Riker Danzig Health Care Update November 20, 2015

Riker Danzig Health Care Update November 20, 2015
Riker Danzig Health Care Update November 20, 2015

New Jersey State: Selected Proposed and Adopted Legislation  

New Jersey State: Selected Proposed and Adopted Regulations

Federal: Selected Proposed Legislation

Proposed:   Senate Bill No. 2256:  Establishes programs for health care provider training in federal health care and medical facilities, to establish federal co-prescribing guidelines, to establish a grant program with respect to naloxone, and for other purposes.

State Litigation

Horizon’s Omnia challenged:  The Middlesex County Superior Court, on Monday, November 9, 2015, denied St. Peter’s University Hospital’s request for an injunction against the Omnia Health Alliance policies that will go into effect January 1, 2016.  St. Peter’s argued that its designation of Tier 2 will lead to irreparable harm.  The Court, however, did grant a hearing to determine if St. Peter’s was wrongfully excluded from Tier 1 status.  Since this case, on November 19, 2015, about a dozen other hospitals designated Tier 2 have joined together to challenge the Department of Banking and Insurance’s approval of the plan in the first place. Capital Health Regional Medical Center et. al. v. The NJ Division of Banking & Insurance in the Appellate Division.

Federal Litigation


The Seventh Circuit turned down a request from a group of Pennsylvania chiropractors to reconsider a decision that disputes between health care providers and insurers over in-network rates are not covered under ERISA.  Instead, the chiropractors must now pursue claims in state court on breach of contract claims. Pennsylvania Chiropractic Association et al v. Independence Hospital Indemnity Plan, Inc., Case Number 14-2322 in the 7th Circuit.  The 5th Circuit ruled in a similar manner in that disputes involving in-network contracts are not pre-empted by ERISA. Kelsey-Seybold Med. Group P.A. v. Great-West Healthcare of Texas Inc., Case Number 14-20506 in the 5th Circuit.

On October 13, 2015, the United States Supreme Court declined to hear UnitedHealth’s question regarding the split in authority among the Circuit Courts on whether a health insurance third party plan administrator may be sued under ERISA.  United Healthcare of Arizona Inc. et al. v. Spinedex Physical Therapy USA Inc. et al., Case Number 14-1286 in US Supreme Court.

Debt Forgiveness:

The Southern District of Texas ruled in United States of America ex rel. Susan Ruscher, et al. v. Omnicare, Inc., Case Number 4:08-cv-3396, that there was insufficient evidence to support a finding that Omnicare willfully forgave any skilled nursing facility debt to induce future referrals.  The District Court ruled that the debt forgiveness was similar to the way other businesses forgive debt from delinquent clients. 

Trial Splitting and Statistical Sampling:

A federal court in Alabama recently allowed defendants to bifurcate trial in an insurance fraud matter.  The bifurcation will require the Department of Justice (DOJ) to first prove that the claims were objectively false and, if so, the second phase will require the DOJ to establish that the defendant knew of the falsity.  U.S. ex rel. Paradies et al. v. AseraCare Inc. et al, Case Number 2:12-cv-00245 in the Northern District of Alabama.   At the same time, however, the federal court allowed the DOJ to use statistical sampling to extrapolate the number of fraud claims thereby making it easier for the DOJ to increase the number of claims that are alleged to be fraudulent.  Another federal court in South Carolina, however, denied the DOJ’s request to use statistical sampling and allowed the question to be reviewed by the 4th Circuit, potentially making it the first case on statistical sampling to be decided by a Circuit Court.  U.S. ex rel Michaels et al. v. Agape Senior Community, Inc. et al, Case Number 0:12-cv-03466 in the District of South Carolina.

On October 30, the federal court in Georgia ruled that Fresenius did not violate the False Claims Act by billing for drugs that it obtained without charge because, among other things, there was no evidence showing that the company knew it should not bill for free extras and that Medicare was aware of the issues for years. United States of America ex rel. Chester Saldivar v. Fresenius Medical Care Holdings Inc., Case Number 1:10-cv-01614, in the Northern District of Georgia.

Selected Guidance Documents

OIG Advisory Opinion 06-10

On November 2, 2015, the Office of the Inspector General (OIG) issued a modification to advisory opinion 06-10.  This modification relates to a nonprofit, tax-exempt, charitable organization’s practice of providing certain therapy management services and assistance with Medicare cost-sharing obligations to financially needy Medicare beneficiaries undergoing medical treatment for certain metastasized cancers.   

OIG Advisory Opinion 07-18

On November 2, 2015, OIG issued a modification of advisory opinion 07-18.  As with the other opinion modified, this one addressed anti-kickback concerns. This opinion, however,  deals with concerns about the management by a health care industry consultancy of a charitable organization’s arrangements to subsidize patient cost-sharing and premium obligations. 

Free Outpatient Drugs Not Kickbacks

On October 31, 2015, the OIG issued a policy statement that hospitals can apply discounts or waive fees on self-administered drugs that are not covered by Medicare but that Medicare patients are given in outpatient facilities without violating federal laws.  The hospitals, however, must uniformly apply their policies regarding discounts and waivers.

The list above does not include every proposed or adopted legislation, litigation or guidance document that may impact the health care industry.  Instead, it includes only a select few chosen by the authors, and any information in this Update is not intended to provide legal advice.  If you are concerned that a proposed or adopted legislation, litigation or guidance document may impact your practice, then you should seek legal advice. Nothing in this Update should be relied upon as legal advice in any particular matter. © 2015 Riker Danzig Scherer Hyland & Perretti LLP.

If you have any questions about the issues discussed in this Update, please contact the following Riker Danzig attorneys: 

Glenn A. Clark, Partner

Khaled John Klele, Partner

Stephen M. Turner, Associate