FDA Publishes Names of Healthcare Providers That Received Contaminated Products – The Food and Drug Administration (FDA) recently published the names of healthcare providers that received contaminated products from New England Compounding Center’s facility in Framingham, Massachusetts. The FDA has published two lists containing the names of the healthcare providers. The first list provides a state-by-state description of the providers that received the contaminated products. The second list compiles the names of the healthcare providers alphabetically and “includes the specific products shipped, the quantities of product shipped, and the shipping date,” according to a FDA press release.
Because New England Compounding Center provided the information contained in the lists, FDA has determined that it “cannot vouch for the completeness or accuracy of the lists.” Nevertheless, FDA maintains that the lists contain “the best information we have available, at this time, to help inform facilities and healthcare providers of [New England Compounding Center] products shipped to their facilities since May 21, 2012.”
FDA and the Massachusetts Department of Public Health have blamed New England Compounding Center with causing “a widespread outbreak of fungal meningitis [that] has affected people in 17 states and caused 23 deaths.” Authorities in Massachusetts allege that the New England Compounding Center failed to follow sterilization guidelines and compounded drugs in dangerous conditions at their Framingham facility. FDA recommends that healthcare providers follow up with patients who received injectable products or cardioplegic solutions purchased or produced by New England Compounding Center that were shipped and administered on or after May 21, 2012.
To view the lists of healthcare providers that received drugs from New England Compounding Center, click here.
Reporter, Ramsey Prather, Atlanta, +1 404 572 4624, rprather@kslaw.com.
OIG Issues Questionnaire on Electronic Health Record Security Practices – The HHS Office of Inspector General (OIG) has issued an 18-page, 54-question survey regarding the safety and audit practices used by hospitals to safeguard information stored in electronic health records (EHRs). These surveys are directed to a number of eligible hospitals that have successfully attested to meaningful use of certified EHR technology under the HITECH Act. The survey was due back to OIG by October 26, 2012, but we understand that some providers have been granted extensions. The questionnaire is available by clicking here.
The questionnaire focuses on several areas of interest: coding practices; user authentication procedures; access to the EHR by entities other than the hospital; audit log use and capabilities; procedures for entry of physician progress and nursing notes into the EHR; export of information from the EHR; patient access; and “copy and paste” capabilities.
The questionnaire is the most recent in a series of events scrutinizing provider use of EHRs. On September 22, 2012, the New York Times reported that some experts believe providers are using EHRs to bill for medically unnecessary services. Shortly after publication of that article, Attorney General Eric Holder and HHS Secretary Kathleen Sebelius issued a joint letter to the major hospital trade associations warning against misuse of EHRs. The letter particularly focused on providers cutting-and-pasting progress notes and diagnoses from one patient record to another without any indication of specific, individualized evaluation. These developments were summarized in detail in the October 1, 2012 edition of Health Headlines, available by clicking here.
Reporter, Christopher Kenny, Washington, D.C., +1 202 626 9253, ckenny@kslaw.com.
OIG Issues Inquiries to Hospital Purchasers of Spinal Devices Supplied by Physician-Owned Entities – The OIG Office of Evaluation and Inspections, Region 1, has issued inquiries to a sample of hospitals that have billed Medicare for spinal surgeries to measure how many of the sampled hospitals purchased implantable spinal devices from physician-owned entities. OIG is conducting the inquiry at Congressional request, with the stated goal of determining “the number of hospitals that purchase spinal devices from physician-owned entities and what benefits hospitals may derive from these distribution models.” The inquiry requests that hospitals complete a general questionnaire on those topics, and answer questions relating to at least one specific, sampled invoice of a spinal surgery for which the hospital billed Medicare.
Among the questions posed in the inquiry, OIG seeks information regarding whether the sampled invoice(s) is for a surgery performed by a physician who practices in the hospital and has an ownership interest in the entity that supplied the device used during the surgery.
The completed questionnaire is due to OIG by October 31, 2012, though we understand OIG has granted an extension. OIG instructs providers to complete the survey online, where the sampled invoice(s) will be provided. A copy of the questions is available by clicking here.
Reporter, Christopher Kenny, Washington, D.C., +1 202 626 9253, ckenny@kslaw.com.
Chancery Court Finds Management Services Agreement Key in Establishing Jurisdiction – On August 28, 2012, the Delaware Court of Chancery found that a management services agreement could help establish both personal jurisdiction through a conspiracy to defraud and joint and several liability through an agency theory. Hospitalists of Delaware, LLC v. Lutz, No. 6221-VCP, 2012 Del. Ch. LEXIS 207 (Del. Ch. Aug. 28, 2012). Plaintiffs in the case were two judgment creditors seeking damages and declaratory relief from defendant Cubit Medical Practice Solutions (Cubit), a dissolved medical billing company, and three other entities in the same corporate family incorporated in Ohio. Plaintiffs received default judgments against Cubit in 2010.
Cubit, a Delaware corporation with its principal place of business in Ohio, was party to a Management Services Agreement (“Agreement”) with defendant Integra. Both Cubit and Integra were organized under Blue Chip Venture Company, an Ohio limited liability company. Pursuant to the Agreement, Integra provided management services to Cubit in exchange for management fees. Though Cubit and Integra entered into the Agreement in 2005, the insolvent Cubit paid no management fees to Integra until 2008. Plaintiffs claimed that Cubit’s directors instructed Integra to document the management fees it received from Cubit as secured payments so Integra would have priority over Cubit’s other creditors.
Integra claimed that, as an Ohio corporation, it was not subject to personal jurisdiction in Delaware. However, Delaware recognizes a conspiracy theory of personal jurisdiction. In Delaware, a conspiracy to defraud is satisfied by a claim for aiding and abetting a breach of fiduciary duty. Because Cubit engaged in a series of self-dealing and interested transactions by paying Integra when it was insolvent, and Integra accepted these as secured payments knowing Cubit was insolvent, the court determined that Integra had aided and abetted the Cubit directors’ breach of fiduciary duty. Additionally, the court found that Integra may be jointly and severally liable for the judgments against Cubit under the agency theory. The court focused on the fact that the Agreement allowed Integra to direct Cubit’s affairs and finance Cubit’s operations by not seeking payment, in addition to the sharing of directors, office space, data services, and a credit card account. The opinion may be read by clicking here.
Reporter, Paige Fillingame, Houston, +1 713 615 7632, pfillingame@kslaw.com.
Proposed Settlement of Medicare Class Action Could Impact Chronic Care Benefits – On October 16, 2012, representatives of the parties in the nationwide class action lawsuit styled, Glenda Jimmo, et. al vs. Kathleen Sebelius filed a proposed legal settlement with the chief judge of the Federal District Court in Vermont in an effort to resolve the lawsuit. If finalized, the settlement would affect thousands of people with chronic conditions and disabilities who are potentially having issues currently qualifying for Medicare coverage of home health care, skilled nursing home stays and outpatient therapy because they are required to show a likelihood of medical or functional improvement before Medicare would pay for the services.
Under the lawsuit, plaintiffs alleged that the U.S. Department of Health and Human Services, Medicare contractors, and administrative review boards were arbitrarily limiting coverage for patients who did not show long-term improvement in their conditions, even though CMS regulations provide that these services should be covered. Pursuant to the proposed settlement, Medicare will pay for the services at issue if they are needed to “maintain the current condition or prevent or slow further deterioration,”—and the patient would not be required to show that their condition is likely to improve.
If implemented, the changes will apply to the traditional Medicare program and to private Medicare Advantage plans. They apply to people 65 and older, as well as to people under 65 who qualify for Medicare because of disabilities. The proposed settlement is available here.
Reporter, Juliet M. McBride, Houston, +1 713 276 7448, jmcbride@kslaw.com.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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