August 26, 2011 Vol. IX Issue 33

A California appeals court affirmed August 12 a judgment in favor of a hospital in an action alleging elder abuse, willful misconduct, and wrongful death.

The California Court of Appeal, Fourth District, agreed with the lower court that the complaint failed to allege “neglect” under the state’s Elder Abuse and Dependent Adult Civil Protection Act (Act), which imposes stiffer penalties for abuse of an elder than those available for ordinary negligence actions.

The appeals court also upheld the lower court’s determination that the remaining claims were time-barred.

Plaintiffs sued Prime Healthcare Paradise Valley LLC, doing business as Paradise Valley Hospital, and Paradise Valley Health Care Center, Inc., a skilled-nursing facility, following the death of their father Roosevelt Grant.

Eighty-seven-year-old Grant was admitted to the Hospital for chest pain and two days later was transferred to the Center for short-term rehabilitation therapy.

According to plaintiffs, while at the Center, Grant was “continually neglected” and developed various complications, including pneumonia, pressure ulcers, and sepsis.

Grant bounced back and forth between the Center and the Hospital several times. During his third hospitalization, Grant died.

Plaintiffs sued both the Hospital and the Center. With respect to the Hospital, plaintiffs alleged it “recklessly,” “willfully,” and “with deliberate indifference . . .” caused his death by failing to treat his pressure ulcers, administer prescribed medications, and stock a crash cart with the proper equipment.

The trial court sustained the Hospital’s demurs without leave to amend. The appeals court affirmed.

The Act defines abuse as “[p]hysical abuse, neglect, financial abuse, abandonment, isolation, abduction, or other treatment with resulting physical harm or pain or mental suffering.”

The appeals court found the allegations in the complaint did not allege “neglect” as to the Hospital for purposes of the Act.

“To recover the enhanced remedies available under the Elder Abuse Act from a health care provider, a plaintiff must prove more than simple or even gross negligence in the provider’s care or custody of the elder,” the appeals court said.

While the Hospital’s conduct might have risen to the level of professional negligence, nothing in the complaint alleged its actions were “sufficiently egregious to constitute neglect” under the Act.

The appeals court also concluded the trial court properly denied leave to amend, as plaintiffs failed to show how they could further amend their pleadings to cure the defects.

Finally, the appeals court upheld the trial court’s judgment as to the remaining causes of action as time-barred.

Carter v. Prime Healthcare Paradise Valley LLC, No. D057852 (Cal. Ct. App. Aug. 12, 2011).

The Centers for Medicare and Medicaid Services (CMS) set out August 19 plans for Round 2 of the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program to include 91 major metropolitan areas and changes to product categories subject to bid.

According to CMS’ most recent timeline, the agency is beginning its pre-bidding supplier awareness program with bidding slated to begin in winter 2012. Round Two is expected to be operational on July 1, 2013.

CMS said the Round 2 expansion also “adds additional high cost, high volume items with a large savings potential to the list of the product categories subject to bid.”

Specifically, CMS is combining standard manual wheelchairs, standard power wheelchairs, and scooters to form a new expanded standard mobility device product category, expanding bidding for support surfaces across all Round 2 areas, and adding negative pressure wound therapy pumps and related supplies and accessories as an additional product category.

CMS also is planning a national mail order competition for diabetic testing suppliers at the same time as the Round 2 competition.

CMS launched Round 1 of the program in January for nine product categories in nine metropolitan statistical areas.

According to a CMS fact sheet, the first phase of the competitive bidding program, which “uses competitions between suppliers to set new, lower payment rates for certain medical equipment and supplies,” has yielded savings of 35% compared to the existing fee schedule, with 51% of contracts awarded to small businesses, and “no changes in beneficiary health status.”

CMS said questions about the new program totaled less than one percent of calls to the Medicare call center, and the agency has received only 45 complaints since the program went into effect.  

The competitive bidding program is expected to save Medicare more than $17 billion over 10 years. Beneficiaries should see about $11 billion in savings as well over this time period, CMS has said, as a result of lower coinsurance payments and premiums.

Critics of the program have continued to argue, however, that savings are overstated and that the bidding process is flawed. 

Congress delayed implementation of the DMEPOS competitive bidding program, originally slated for July 1, 2008, and required a rebid of Round 1 in part over concerns that winning bidders in the initial Round 1 were not appropriately qualified to deliver on their bids.

“The success we’ve had in the first phase tells us that we can achieve these savings with no disruption for patients’ access and no negative effect on patients’ health,” said Deputy CMS Administrator and Director of the Center for Medicare Jonathan Blum. “We remain confident in our bidding methodologies that will produce tangible savings while ensuring adequate choice of qualified suppliers.”

But the American Association for Homecare said “[p]roponents of the bidding system have conveyed misleading information that exaggerates the benefits and ignores the severe shortcomings of the program.”  

Tyler J. Wilson, president of the group, said more than “30 patient advocacy groups, 244 economists and auction experts, and 145 members of Congress oppose the program” because “it undermines quality of care and it increases costs.”

The Centers for Medicare and Medicaid Services (CMS) launched August 23 its bundled payment initiative, inviting providers to apply to help the agency test and develop different models of bundling payments for services patients receive across a single episode of care.

The Bundled Payments for Care Improvement Initiative, authorized by the Affordable Care Act, is intended to encourage better coordination of care among physicians, hospitals, and other healthcare providers, with the goal of improving care while reducing costs.

Medicare currently makes separate payments to providers for the services they furnish to beneficiaries for a single illness or course of treatment, which leads to fragmented care instead of beneficial coordination across care settings, according to a CMS fact sheet.

CMS said a “bundled” payment will help incentivize providers to work more efficiently and improve the patient’s experience of care.

Four Models for Bundled Payments

In an August 25 Federal Register notice (76 Fed. Reg. 53137), the agency is seeking applications for four broadly defined models of care, three of which involve a retrospective bundled payment, with a target price for a defined episode care.

Under the retrospective bundled payment models, participants would be paid for their services under traditional Medicare, but at a negotiated discount. At the end of the episode, the total payments would be compared with the target price and participating providers may then be able to share in those savings, CMS explained.

In Model 1, the episode of care would be the inpatient stay in the hospital. Medicare would pay the hospitals a discounted amount based on the Inpatient Prospective Payment System. Physicians would be paid separately under the Medicare fee schedule.

In Model 2, the episode of care would include the inpatient stay and post-acute care and end, at the applicant’s option, either 30 or 90 days after discharge. Model 3's episode of care would begin at discharge from the inpatient stay and end no sooner than 30 days post-discharge.

For both models, bundled payments would include physicians’ services, care by a post-acute provider, related readmissions, and other services proposed in the episode definition such as clinical laboratory services; durable medical equipment, prosthetics, orthotics and supplies; and Part B drugs, CMS said.

Under Model 4, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians, and other practitioners.

CMS’ fact sheet includes a side-by-side comparison of the four models.

Application Deadlines

Model 1 applicants must submit a non-binding letter of intent (LOI) by September 22, 2011, with the application due October 21, 2011.

Model 2, 3, and 4 applicants must submit an LOI by November 4, 2011, with completed applications due March 15, 2012.

The Eighth Circuit August 19 affirmed a lower court decision finding the Federal Trade Commission failed to show that two drugs were in the same product market for purposes of its antitrust suit against the manufacturer of the drugs.

The government had urged the appeals court to find fault with the lower court’s decision to credit testimony of certain physicians, but the Eighth Circuit noted, “[i]t is precisely the job of the district court to consider the evidence offered by both sides and render a judgment.”

Patent ductus arteriosus (PDA) is a life-threatening heart condition that primarily affects low-birth-weight, usually premature, babies.

When this case was brought, there were two Food and Drug Administration (FDA)-approved drugs for PDA—Indocin IV and NeoProfen.

Defendant Lundbeck purchased the rights to Indocin IV from Merck & Co. in 2005, and the rights to NeoProfen from Abbott Laboratories in 2006 (before it was put on the market). Thus, until generics appeared in 2010, Lundbeck owned all the drugs for PDA.

Lundbeck immediately raised the price of Indocin IV and two days after acquiring the rights to NeoProfen, Lundbeck raised the price thirteen-fold.

The Federal Trade Commission and Minnesota (collectively, FTC) sued Lundbeck, alleging its acquisition of the drug NeoProfen violated the Federal Trade Commission Act, the Sherman Act, the Clayton Act, the Minnesota Antitrust Law of 1971, and unjustly enriched Lundbeck.

The district court determined the FTC did not meet its burden to prove that Indocin IV and NeoProfen were in the same product market and thus failed to identify a relevant market. FTC appealed.

After noting the lower court’s decision would be reviewed for clear error, the appeals court highlighted that the FTC bears the burden of identifying a relevant market.

The district court credited testimony of physicians who said the relative price of the drugs does not factor into the choice of drug treatment.

Considering these facts, as well as testimony by Lundbeck’s expert whom the court found “persuasive,” the court ruled that there is low cross-elasticity of demand between Indocin IV and Neoprofen, and thus the drugs are not in the same product market.

FTC argued the hospitals, not the neonatologists, are the consumers, and the hospitals would switch between Indocin IV and NeoProfen based on price differences.

But “FTC offers no evidence that hospitals would disregard the preferences of the neonatologists and make purchasing decisions based on price,” the appeals court found.

Accordingly, the district court did not err in finding more persuasive the testimony of the pharmacists and most neonatologists, compared to the one neonatologist favorable to the FTC, the appeals court held.

The appeals court rejected the FTC’s other arguments as well, finding “[i]n the end, the FTC disagrees with the district court’s weighing of the facts applicable to the relevant market determination.”

However, the district court reached its decision after “careful consideration based upon the entire record,” and thus its “fact-finding was not clearly erroneous,” according to the appeals court.

Federal Trade Comm'n v. Lundbeck, Inc., No. 10-3458/3459 (8th Cir. Aug. 19, 2011).

By Laurie Clarke, Marian Lee, Beverly Lorell, MD, Jessica Ringel, King & Spalding 

On July 19, 2011, the U.S. Food and Drug Administration (FDA or the Agency) released a “Draft Guidance for Industry and Food and Drug Administration Staff” on “Mobile Medical Applications.” The draft announces FDA’s intention to regulate mobile applications (apps) that “either have traditionally been considered medical devices or affect the performance or functionality of a currently regulated medical device.” According to Jeffrey Shuren, MD, director of FDA’s Center for Devices and Radiological Health (CDRH), “[FDA’s] draft approach calls for oversight of only those mobile medical apps that present the greatest risk to patients when they don’t work as intended.”[1] Although FDA acknowledged that this proposed approach “does not cover the majority of medical apps,”[2] its scope is broad. Public comments on the draft Guidance may be submitted online or in writing through October 19, 2011.[3] 

I. The Scope of the Draft Guidance

The draft Guidance defines three key terms:

• “Mobile platforms” are “commercial off-the-shelf (COTS) computing platforms, with or without wireless connectivity, that are handheld in nature.” Examples include smartphones, tablet computers, and personal digital assistants (PDAs). 
• A “mobile application” or “mobile app” is a “software application that can be executed (run) on a mobile platform, or a web-based software application that is tailored to a mobile platform but is executed on a server.” 
• A “mobile medical application” or “mobile medical app” meets the definition of a device under Section 201(h) of the Federal Food, Drug, and Cosmetic Act (FD&C Act),[4] and either (a) “is used as an accessory to a regulated medical device”; or (b) “transforms a mobile platform into a regulated medical device.” Mobile medical applications are a subset of mobile applications.
 

A. Mobile Medical Apps

FDA currently intends to regulate mobile medical applications. FDA will determine whether a product is a mobile medical app based on its intended use. 

The draft Guidance identifies uses/functions of both categories of mobile medical apps and provides examples of them: 

• Mobile apps that act as accessories to regulated medical devices: 
• Mobile apps that control the intended use, function, modes, or energy source of the connected medical device will be considered mobile medical apps. Examples include apps that provide the remote display of data from bedside monitors, the display of medical images from a Picture Archiving and Communications System (PACS), or transmit control signals to insulin pumps from a mobile platform. 
• Mobile apps that create alarms, recommendations, or new data by analyzing or interpreting medical device data will also be considered mobile medical apps.[5] Examples include software that analyzes blood glucose readings to help manage diabetes and apps that activate an alarm based on changes in recorded arterial oxygen saturation levels and pulse rate. 
• Mobile apps that transform a mobile platform into a medical device:
• Mobile apps can transform mobile platforms into medical devices by using attachments, display screens, or sensors. Examples include mobile apps that attach a blood glucose strip reader to a mobile platform to function as a glucose meter or use a built-in meter on a mobile platform to collect motion information on sleep apnea.
• Mobile apps that allow the user to input patient-specific information can also transform a mobile platform into a medical device by using formulas or processing algorithms to generate a patient-specific result, diagnosis, or treatment recommendation that is targeted at either healthcare providers, consumers, or both. Examples include mobile apps that collect patient-specific responses to a questionnaire and compute a prognosis for a particular disease or condition, or calculate dosages for a specific medication or treatment. 

Appendix A of the draft Guidance provides additional examples of mobile medical apps. 

B. Products Excluded from Mobile Medical App Regulation

In the Guidance document, FDA identifies the following categories of mobile apps that it does not consider to be mobile medical apps: 

• Electronic textbooks or references. FDA excludes “[m]obile apps that are electronic ‘copies’ of medical textbooks, references, or teaching aids, or are solely used to provide clinicians with training . . . .” These apps do not contain patient-specific information, but could provide examples of a specific medical specialty or condition. 
• General health and wellness mobile apps. FDA also excludes “[m]obile apps that are solely used to log, record, track, evaluate, or make decisions or suggestions related to developing or maintaining general health and wellness” and that are not intended for curing, treating, diagnosing, or mitigating a specific disease, disorder, patient state, or “any specific, identifiable condition.” Examples include diet logs, dietary suggestions based on a calorie counter, exercise suggestions, and appointment reminders. 
• Office administration mobile apps. FDA excludes “[m]obile apps that only automate general office operations, [such as] billing, inventory, appointments, or insurance transactions.” Examples include apps that replace paper-based entry of patient histories and apps that determine insurance billing codes. 
• Generic aids. FDA further excludes “[m]obile apps that are generic aids that assist users but are not commercially marketed for” a medical use. Examples include a general magnifying glass app or a note-taking app. 
• Electronic or personal health records. Finally, FDA excludes from the definition of mobile medical apps any mobile apps that function only as electronic health records or personal health records. 

FDA notes that the majority of these mobile apps automate common medical knowledge or allow individuals to self-manage their disease or condition.[6] FDA does not regulate these types of mobile apps. However, the Agency plans to monitor them to determine whether additional actions are necessary to protect the public health. 

C. Regulated Entities

FDA states in the draft Guidance that mobile medical app manufacturers are responsible for their mobile medical apps’ compliance with FDA regulations. A “mobile medical app manufacturer” is “any person or entity that manufactures mobile medical apps in accordance with 21 C.F.R. Parts 803, 806, and 807.” This definition includes any person or entity that “initiates specifications, designs, labels, or creates, a software system or application in whole or from multiple software components.” FDA considers the following to be examples of mobile medical device manufacturing activities: 

• Creating, designing, labeling, remanufacturing, or modifying software systems, including off-the-shelf software, from multiple components to perform as a mobile medical app. 
• Providing mobile medical app functionality through a web service for use on a mobile platform. 
• Initiating specifications for mobile medical apps that are developed or manufactured by third parties, e.g., contract manufacturers, for commercial distribution. 
• Creating a mobile medical app for use on a mobile platform, or creating a mobile app to be supported by hardware attachments to a mobile platform that has a device intended use. 

An individual or entity performing any of these functions is a mobile app manufacturer subject to FDA device regulatory requirements. On the other hand, FDA excludes from the definition of mobile medical app manufacturers “entities that exclusively distribute mobile medical apps, without engaging in manufacturing functions,” e.g., Android Market, iTunes Store, and BlackBerry App World. 

FDA also excludes “mobile platform manufacturers,” e.g., smartphone manufacturers, that “solely distribute[] or market[ their] platform[s] with no device intended use.” Mobile platform manufacturers are considered “component manufacturers” (21 C.F.R. 820.3(c)) and are exempt from quality systems, registration, and listing requirements. Therefore, if an entity manufactures a smartphone that is able to run other entities’ mobile medical apps, but does not market the phone for medical use, the phone manufacturer is not a mobile medical app manufacturer. 

II. Regulatory Approach

For mobile medical apps that are subject to FDA regulation, manufacturers should satisfy the criteria associated with the applicable device classification. If the mobile medical app, on its own, falls under a device classification, then the manufacturer is subject to those classification requirements. Accessories to medical devices generally have the same regulatory classification and are subject to the same requirements as their parent devices. However, FDA acknowledges that “this approach may not be well-suited for mobile medical apps that serve as an accessory to another medical device because of the wide variety of functions mobile medical apps can potentially perform.” Thus, the Agency is seeking comment on how it should regulate mobile medical apps that are accessories so that the apps’ “safety and effectiveness can be reasonably assured.” FDA states that mobile medical apps that add medical device functions to mobile platforms are subject to the classification requirements applicable to the added medical device functions. 

FDA notes that some mobile medical apps meet the definition of a Medical Device Data System (MDDS).[7] MDDSs are computer- or software-based devices that passively and electronically transfer, store, display or convert medical device data; these devices do not generate or analyze data. Mobile medical apps that meet the definition of MDDS would be regulated as MDDSs, i.e., they would be Class I devices that are exempt from 510(k) requirements. 

FDA indicates that mobile medical app manufacturers are subject to the same regulatory requirements as other medical device manufactures. Applicable requirements include: device establishment registration and listing; investigational device exemptions (IDEs); labeling; premarket clearance or approval; Quality Systems Regulation (QSR), unless the device is 510(k) exempt; adverse event reporting; and corrections and removals. FDA expects distributors of mobile medical apps to cooperate with manufacturers in conducting corrections and removals. 

FDA recommends that manufacturers of all mobile apps that may meet the definition of a device comply with the Quality Systems Regulation (21 C.F.R. Part 820) regarding design and development, even if the mobile app is not a mobile medical app. FDA points out that the majority of software-related device failures are due to design errors, e.g., failure to validate software prior to routine maintenance. 

The draft Guidance does not address several related issues, such as wireless safety, classification and submission requirements for clinical decision support software, or the application of quality systems to software. FDA intends to address these issues in separate guidance documents.

Laurie Clarke is a partner in the firm’s Washington, D.C., office. Ms. Clarke’s practice focuses primarily on the FDA’s regulation of medical devices. She specializes in premarket submissions, including 510(k) premarket notifications, investigational device exemption (IDE) applications, pre-IDE submissions, premarket approval (PMA) applications, amendments, and supplements, reclassification petitions, de novo review submissions, device designation requests for combination products, and requests for humanitarian use designation. In addition, Ms. Clarke has extensive experience counseling medical device manufacturers and tissue processors regarding compliance with FDA laws and regulations, including labeling requirements. She is an expert on FDA’s policies regarding disclosure of clinical investigators’ financial interests in devices being tested in humans. Ms. Clarke has assisted clients in developing successful regulatory strategies for a wide variety of medical devices, including cardiac, general surgery, obstetrics/gynecology, anesthesiology, respiratory, gastroenterology, renal, urology, radiology, physical medicine, dental, ophthalmic, otolaryngology, infection control, and general hospital devices. She is a member of the firm’s FDA & Life Sciences Practice Group. 

Marian Lee is an associate in the FDA & Life Sciences Practice Group at King & Spalding. Since joining the firm in 2004, Ms. Lee has advised medical device, pharmaceutical, and biotechnology companies on a variety of FDA regulatory and compliance issues, including adverse event reporting, product recalls, labeling and promotion, product approvals, quality system regulation (QSR), device reclassifications, regulatory risk assessments, and governmental investigations.

Beverly Lorell is the Senior Medical and Policy Advisor with the firm’s FDA & Life Sciences Practice Group in Washington, D.C. Dr. Lorell specializes in the areas of clinical trial design of studies for drugs, devices and biologics; review of pre-market submissions; recalls; and assessment of matters involving a risk to health. She also specializes in the area of physician and industry relations and the development of independent scientific panels to advise health industries. 

Jessica Ringel is an associate in the Washington, D.C., office of King & Spalding and a member of the firm's FDA & Life Sciences Practice Group.

Google Inc. will forfeit $500 million for accepting advertisements from online Canadian pharmacies that targeted consumers in the United States, which federal officials said resulted in the unlawful importation of controlled and non-controlled prescription drugs into the country.

According to a press release posted by the U.S. Attorney for the District of Rhode Island Peter F. Neronha, the forfeiture is one of the largest ever and represents not only the gross revenue received by the online search engine for placing the ads, but also gross revenue made by the Canadian pharmacies from their sales to U.S. customers.

“This investigation is about the patently unsafe, unlawful, importation of prescription drugs by Canadian on-line pharmacies, with Google’s knowledge and assistance, into the United States, directly to U.S. consumers,” Neronha said. “It is about taking a significant step forward in limiting the ability of rogue on-line pharmacies from reaching U.S. consumers, by compelling Google to change its behavior.”

Under the Federal Food, Drug, and Cosmetic Act and Controlled Substances Act, it generally is illegal to import prescription drugs or prescription controlled substances into the U.S. from pharmacies in other countries.

An investigation revealed that as early as 2003, “Google was on notice that online Canadian pharmacies were advertising prescription drugs to Google users in the United States through Google’s AdWords advertising program,” the release said.

Google took steps to bar pharmacies from other countries from advertising through AdWords, but did not take similar measures with respect to Canadian pharmacies that targeted U.S. consumers, the release said.

Under the terms of an agreement signed by Google and the government, Google acknowledged and accepted responsibility for this conduct, according to the release. Google also has agreed to a number of compliance and reporting measures to avoid similar conduct in the future.

The Department of Health and Human Services (HHS) announced August 25 $137 million in grant awards to states to boost prevention and public health.

Awarded in nearly every state, the grants are aimed at enhancing efforts to provide tobacco cessation services, strengthen public health laboratory and immunization services, prevent healthcare-associated infections, and provide comprehensive substance abuse prevention and treatment, HHS said.

The grants will fund key state and local public health programs supported through the Centers for Disease Control and Prevention (CDC) and the Substance Abuse and Mental Health Services Administration (SAMHSA).

The awards include: $1.5 million to evaluate and prevent ventilator-associated pneumonia to reduce cases of Methicillin-resistant Staphylococcus aureus (MRSA) infections and protect Americans from healthcare-associated infectious diseases; more than $42 million to support immunization programs; $1 million to further enhance the nation's public health laboratories; and $9.2 million to eight national nonprofit professional public health organizations to assist state, tribal, local, and territorial health departments in adopting effective practices that strengthen their core public health systems and service delivery.

The grants are part of the Obama administration’s broader effort to improve the health and well-being of the nation’s communities and most of the funding comes from the Affordable Care Act, HHS noted.

The Department of Health and Human Services (HHS) issued August 23 its Plan for Retrospective Review of Existing Rules to inventory and eliminate or streamline out-dated and overly burdensome regulations.

The plan responds to Executive Order No. 13563 issued by President Obama in January calling on all federal agencies to achieve a more robust and effective regulatory framework.

“While HHS’s systematic review of regulations will focus on the elimination of rules that are no longer justified or necessary, the review will also consider strengthening, complementing, or modernizing rules where necessary or appropriate—including, if relevant, undertaking new rulemaking,” the agency said.

HHS’ retrospective review plan has five principal goals:

• Streamline or eliminate unjustified costs and burdens;
• Increase transparency in the retrospective review process;
• Increase opportunities for public participation;
• Set clear retrospective review priorities; and
• Strengthen analysis of regulatory options.

HHS said its plan contains reforms, completed or proposed, that will save hundreds of millions of dollars annually.

Among the initiatives described in the plan, is the Centers for Medicare and Medicaid Services’ (CMS’) retrospective review of the conditions of participation it imposes on hospitals to remove or revise obsolete, unnecessary, or burdensome provisions. CMS intends to publish a proposed rule in September 2011 and currently estimates that such revisions may save as much as $600 million annually and $3 billion over five years.

The Food and Drug Administration’s (FDA’s) Bar Code Rule was identified in the plan as a good candidate for retrospective review to assess the estimated savings and impact on adverse events. The goal of the review will be to evaluate the costs and benefits of the existing rule and to determine if it should be modified to take into account changes in technology that have occurred since the rule went into effect eight years ago, HHS said.

The plan also noted FDA “is embarking on a major campaign to revise its regulations to increase use of electronic information in the way it conducts business.”

On its immediate agenda, the plan noted, are regulatory revisions to permit electronic submission of clinical study data for drug trials, post-market reporting for drugs and biological products, and registration and listing of drugs and medical devices. 

One department-wide initiative highlighted in the plan is HHS’ review of reporting, recordkeeping, and other requirements to reduce burdens.

The American Hospital Association, the Healthcare Financial Management Association, and VHA Inc. provided August 24 detailed comments to the Internal Revenue Service (IRS) on the revised Schedule H of the Form 990 and instructions.  

The Affordable Care Act included new reporting requirements for tax-exempt hospitals under Internal Revenue Code Section 501(r), which revised Schedule H is intended to implement. Section 501(r) requires hospitals to conduct a community health needs assessment (CHNA) every three years, adopt a financial assistance policy, limits charges for medical care, and restricts certain billing and collection practices.

IRS released the revised Schedule H in February, which the same hospital groups commented on in April. The groups also met with the IRS, which asked them to follow-up with detailed line-by-line comments suggesting ways to improve Schedule H.

The instant letter responds to that request, and also provides comments on the recently issued Notice 2011-52, which sets forth anticipated regulatory provisions for conducting CHNAs.  

According to the letter, the comments incorporate input from 300 hospital across the country, including urban and rural hospitals, large and small multi-hospital systems, and academic medical centers and teaching hospitals. “[I]t is critically important that the Service revise Schedule H in a manner that accounts for this diversity," the letter said.

To this end, the groups urge the IRS to make the entire Section 501(r) requirements of the Schedule H optional for the 2011 tax year, as the agency previously did for the 2010 tax year. See Announcement 2011-37

The groups also take issue with recently added “new requirements for hospitals to list facilities by size and revenue from the largest to the smallest and to provide similar information for non-hospital facilities,” which they say “has vastly increased the reporting burden without any apparent commensurate benefit."

Most Department of Health and Human Services (HHS) conflict-of-interest waivers reviewed by the HHS Office of Inspector General (OIG) were not documented as recommended in provisions of selected government-wide federal ethics regulations, OIG said in a report posted August 25.

The report, Conflict-of-Interest Waivers Granted to HHS Employees in 2009 (OEI-04-10-00010), noted HHS employees, including special government employees (SGE) serving as subject-matter experts on federal advisory committees, play an influential role in public health policies and thus are prohibited from participating in certain official government matters affecting their personal financial interests.

The Office of Government Ethics (OGE) promulgates government-wide federal ethics regulations for all Executive Branch employees and oversees all federal agencies' ethics programs, the report explained.

With oversight and guidance from OGC, an HHS Operating Division (OPDIV) or Staff Division (STAFFDIV) may grant conflict-of-interest waivers to HHS employees if the OPDIV or STAFFDIV determines the conflicts are not likely to affect the integrity of the employees' services to the government, or if the need for the employees' services outweighs the potential for conflicts.

According to selected government-wide federal ethics regulations and the HHS Secretary's instructions, a waiver should describe, among other things, (1) the employee's specific financial interest that poses the conflict; (2) the particular matter in which the employee is permitted to participate; and (3) the particular matter, if any, in which the employee is prohibited from participating.

OIG looked at a random sample of 50 conflict-of-interest waivers granted to HHS employees in 2009, finding 56% not properly documented.

Of that 56%, 14% did not describe employees' specific interests that posed conflicts; 46% did not describe the particular matters in which employees were permitted to participate; and 28% were limited waivers that did not describe the particular matters in which the employees were prohibited from participating.

In addition, 24% were not documented as recommended in at least two of the three selected provisions and 8% were not documented as recommended in any of these provisions or instructions.

OIG also noted that, although not required, 18% of the 50 HHS conflict-of-interest waivers reviewed included employees' signatures and dates.

“If conflict-of-interest waivers are not clearly documented to show that employees understand their conflicts of interest and the matters, if any, in which they are prohibited from participating, employees may inadvertently violate the criminal conflict-of-interest statute,” OIG said.

Accordingly, OIG recommended that OGC (1) require OPDIVs and STAFFDIVs to document conflict-of-interest waivers as recommended in government-wide federal ethics regulations and the Secretary's instructions; (2) develop additional guidance and training to assist OPDIVs and STAFFDIVs in documenting conflict-of-interest waivers as recommended; (3) take action to revise the conflict-of-interest waivers in OIG's review that were not documented as recommended in government-wide federal ethics regulations and the Secretary's instructions, if the waivers are still in effect; (4) expand the review of conflict-of-interest waivers for SGEs on committees; and (5) require all employees to sign and date their conflict-of-interest waivers or otherwise document that they received and acknowledged them.

Following a failed sterilization procedure, damages related to an additional pregnancy, along with the costs of raising any subsequent children to the age of majority, are only available when plaintiffs can prove a breach of the duty to inform, the New Mexico Supreme Court held August 17.

Although New Mexico follows a small minority of states that allow for full damages for a wrongful conception claim, the damages should be reserved for only the most egregious cases, the high court said.

In so holding, the high court reversed the appeals court and reinstated the district court’s entry of judgment for the physician in the case.

Defendant Dr. Steven Wenrich delivered plaintiff Cynthia Provencio’s fourth child and at the same time performed a tubal ligation procedure.

After completing the surgery, defendant sent tissue to a lab and the resulting pathology report revealed the tissue defendant had ligated was ligament, not fallopian tube, and plaintiff still could conceive children.

At a follow up appointment, defendant informed plaintiff she could still conceive a child. Plaintiff subsequently conceived and delivered a fifth child.

Provencio and her husband then sued defendant for wrongful conception and battery. As to the wrongful conception claim, the only damages for which plaintiffs sought recovery were the costs associated with raising Mrs. Provencio’s fifth child to the age of majority and punitive damages.

The district court entered judgment in favor of defendant. Plaintiff appealed. The court of appeals reversed, and defendant then appealed.

In Lovelace Medical Center v. Mendez, 111 N.M. 336, 805 P.2d 603 (1991), the high court held New Mexico would join a minority of jurisdictions that recognize damages resulting from the birth of an unplanned, yet healthy child.

The appeals court in its opinion below found “in an ordinary medical malpractice claim stemming from a negligently performed sterilization procedure, the cost of raising a child may be recovered when a doctor’s negligence causes the birth of an unwanted child,” regardless of whether that doctor informs the patient about the failed procedure.

The jury would then weigh the effect of the notice, or lack of it, when assessing causation under this theory.

The high court agreed with the appeals court that wrongful conception sounds in the law of medical negligence.

“We are of the view, however, that this case is fundamentally about duty, which is for the court alone to define,” the high court said.

In examining the specific duty owed, the high court noted “[w]rongful birth is appropriately characterized as a claim-based failure to diagnose or failure to advise the parents. The duty owed is part of the doctor’s obligation to provide adequate care so that the parents can make an informed decision about the risks of pregnancy and childbirth; adequate care includes adequate notice.”

Wrongful conception is a closely related medical negligence claim that involves the birth of a healthy, but unplanned, child, the high court explained.

“As a matter of sound policy, we think that the extraordinary damages of raising a child to the age of majority should be reserved for extraordinary cases like Mendez” where the physician both failed to properly perform a tubal ligation and failed to inform the patient of the failure, the high court said.

In distinguishing the present case, the high court noted it was “the doctor in Mendez, not the patient, who controlled the relevant medical information.”

“In contrast to Mendez, Mr. and Mrs. Provencio possessed information that they could have used to avoid conception, assuming this was their goal,” the opinion said.

Accordingly, the high court found “damages relating solely to a negligently performed sterilization are those that would normally flow from a failed surgery, such as the cost of a second sterilization procedure, any physical or emotional harm that may result from the initial or subsequent sterilization, lost wages, the reasonable costs of birth control until a second procedure is feasible, and so forth.”

Provencio v. Wenrich, No. 32,344 (N.M. Aug. 17, 2011).

The National Institutes of Health (NIH), on behalf of the Department of Health and Human Services (HHS), issued a final rule August 23 on financial conflicts of interest.

The rule, published in the August 25 Federal Register (76 Fed. Reg. 53256 ), revises the 1995 regulations on the Responsibility of Applicants for Promoting Objectivity in Research for which Public Health Service Funding is Sought and Responsible Prospective Contractors to update and enhance the objectivity and integrity of the research process.

The rule noted, “[s]ince the promulgation of the regulations in 1995, biomedical and behavioral research and the resulting interactions among government, research Institutions, and the private sector have become increasingly complex.”

Such complexity plus a need to strengthen accountability, led NIH to revise the regulations, according to the rule.

Accordingly, the rule requires investigators to disclose to their institutions all of their significant financial interests (SFIs) related to their institutional responsibilities.

The rule lowers the monetary threshold at which SFIs require disclosure, generally from $10,000 to $5,000 and requires institutions to make certain information accessible to the public concerning identified SFIs held by senior/key personnel.

In addition, institutions must report to the Public Health Service (PHS) awarding component additional information on identified financial conflicts of interest and how they are being managed.

The rule also requires investigators to complete training related to the regulations and their institution’s financial conflict of interest policy.

“The NIH is committed to safeguarding the public’s trust in federally supported research that is conducted with the highest scientific and ethical standards,” NIH Director Dr. Francis S. Collins said in a press release. “Strengthening key provisions of the regulations with added transparency will send a clear message that NIH is committed to promoting objectivity in the research it funds.”

The rule also said Institutions applying for or receiving PHS funding from a grant, cooperative agreement, or contract that is covered by the rule must be in full compliance with all of the regulatory requirements no later than August 24, 2012, and immediately upon making its institutional Financial Conflict of Interest (FCOI) policy publicly accessible as described in the rule.

The Ninth Circuit held August 24 that the Department of Health and Human Services (HHS) Secretary failed to consider the required factors in granting Arizona's request to increase mandatory copayments on certain "medically needy" residents covered under a Medicaid waiver.

According to the appeals court panel, increasing the copayments as a way to save money did not satisfy the requirement for a “research or demonstration value” under a 42 U.S.C. § 1315 waiver.

Plaintiffs are a class of “medically needy” Arizonans who receive coverage through the state’s Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS), under a Section 1315 waiver, but who are not otherwise entitled to Medicaid.

In 2003, AHCCCS sought an increase in mandatory cost-sharing on certain low-income residents covered under its Section 1315 waiver. The HHS Secretary granted the request.

Plaintiffs alleged, among other things, the heightened mandatory copayments imposed by the state violated Medicaid cost-sharing restrictions and that the waiver exceeded the Secretary’s authority.

The district court granted summary judgment to defendants, finding cost-sharing was a reasonable means of providing care to certain expansion populations when budgets are tight. According to the court, the demonstration allowed plaintiffs to receive healthcare coverage they otherwise may not have had.

On appeal, the Ninth Circuit held the increased mandatory copayments did not violate Medicaid cost-sharing restrictions because plaintiffs were part of an “expansion population.”

HHS regulations, which are entitled to deference, “support the Secretary’s interpretation that where, as here, a state has not defined its 'medically needy' population pursuant to the Medicaid Act, persons who are not mandatorily covered by the state plan are expansion populations not protected by the 42 U.S.C. § 1396o costsharing limits,” the appeals court said. 

But the Ninth Circuit panel went on to find that the cost-sharing requirements did not comply with Section 1315. 

Specifically, the appeals court said, the Secretary was required to consider certain factors before granting a waiver, including whether a “project has a research or a demonstration value.” 

“A simple benefits cut, which might save money, but has no research or experimental goal, would not satisfy this requirement,” the appeals court explained.  

“There is little, if any, evidence that the Secretary considered the factors § 1315 requires her to consider before granting Arizona’s waiver,” the appeals court concluded. Thus, the Secretary’s decision was arbitrary and capricious. 

The appeals court reversed the district court’s ruling on this claim and remanded with directions to vacate the Secretary’s decision and remand to the agency for further consideration.  

Newton-Nations v. Betlach, No. 10-16193 (9th Cir. Aug. 24, 2011).

The Ninth Circuit held August 19 that a nonprofit hospital’s dormant commerce clause challenge to Washington state certificate of need (CON) regulations limiting licensed providers of certain “elective” cardiac procedures should not have been dismissed.

After finding Yakima Valley Memorial Hospital (Memorial) had prudential standing to mount the constitutional challenge, the appeals court reversed a lower court’s ruling that Congress expressly authorized approval of CON regimes pursuant to the National Health Planning and Resources Development Act of 1974 (NHPRDA).

Congress repealed the NHPRDA in 1986; the CON law and regulations at issue were promulgated after that in 2007 and 2008, respectively. Thus, the NHPRDA could not serve as an express congressional authorization of Washington's CON regulations, the Ninth Circuit said.

The appeals court reversed and remanded for further consideration of the hospital’s dormant Commerce Clause claim.

CON Regulations

The Washington State Department of Health refused to license Memorial to perform certain procedures known as elective percutaneous coronary interventions (PCI), although the hospital provides such services on an emergency basis.

State law, passed in 2007, requires the Department to issue a CON before licensing a provider to provide elective PCI. The Department issued implementing regulations in 2008.

Memorial sued the Department, arguing the CON requirement violates the dormant Commerce Clause by unreasonably burdening interstate commerce. Memorial also argued the way the Department defines “need” is anticompetitive and is preempted by Section 1 of the Sherman Act because it allows incumbent certificate holders to expand their capacity and preclude new certificates.

Unilateral Restraint of Trade

The district court held, and the appeals court agreed, Memorial could not maintain a claim of antitrust preemption because the PCI regulations were a unilateral restraint of trade by the state and therefore not barred by the Sherman Act.

Memorial argued the PCI regulations grant regulatory power to incumbent licenses by effectively allowing them to expand their capacity and exclude competitors from the elective PCI market.

The Ninth Circuit disagreed. While the PCI regulations create “market power,” they do not delegate “regulatory power” to the incumbent license holders, the appeals court said.

“The state imposes the licensing requirements. The state decides what the licensing requirements will be and whether they are met. The state does not delegate any aspect of need calculation to private parties,” the appeals court said.

“In short, nothing about the PCI regulations involves private discretion to engage in per se anticompetitive conduct,” the appeals court said.

Dormant Commerce Clause

The appeals court also agreed with the district court that Memorial had prudential standing to assert a dormant commerce clause challenge, but parted ways with the lower court on the issue of whether Congress precluded the challenge to the state’s CON regulations.

“Here, the barrier to interstate commerce is the requirement of a certificate of need to offer elective PCI to all patients, in-state or out-of-state,” the appeals court observed. “By virtue of the certificate of need requirement, the department prevents Memorial from soliciting out-of-state patients and competing in an interstate market to offer elective PCI services, activities that clearly involve interstate commerce.”

The district court also ruled, however, that Congress had authorized CON programs under NHPRDA, and even though the statute was repealed before the CON requirements at issue were enacted “erroneously put the burden on Memorial to prove the significance of repeal.”

Reversing, the Ninth Circuit held the repealed NHPRDA did not provide the requisite clear statement of authorization for the subsequently promulgated 2008 PCI regulations.

“Had Congress meant to perpetuate its alleged authorization for certificate of need programs, it could have included a savings clause in the repeal,” the appeals court added.

Yakmia Valley Mem’l Hosp. v. Washington State Dep’t of Health, No. 10-35497 & 10-35543 (9th Cir. Aug. 19, 2011).

The Second Circuit affirmed August 18 the dismissal of the City of New York’s (City's) antitrust action seeking to prevent Health Insurance Plan of Greater New York’s (HIP’s) merger with Group Health Inc. (GHI).

Affirming the U.S. District Court for the Southern District of New York’s grant of summary judgment to defendants, the appeals court agreed the City’s market definition as the “low-cost municipal health benefits market” was legally deficient because it was based on the preferences of a single-purchaser, not according to the rule of reasonable interchangeability and cross-elasticity of demand.

The appeals court also held the district court did not err in denying the City’s motion to amend its complaint to expand its market definition and add a new basis for its antitrust claims.

Specifically, the appeals court found the amended market definition to encompass all insurance providers participating in the City’s Health Benefits Program and all providers of commercial medical benefits in downstate New York would still be legally deficient.

The appeals court also noted no clear error in the district court’s determination that allowing the amendment would cause undue prejudice to GHI and HIP because it would require, at minimum, additional discovery from large employers other than the City in the downstate New York area and from other health insurer competitors.

The City obtains health insurance for its employees and their dependents through its Health Benefits Programs, which provides coverage to about 1.2 million.

The City selects several plan options from which employees choose coverage, either through health maintenance organizations, preferred provider organizations, or point of service plans.

GHI and HIP offer the two least expensive and most popular plans among City employees.

In September 2005, GHI and HIP announced merger plans and to convert from nonprofit to for-profit status.

The U.S. Department of Justice and the New York State Attorney General investigated the antitrust implications and decided not to challenge the proposed merger. The City, however, sued GHI and HIP in November 2006, seeking an injunction to block the merger under Section 7 of the Clayton Act, and Sections 1 and 2 of the Sherman Act.

The district court ultimately granted defendants summary judgment.

Affirming, the Second Circuit said the City’s alleged market was legally insufficient because “it ignores the competition existing among insurance providers for the City’s business, as well as the health insurance market for other large employers in the region.”

According to the appeals court, the City’s proposed market was too narrow because the City did not explain why other insurers could not propose competitive products if the merged firm raised its premiums to supracompetitive prices.

The appeals court also found the City’s proposed amendment to the market definition would not cure this deficiency and would be unfair to defendants that at this stage of the litigation would need to conduct significant additional discovery.

City of New York v. Group Health Inc., No. 10-2286-cv (2d Cir. Aug. 18, 2011).

The Sixth Circuit upheld August 18 a Department of Health and Human Services (HHS) regulation that excluded “pure research” conducted by residents from reimbursable “non-patient care activities” for purposes of a teaching hospital’s full time equivalent (FTE) resident count used to determine its indirect medical education (IME).

At issue in the case, was whether the federal government must reimburse teaching hospitals for the time their residents spent conducting pure research in the 1990s.

Congress included a provision in the Affordable Care Act (ACA), which requires Medicare to reimburse teaching hospitals for “all the time spent by an intern or resident . . . in non-patient care activities, such as didactic conferences and seminars, as such time and activities are defined by the Secretary.” ACA § 5505(b).

Reversing a 2009 decision by the a federal district court in Michigan in favor of the hospital, the Sixth Circuit held the ACA provision, which went into effect while the case was on appeal, was ambiguous as it specifically left how to define “non-patient care activity” in this context to the Secretary.

Pursuant to this authority, the Secretary recently issued a regulation implementing the ACA provision, which excludes “pure research” from reimbursable “non-patient care activities.”

Applying Chevron deference, the Sixth Circuit found the HHS regulation implementing the ACA provision was a reasonable interpretation of an ambiguous statutory term and therefore not arbitrary and capricious.

In so holding, the appeals court noted legitimate reasons for distinguishing pure research activities from other non-patient care activities, like attending seminars and didactic conferences, which still could have some affect on patient care.

Background

Plaintiff Henry Ford Health System d/b/a Henry Ford Hospital filed the instant action in the U.S. District Court for the Eastern District of Michigan disputing the proper amount of its IME payments for the years 1991 through 1996, and 1998 through 1999.

The hospital’s fiscal intermediary reduced its FTE count, used to determine IME payments, for all eight fiscal years. The fiscal intermediary disallowed, among other things, FTEs assigned to “pure research” rotations—i.e., research unrelated to the treatment of patients.

The Provider Reimbursement Review Board (PRRB) reversed. But the Centers for Medicare and Medicaid Services Administrator overturned the PRRB's decision.

The district court, which considered the case before the ACA provision was enacted, ruled in the hospital’s favor under a 1996 regulation, 42 U.S.C. § 412.105(g)(1), which provided for a resident to be counted if he or she was assigned to “one of the following areas: (A) The portion of the hospital subject to the prospective payment system . . . .”

The court held the term “areas” under the regulation “unequivocally refer[s] to geographic areas, not functions” as the Secretary had argued. Henry Ford Health Sys. v. Sebelius, No. 2:09-cv-10195-SFC-MJH (E.D. Mich. Dec. 30, 2009).

Ambiguity

On appeal, the Sixth Circuit considered the dispute in the context of the since-enacted ACA provision, which is effective for "cost reporting periods beginning on or after January 1, 1983” through those beginning on September 30, 2001.

The appeals court said the ACA provision did not resolve the issue of whether pure research amounts to a reimbursable “non-patient care activit[y],” emphasizing the statute expressly delegates to the Secretary the authority to “define[]” eligible “non-patient care activities.”

“Had Congress wanted anything that might fall into the category of non-patient care activities to count, no matter how distant from medical care the activity might be, why would it empower the Secretary to define the phrase,” the appeals court asked.

The hospital argued an adjacent section of the ACA concerning Medicare reimbursement of a teaching hospital’s direct cost specifically excludes “pure research” from the definition of “non-patient care activities.” Therefore, Congress’ failure to similarly exclude “pure research” under the ACA provision for indirect costs was significant.

But the appeals court rejected the hospital’s argument, noting the different context of “direct” versus “indirect” costs.

The appeals court also held the regulation was not impermissibly retroactive, noting Congress expressly authorized the Secretary to define "non-patient care activities" for the 1983 to 2001 time period.

“Tension” with Seventh Circuit Decision

The Sixth Circuit acknowledged its decision was “in some tension” with the Seventh Circuit’s August 2010 decision in University of Chicago Med. Ctr. v. Sebelius, No. 09-3429 (7th Cir. Aug. 25, 2010), which held the University of Chicago Medical Center was entitled to roughly $2.8 million in Medicare reimbursements for IME  expenses related to resident time spent on “pure research,” as opposed to patient care. According to the Seventh Circuit, Section 5505(b) of the ACA provided a clear statutory answer for the time period at issue.

In its decision, however, the Sixth Circuit noted the Seventh Circuit did not have the benefit of the subsequently issued HHS regulation, “which converted a run-of-mine statutory interpretation case into a Chevron case.”

Henry Ford Health Sys. v. Department of Health and Human Servs., No. 10-1029 (6th Cir. Aug. 18, 2011).

Pur Pharmaceutical Inc. will pay $154 million to resolve allegations that it defrauded Medicaid by improperly inflating reported drug prices used to set pharmacy reimbursement rates, Texas Attorney General Greg Abbott announced August 24.

Texas will share the settlement with four other states—Florida, Kentucky, South Carolina, and Alaska—and the federal government. Abbott said Texas will receive $71.8 million of the recovery, $24.4 million of which will go to the state’s general fund.

The relator that initiated the whistleblower action, Ven-a-Care of the Florida Keys, Inc., also will receive a portion of the settlement.

Similar cases have been filed across the country against numerous drug makers for allegedly inflating their drug prices to increase the so-called “spread” between actual costs and pharmacy reimbursement amounts.

The settlement resolves an enforcement action filed by Texas in 2008 against Pur and several other drug manufacturers for allegedly improperly reporting drug prices to Medicaid to increase their market share. The action against Pur was headed to trial later this year, Abbott said.

Pur admitted no liability or wrongdoing in agreeing to the settlement.

• Jose Nunez, a Miami-area physician, pled guilty August 23 to one count of conspiracy to commit healthcare fraud for his participation in a $25 million home health Medicare fraud scheme, the Department of Justice (DOJ) and other federal officials announced in a press release. According to plea documents, Nunez provided prescription referrals, in exchange for kickbacks and bribes, to two home healthcare agencies for expensive physical therapy and home healthcare services that were medically unnecessary and/or were never provided. These were prescribed by Nunez and other doctors, the release said. As part of the scheme, according to plea documents, Nunez falsified patient files with descriptions of non-existent medical conditions for Medicare beneficiaries so the program could be billed for medically unnecessary therapy and home health-related services. The Medicare program was billed approximately $1.5 million for the purported home healthcare services as a result of Nunez’s participation in the scheme, the release said. Three other co-conspirators also have pleaded guilty for their roles in the fraud scheme.

• DOJ announced that after a six-day trial, a federal jury convicted August 24 Judith Negron, the owner of Miami-area American Therapeutic Corporation (ATC), for orchestrating a fraud scheme that resulted in the submission of more than $205 million in fraudulent claims to Medicare for community health treatments for ineligible patients, according to an agency press release. The jury in the Southern District of Florida found Negron guilty of 24 felony counts, including conspiracy to commit healthcare fraud, healthcare fraud, conspiracy to pay and receive illegal healthcare kickbacks, conspiracy to commit money laundering, money laundering, and structuring to avoid reporting requirements, the release said. ATC’s two other co-owners pled guilty to all charges against them in April 2011, DOJ said.

• A federal judge in Florida sentenced August 22 Obel Martinez and Damaris Gil to 70 months and 37 months in prison, respectively, for participating in a durable medical equipment (DME) healthcare fraud scheme following their May 2010 guilty plea, DOJ announced in a press release. Martinez and Gil are the husband and wife owners of a Miami-area DME company, OM Best Help Corporation, that, according to plea documents, submitted false and fraudulent claims to Medicare for DME and other medical items and services that were medically unnecessary and not prescribed by a physician or licensed healthcare provider. Martinez and Gil also were ordered to pay $474,662 in restitution jointly and severally.

• A federal jury convicted August 22 Dr. Joseph J. Kubacki of 150 counts of healthcare fraud, wire fraud, and making false statements in healthcare, announced U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger. According to a press release, Kubacki, the Chairperson of the Ophthalmology Department of the Temple University School of Medicine, caused thousands of false claims to be submitted to healthcare benefit programs totaling more than $4.5 million for services rendered to patients he did not personally see or evaluate. The release said Kubacki was outside of Pennsylvania on some of the days he claimed to have treated patients. Medicare and private health insurers made more than $1.5 million in payments on fraudulent claims, the release said.

• U.S. Attorney for the Western District of Oklahoma Sanford C. Coats announced August 18 that a jury found Adedayo O. Adegboye and Olalekan Rufai guilty of committing five counts of healthcare fraud involving the sale of power wheelchairs and wheelchair accessories to Medicare beneficiaries. According to a press release, evidence at trial showed defendants’ company fraudulently billed Medicare $1.1 million for beneficiaries who did not receive a power wheelchair, beneficiaries who received a less expensive motorized scooter, and beneficiaries who did not have a medical need for a wheelchair. The jury found the pair not guilty of conspiracy.

• U.S. Attorney for the District of Minnesota B. Todd Jones announced in an August 18 press release that a former employee and the operator of a home healthcare agency, Universal Home Health, were charged with Medicaid fraud-related offenses. Stephen Jon Rondestvedt, who worked for Universal, was charged with one count of healthcare fraud and Mustafa Hassan Mussa, Universal’s operator, was charged with one count of aggravated identity theft. Rondestvedt allegedly agreed to provide and facilitate kickback payments to the family of a Medicaid recipient, who did not actually receive the personal care assistant services billed to Medicaid, which resulted in an estimated loss to the program of allegedly $55,000. Mussa allegedly used the identification of a Medicaid recipient during and in relation to the submission of fraudulent billings to Medicaid for services that were not actually provided, the release said.

The U.S. District Court for the Middle District of Louisiana dismissed August 15 all of a physician’s claims against a professional association that investigated and eventually suspended the physician for unprofessional conduct.

The case began when plaintiff Dr. Anthony S. Ioppolo was retained to provide expert medical opinion testimony for a plaintiff in a Florida medical malpractice suit.

Prior to the verdict, the defendants in the underlying case, Drs. Christopher Rumana and Mark Cuffe settled.

Ioppolo alleges that Rumana and Cuffe subsequently wrote a letter to the American Association of Neurological Surgeons and the American Association of Neurosurgeons (collectively, AANS) criticizing his ethics, honesty, integrity, and professionalism.

After receipt of the letter, the AANS convened a committee of its members known as the Professional Conduct Committee (PCC) to investigate the allegations advanced by Rumana and Cuffe and eventually recommended the imposition of sanctions against Ioppolo.

According to Ioppolo, Rumana and Cuffe violated the AANS by-laws by sending a copy of the PCC’s preliminary findings to several entities where he maintained professional relationships.

Ioppolo then filed suit against Rumana, Cuffe, AANS and others alleging that the actions of the defendants constituted defamation, abuse of process, abuse of personal rights, and intentional infliction of emotional distress.

After several procedural moves, AANS moved to dismiss Ioppolo’s second amended complaint under Federal Rule of Civil Procedure 12(b)(6).

Turning first to plaintiff’s defamation claim, the court agreed with defendants that the claim must be dismissed because Ioppolo failed to allege that the AANS itself published any defamatory statements relating to the disciplinary proceeding in issue to anyone outside of the association.

The court further agreed with defendants that plaintiff failed to establish the elements of his other claims and dismissed them as well.

Ioppolo v. Rumana, No. 06-193-JJB (M.D. La. Aug. 15, 2011).