Crowell & Moring has issued its Regulatory Forecast 2018: What Corporate Counsel Need to Know for the Coming Year.”

The health care section of the Forecast, “Mergers: Keeping Care Competitive,” outlines how regulators have kept a close eye on the impact of industry consolidation and how the government has been aggressively blocking mergers it feels will hurt consumers. There is also an interesting section on the regulation of digital health technology in the cover story, Digital Transformation: The Sky’s the Limit.”

The theme of the fourth-annual Regulatory Forecast is how digital technology is driving the future of business across a wide range of industries – and how Washington, as well as state and global regulators, is forging the appropriate balance between fostering innovation and protecting consumers. This report is the companion piece to the firm’s 2018 Litigation Forecast, which was published in January and also focused on the opportunities and challenges general counsel face in navigating the Big Data revolution.

Be sure to follow the conversation on Twitter with #RegulatoryForecast.

 

Crowell & Moring has issued its Litigation Forecast 2018: What Corporate Counsel Need to Know for the Coming Year.”

 The health care section of the Forecast, “FCA Enforcement: Different, But Still Here,” outlines how health care companies should expect continued enforcement of the False Claims Act, but with perhaps different emphasis on key areas such as drug pricing.

 The Forecast explores the important litigation trends and challenges that businesses may face in 2018, and it features an in-depth look at how data-driven innovation is driving new opportunities and risks for clients across industries.

 Be sure to follow the conversation on Twitter with #LitigationForecast.

 

Internet defamation (and intellectual property infringement) cases are on the rise.  And cases involving anonymous defendants are becoming more common.  They of course present tricky First Amendment issues.  Indeed, most such cases result in the anonymous defendants remaining masked and escaping liability.  But in four example health care cases – a scare tactic, accidental disclosure, hacking, and impersonation set of cases – the plaintiffs successfully took on the First Amendment challenge.  Knowing how these plaintiffs prevailed may help with your own response plan to a surprise cyber-attack by persons you don’t know.

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A recent California Supreme Court decision has significant implications for any agreement attempting to waive a substantive statutory remedy in California. In McGill v. Citibank, the Court held that an arbitration provision that provides for a waiver of the right to seek public injunctive relief is contrary to California public policy and unenforceable.  The Court also held that California law prohibiting such waivers is not preempted by the Federal Arbitration Act (FAA).  Crowell & Moring’s Product Liability & Torts and Litigation Groups provided a thorough analysis of the McGill decision in an alert posted on April 10, 2017.

Overview

Plaintiff Sharon McGill filed a class action against Citibank under California consumer protection laws, including the Unfair Competition Law (UCL), Consumers Legal Remedies Act (CLRA) and false advertising law.  Among other remedies, McGill sought public injunctive relief that would prohibit Citibank from continuing to engage in its allegedly illegal and deceptive practices.  Citibank petitioned to compel McGill to arbitrate her claims on an individual basis, pursuant to the terms and conditions of their agreement.

The trial court ordered McGill to arbitrate all claims other than those for injunctive relief.  The Court of Appeal reversed, concluding that the FAA preempted California’s Broughton-Cruz rule,[1] which prohibits agreements to arbitrate claims for public injunctive relief under the UCL, CLRA, or the false advertising law.

The Supreme Court of California held that the Broughton-Cruz rule was not applicable.  Rather, the panel’s decision centered on the application of the California Civil Code § 3513, which states that “a law established for a public reason cannot be contravened by a private agreement.”   The Court held that McGill’s statutory right to seek certain injunctive relief cannot be waived through an arbitration provision.

Implications for Health Care Plans

The Supreme Court’s opinion has several implications for health plans that use binding arbitration to resolve disputes with enrollees. The Court’s opinion only carves out from the requirement of binding arbitration only those claims that seek injunctive relief on behalf of the general public and does not impact the arbitrability of claims seeking other forms of relief  including other remedies under the UCL, CLRA, and the false advertising law.  For instance, the decision does not preclude parties from agreeing to arbitrate claims that seek compensatory, monetary and punitive damages, or claims that seek injunctive relief in form of restitution.  But, the McGill opinion stands for the proposition that waivers of the right to seek public injunctive relief in any contract are void under California Civil Code § 3513, including those waivers in health plan contracts with enrollees.

 

 


[1] The Broughton-Cruz rule, named after two decisions in the California Supreme Court – Broughton v. Cigna Healthplans, 21 Cal. 4th 1066 (1999) and Cruz v. Pacificare Health Systems, Inc., 30 Cal. 4th 1157 (2003).

California recently enacted Assembly Bill 72 (“AB 72”) to target surprise medical bills from out-of-network professionals.  The new law applies to commercial plans licensed by the Department of Managed Health Care and the Department of Insurance.  AB 72 sets reimbursement rates for out-of-network professionals at in-network facilities at either the average contracted rate, or 125 percent of the Medicare Fee-for-Service reimbursement for the same or similar services.  The constitutionality of these provisions has been challenged in federal court by the Association of American Physicians and Surgeons.  AB 72 also implements a new dispute resolution process to resolve reimbursement disputes between commercial health plans/insurers and non-contracting health professionals that provide services at a contracted facility.  Read the full client alert titled “New California Law to Curb Surprise Medical Bills Will Impact Relationships Between Health Plans and Non-Contracted Professionals,” here.

On August 24, 2016, Judge Edgardo Ramos of the Southern District of New York approved a settlement in which Mount Sinai Health System (Mount Sinai) will pay $2.95 million to New York and the federal government to resolve allegations that it violated the False Claims Act (FCA) by withholding Medicare and Medicaid overpayments in contravention of the 60-day overpayments provision of the Affordable Care Act (ACA).  The provision creates FCA liability for healthcare providers that identify overpayments but fail to return them within 60 days, and the Mount Sinai settlement is the first one that specifically resolves allegations of violations of the provision.

The settlement stems from the qui tam action Kane v. Healthfirst, Inc., No. 1:11-cv-02325-ER, in which it was alleged that employee Robert Kane alerted Continuum Health Partners, Inc. (now a part of Mount Sinai) to hundreds of potential overpayments, and, instead of pursuing the refund of overpayments, Continuum fired Kane and delayed further inquiry.  Last year, as we discussed in a previous post, Judge Ramos denied Mount Sinai’s motion to dismiss and provided first-of-its-kind guidance on what it means to “identify” an overpayment and start the 60-day clock created by the ACA.  He opined that a provider has identified an overpayment if it has been “put on notice” that a certain claim may have been overpaid.  In February of this year, CMS released its final 60-day overpayment rule, largely adopting the same interpretation of “knowledge” and “identified” that Judge Ramos used.

Although the Kane court did not hold that the “mere existence” of an obligation under the ACA established an FCA violation, the 60-day period in the statute clearly carries a heightened risk of potential liability for providers that fail to carry out compliance activities or undertake an investigation once they have been given credible evidence of the existence of overpayments.  The settlement further signals to providers the importance of taking any allegation related to overpayments seriously, and to take swift action in order to be ready for the start of the 60-day clock deadline for returning any overpayments.

Managed Care Lawsuit Watch is Crowell & Moring’s summary of key litigation affecting managed care. If you have questions or need assistance on managed care law matters, please contact any member of the Health Care Group. Cases in this issue include:

  • Helfrich v. Blue Cross & Blue Shield Ass’n
  • King v. CompPartners, Inc.
  • Unilab Corp. v. Angeles-IPA
  • Kaiser Found. Health Plan, Inc. v. Burwell
  • Smilow and Katz v. Anthem Life & Disability Ins. Co.
  • Aetna Life Ins. Co. v. Huntingdon Valley Surgery Ctr.
  • Baptist Hosp. of Miami, Inc. v. Humana Health Ins. Co. of Florida, Inc.
  • Rose v. Healthcomp, Inc.

On February 9, 2016, the D.C. Circuit, in American Hospital Association v. Burwell, No. 1:14-cv-00851 , held that a district court has jurisdiction to compel the Department of Health & Human Services (“HHS”) to address the substantial backlog of disputed Medicare claims and to make decisions within the statutory deadlines in the face of complaints by the American Hospital Association (“AHA”) and several hospitals.  Not only did the D.C. Circuit find that the suit met the threshold requirements for mandamus jurisdiction, it also opined that the circumstances of the case and the clarity of HHS’ duty to meet statutory deadlines will “likely require” issuance of the writ if HHS has not made meaningful progress in addressing the backlog by the close of the next full appropriations cycle.

After a Medicare claim is denied, the Medicare Act provides a four-level administrative appeal process, followed by judicial review. The statute includes specific time frames for each step of the process.  At the first level, the provider presents its claim to the Medicare Administrative Contractor for “redetermination,” to take place within 60 days.  The second level involves “reconsideration” by a Qualified Independent Contractor, also to be completed within 60 days.  The third level constitutes de novo review by an administrative law judge (“ALJ”) within 90 days.  The fourth and final administrative stage involves de novo review by the Medicare Appeals Council within 90 days.  Appeals should work their way through the administrative process within about a year if all of the respective time frames are met.

Continue Reading DC Circuit Breathes New Life into AHA’s Suit over Medicare Appeals Backlog

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Spotlight on Best Practices, Litigation, Antitrust, and Tax for Health Care Companies

Crowell & Moring LLP is pleased to release its “2016 Litigation & Regulatory Forecasts: What Corporate Counsel Need to Know for the Coming Year.” The reports examine the trends and developments that will impact health care companies and other corporations in the coming year—from the last year of the Obama administration to how corporate litigation strategy is transforming from the inside out. This year will bring remarkable change for companies, as market disruptions and the speed of innovation transform industries like never before, and the litigation and regulatory environments in which they operate are keeping pace.

Continue Reading Crowell & Moring’s 2016 Litigation & Regulatory Forecasts: What Corporate Counsel Need to Know for the Coming Year

On November 2, President Obama signed the Bipartisan Budget Act of 2015. As an offset for near-term increases in federal spending, the new law extends by one year – to 2025 – two-percent sequestration reductions in federal spending for mandatory federal programs including Medicare.  The end result is that Medicare Advantage Organizations (MAOs) can expect their capitated payments from Centers for Medicare and Medicaid Services (“CMS”) to continue to be reduced, and Medicare fee-for-service providers can also expect to have sequestration reductions on their CMS reimbursements until at least 2025.

First established by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), “sequestration” is a process of automatic, largely across-the-board reductions enacted to constrain federal spending. Sequestration in its current form began on March 1, 2013, when President Obama, pursuant to the Budget Control Act of 2011, ordered cuts to federal spending effective April 1, 2013, after Congress and the President failed to reach a budget compromise.

Under the Budget Control Act of 2011, the size of reductions to the Medicare program is limited to two-percent. As required by President Obama’s sequestration executive order, on March 8, 2013, CMS notified providers that a “2 percent reduction in Medicare payment[s]” would apply to “Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013.” In other words, due to sequestration, as of April 1, 2013, CMS reduced the amount it pays to providers for fee-for-service Medicare claims by two-percent.

Continue Reading Sequestration Extended to 2025 in Federal Budget Deal