans Benefits, Health Care, and Information Technology Act of 2006 (the “Veterans Act of 2006”) requires the Department of Veterans Affairs (“VA”) to conduct a “Rule of Two” analysis before a contract award. The unanimous decision, authored by Justice Clarence Thomas, holds that the Veterans Act of 2006 “unambiguously requires” the VA to use the Rule of Two before awarding a contract under competitive procedures even when the VA will otherwise meet its annual minimum small business contracting goals.

Kingdomware Technologies, Inc. is a veteran-owned small business (“VOSB”) that filed suit after unsuccessfully bidding for a VA emergency-notification services contract that was eventually awarded to a non-VOSB via the Federal Supply Schedule (“FSS”). In its protest to the Government Accountability Office, and subsequent suits in the Federal Circuit, Kingdomware argued that the VA violated the Veterans Act of 2006 by failing to award the contract to a VOSB because it did not award the contract based on the mandatory Rule of Two provision. The Rule of Two states that the VA “shall award” contracts to VOSBs when there is a “reasonable expectation” that two VOSBs will submit bids “at a fair and reasonable price that offers the best value to the United States.” Continue reading “Supreme Court Affirms Small Business Preference Requirement in Veterans Affairs Contracts in Kingdomware Technologies, Inc. v. United States“

We Just Received a Government Subpoena. Now What?

Merle M. DeLancey Jr., Steven J. Roman, James R. Murray, and Christian N. Curran

 

 

 

If you are a multi-million dollar company and receive a subpoena for your documents and records, you simply send it to the legal department. But what if you are a smaller healthcare provider? Responding to a government subpoena can be daunting, especially if it is your first one, and you may not have the personnel or resources to respond without a significant disruption to your business. Does the subpoena mean you or your company is about to be charged with a crime? Do you have to submit original records? Will the government insist on the production of all documents within the often broadly worded scope of a subpoena? How do you deal with electronic information on your computer system? How do you protect patient confidentiality? Will your insurance help with the costs of complying with the subpoena? What can you do to ensure the company is prepared ahead of time?

Step One: Issue a Document Hold Notice and Consult Counsel

The first thing you should do when you receive a government subpoena is issue a written notice to your employees to protect and maintain any documents and records that may be encompassed by the subpoena. As part of that process, you will also need to suspend any records destruction practices that you currently have in place. The failure to produce or preserve potentially relevant documents and information can result in significant exposure. Courts have regularly penalized companies and individuals who fail to produce or preserve potentially relevant materials. It is important to send the notice out as soon as possible and to thoroughly document its distribution. You should also simultaneously consult with counsel to review the subpoena and ensure that you are taking all necessary steps to preserve information. Continue reading “We Just Received a Government Subpoena. Now What?”

Medicare Advantage Program Enforcement: Increased Publicity May Lead to Increased Scrutiny

Merle M. DeLancey Jr. and Lyndsay A. Gorton

On May 19, 2015, the chairman of the Senate Judiciary Committee, Senator Charles E. Grassley (R-IA), requested information from United States Attorney General Loretta Lynch and Andrew M. Slavitt, Acting Administrator for Centers for Medicare and Medicaid Services (CMS) regarding how the agencies are working together and separately to prevent Medicare Advantage fraud. Senator Grassley’s letters rely on April 2015 investigative findings issued by the Center for Public Integrity for his assertion that there is “an increasing number of lawsuits against insurance companies” for Medicare Advantage fraud, and the Government Accountability Office’s (GAO) 2015 Annual Report, which suggests that CMS “could save billions of dollars by improving the accuracy of its payments to Medicare Advantage programs. . . .” To ensure that CMS has the appropriate “safeguards” in place to prevent fraud, Senator Grassley requested answers to the following questions by June 3, 2015:

  1. What steps has the Department of Justice (DOJ) taken, and is currently taking, to ensure that insurance companies are not fraudulently altering risk scores?
  2. Is DOJ working in conjunction with CMS to investigate risk score fraud? If not, why not?
  3. In the past five years, how many Medicare Advantage risk score fraud investigations has DOJ conducted? Of the investigations, how many have resulted in criminal and/or civil sanction?

Senator Grassley’s letters were sent only weeks after CMS issued its 2016 Rate Announcement and Call Letter on April 6, 2015. After accepting and reviewing comments on its Advance Notice and Draft Call Letter, which estimated a 0.95 percent decrease in revenue for plan providers, the April 6 announcement estimated a 3.25 percent increase in revenue based on finalized 2016 rates. Neither the Attorney General nor CMS has responded to Senator Grassley’s requests. Continue reading “Medicare Advantage Program Enforcement: Increased Publicity May Lead to Increased Scrutiny”

Responding to a Warrant—What to Do if Your Company Is Subject to a Fraud Investigation

Merle M. DeLancey Jr., Steven J. Roman, and Philip E. Beshara

This is the scenario: you are an executive or manager at a government contractor. It’s Friday morning. You are hoping to leave early and get a jump on the weekend. Then, the receptionist buzzes you and says, “There are men and women out here wearing FBI windbreakers and they want to execute a search warrant.” You wonder, “Can I tell the agents they cannot come in?” Your company does not have in-house counsel. You can call your attorney, but his or her office is across town and the FBI agents say they are not going to wait. “What should I do?”

This may sound like an unlikely scenario, but such government investigations happen all of the time around the country and are rarely expected. In recent years, prosecutors and agents from the Department of Justice (DOJ) and Inspector General Offices have brought charges of procurement fraud and corruption against over 100 defendants, including officers and employees of companies of all sizes. In September 2014, DOJ’s Criminal Division announced that it would be “stepping up” its investigation and prosecution of criminal violations of the False Claims Act, using a team of senior federal prosecutors dedicated exclusively to procurement fraud. DOJ’s announcement cited the use of search warrants as one of the significant investigative tools at prosecutors’ disposal. In addition to their increased exposure to law enforcement authorities, small businesses should expect greater scrutiny of their contracting dollars, an initiative that has received bipartisan support in Congress. In March, the House Small Business Committee approved a measure calling for a sweeping examination into abuses in small business contracting, and the Small Business Administration recently proposed a rule for harsher penalties relating to small business subcontracting limitations. Continue reading “Responding to a Warrant—What to Do if Your Company Is Subject to a Fraud Investigation”

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