March 27 follow up -
Coverage at Dark Daily here.
I cited the safe harbor statute below [see footnotes]; Dark Daily cited the Federal Register 2016 here. This discusses the preventive care exception at numerous points, but is not the original policymaking for it. There is also an exception more generalized than "preventive care" per se, when "renumeration promotes access to care and poses a low risk." (81 FR 88390).
I'm not an attorney but it is interesting to watch the ebb and flow of DOJ investigations and qui tam cases in the lab industry. Here's an interesting pair involving Exact Sciences. I am only providing links to documents easily available via Google.
Brief summaries of both actions, from Exact's perspective, appear in Exact SEC filings. Other links (see picture above) can be gleaned by searching Google for "Niles Rosen" and "Exact Sciences."
In an SEC Form 10-Q (quarterly), dated August 2, 2022, Exact writes:
- On June 24, 2019, Niles Rosen M.D. filed a sealed ex parte qui tam lawsuit against the Company in the United States District Court for the Middle District of Florida, that alleged a violation of the Federal Anti-Kickback Statute and False Claims Act for offering gift cards to patients in exchange for returning the Cologuard screening test (the “Qui Tam Suit”). Dr. Rosen seeks on behalf of the U.S. government and himself an award of civil penalties, treble damages and fees and costs.
- On February 25, 2020, the Company received a civil investigative demand by the DOJ related to the Company’s gift card program. The Company produced documents in response thereto. On March 25, 2021, the DOJ filed a notice of its election to decline intervention in the Qui Tam Suit. This election does not prevent Dr. Rosen from continuing the Qui Tam Suit. On April 12, 2021, Dr. Rosen filed an amended complaint against the Company, alleging violations of the Federal Anti-Kickback Statute and False Claims Act.
- The Company first learned of the Qui Tam Suit and the DOJ’s election to decline intervention in July 2021.
- The Company intends to vigorously defend itself against Dr. Rosen's claims and seek, among other things, the Company’s attorneys' fees and costs incurred in defending this action. Although the Company denies Dr. Rosen's allegations and believes that it has meritorious defenses to his False Claims Act claims, neither the outcome of the litigation nor can a reasonable estimate or an estimated range of loss associated with the litigation be determined at this time.
While I have not used legal databases to look at other court documents, one document from March 2022 was open access online and involved use of "discovery" while other motions were playing out. Here or here.
A short article was open access at COSMOS (compliance site), issue October 2022, here. COSMOS remarks as follows: "The lawsuit was filed by a whistleblower, 72-year-old retired Florida physician Niles Rosen, against Exact Sciences Corp. (ESC) and its subsidiary, Exact Sciences Laboratories LLC (ESL), which administers Cologuard, a colon cancer screening test. Rosen alleges that a $75 Visa reward card offered to him and other Medicare beneficiaries as part of Exact Sciences’ Patient Compliance Program was unlawful remuneration intended to induce their use of Cologuard."
A currently open-access issue of Medicare Compliance, October 2022, was on Google from the Berry Dunn website and has a several page article (p 3ff) on the Rosen topic. Here. Basically this expands on the sentence just quoted from COSMOS. It includes the quote, " 'It was a straight up kickback,' contends attorney Marlan Wilbanks, who represents the whistleblower. 'You can't offer cash or cash equivalents to anyone to induce them to use a government service.' " The newsletter goes on to quote Exact Science, which "refuted the allegations and asserted, among other things, that the arrangement qualifies for the preventive care safe harbor to the anti-kickback statute and that the complain fails for many reasons..." They note that, "encouraging a patient to have a medical service that was already ordered by a provider isn't an inducement under the AKS."
Subscription access article on this topic in Laboratory Economics, January 2023.
Rosen as Retired Policymaker
For years (since 1997) and up to a few years ago, Dr. Rosen was in charge of the contract for managing Medicare's "Correct Coding" edits (e.g. see testimony by Rosen in 2011 here, his title as Contractor Medical Director.) Another example of a senior Medicare policymaker filing a qui tam case against a laboratory involved Dr. Elaine Jeter and Myriad, and played out to a $9M settlement in 2019.
Another topic: Date of Service Investigation (Genomic Health/Exact)
The Exact Sciences quarterly filing from November 2022 also has a paragraph about a Date of Service rule investigation by DOJ. This has gone on for several years, and stems from actions at Genomic Health before it was acquired by Exact Sciences.
- As of the date of this Annual Report on Form 10-K, amounts accrued for legal proceedings and regulatory matters were not material except for the amounts accrued related to the Medicare Date of Service Rule Investigation (the “DOS Rule Investigation”) discussed below. However, it is possible that in a particular quarter or annual period the Company’s financial condition, results of operations, cash flow and/or liquidity could be materially adversely affected by an ultimate unfavorable resolution of, or development in, legal and/or regulatory proceedings, including as described below. Except for the proceedings discussed below, the Company believes that the ultimate outcome of any of the regulatory and legal proceedings that are currently pending against it should not have a material adverse effect on financial condition, results of operations, cash flow or liquidity.
- The Company is currently responding to civil investigative demands and administrative subpoenas issued pursuant to the Health Insurance Portability and Accountability Act of 1996 by the United States Department of Justice (“DOJ”) concerning Genomic Health’s compliance with the Medicare Date of Service billing regulations. The Company has been cooperating with these inquiries and has produced documents in response thereto.
- During the second quarter of 2021, as part of ongoing discussions between the DOJ and the Company regarding the DOS Rule Investigation, the DOJ presented an estimate of civil damages in the amount of $48.2 million relating to alleged non-compliance with the Medicare Date of Service billing regulations from 2007 to 2020. The civil damages estimate does not include potential treble damages, civil or criminal penalties or other remedies that the DOJ could seek against the Company. Based on the Company’s review and analysis of the DOJ presentation, ongoing discussions held with the DOJ, the civil damages estimate,and range of potential exposure, the Company recorded an accrual of approximately $10 million for the year ended December 31, 2021.
- As noted above, litigation outcomes are difficult to predict, and the estimation of probable losses requires an analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Accordingly, the recorded accrual of approximately $10 million for the year ended December 31,2021 is based on several factors, considerations, and judgments, and the ultimate resolution of this matter could result in a loss in excess of the recorded accrual.
OIG opinion 20-08 here notes that SSA 1128A(i)(6) has an exception for the delivery of preventive care. This OIG opinion contains the word "preventive" 18 times. (i)(6)(D) states that "remuneration" does not include, (D) incentives given to individuals to promote the delivery of preventive case as determined by the Secretary in regulations so promulgated.
This exception and others are further defined at 42 CFR 1003.110. Preventive care, for purposes of the definition of the term Remuneration as set forth in this section and the preventive care exception to section 231(h) of HIPAA, means any service that - (1) Is a prenatal service or a post-natal well-baby visit or is a specific clinical service described in the current U.S. Preventive Services Task Force's Guide to Clinical Preventive Services, and (2) Is reimbursable in whole or in part by Medicare or an applicable State health care program.
Preventive exceptions are also noted on page 2 of a 7-p OIG bulletin to providers. A law firm essay on safe harbors also notes the preventive services exception. For example, a provider could give a patient a gift card if they scheduled and received a preventive service, like a mammogram.