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May 20, 2019

Health Headlines – May 20, 2019


U.S. Supreme Court Holds that FCA Relators can Rely on “Government Knowledge” Statute of Limitations even if the Government does not Intervene – On May 13, 2019, in a unanimous decision, the United States Supreme Court held that even in cases where the government does not intervene in a False Claims Act (FCA) action, a relator is entitled to rely on the portion of the statute that allows the filing of an FCA action within three years of when relevant material facts are known or should have been known by “the official of the United States charged with responsibility to act in the circumstances.” A relator’s ability to rely on this portion of the statute, whether or not the government intervenes in the case, increases the time by which a relator can file an FCA action by up to four years in some cases. A copy of the Supreme Court opinion in the case, entitled Cochise Consultancy, Inc. v. United States ex rel. Hunt, can be found here.

Under the FCA statutory structure, FCA actions must be filed within six years of the alleged violation or three years after relevant material facts are known or should have been known by the government, whichever is later. A hard 10-year limit since the time of the alleged violation also applies to all claims. There was previously a question as to whether, in nonintervened cases, the relator could rely on the “government knowledge” portion of this statute for determining whether the action was timely. Writing for the unanimous court, Justice Thomas conclusively answered this question by holding:

The limitations period in §3731(b)(2) applies in a relator-initiated suit in which the government has declined to intervene. Both government-initiated suits under §3730(a) and relator-initiated suits under §3730(b) are “civil action[s] under section 3730.”  Thus, the plain text of the statute makes the two limitations periods applicable in both types of suits. 

The Court further reasoned that “treating a relator-initiated, nonintervened suit as a ‘civil action under section 3730’ for purposes of subsection (b)(1) but not subsection (b)(2) is at odds with fundamental rules of statutory interpretation.” The Court found “nothing unusual about extending the limitations period when the government official did not know and should not reasonably have known the relevant facts, given that the government is the party harmed by the false claim and will receive the bulk of any recovery.” Moreover, since the relator is not an “official of the United States” for purposes of the FCA, their knowledge of alleged false claims does not itself trigger the three-year statute of limitations.

Thus, relators can now take advantage of the full ten-year statutory period where the evidence shows that the government’s knowledge of the facts occurred within three years of the filing of the action – even if the alleged violation giving rise to the action occurred more than six-years before filing and even if the relator was aware of the alleged violation giving rise to the action more than three years before filing.

Reporter, Amy L. O’Neill, Sacramento, +1 916 321 4812, aoneill@kslaw.com.

CMS Temporarily Pauses QIO Short Stay and Higher Weighted Diagnosis-Related Group Reviews – Effective May 8, 2019, CMS temporarily suspended Beneficiary and Family Centered Care Quality Improvement Organization (BFCC-QIO) Short Stay reviews and Higher Weighted Diagnosis-Related Group (HWDRG) reviews. Reviews will be suspended until CMS finds a new BFCC-QIO contractor to perform the Short Stay reviews and the HWDRG reviews. It is anticipated that CMS will award a new contract in the third quarter of 2019. Two contractors – Livanta and Kepro – have been performing the reviews for all 50 states and three territories since 2015, and CMS would like one contractor to perform these reviews on a national basis.

Starting in 2015, BFCC-QIOs began performing Targeted Probe and Educate Short Stay reviews to assess compliance with the Two Midnight Rule. CMS, however, paused BFCC-QIO Short Stay reviews in May 2016 “in an effort to promote consistent application of the medical review policies regarding patient status for short hospital stays and to allow time to improve standardization in the BFCC-QIOs’ review process.” BFCC-QIO Short-Stay reviews resumed in September 2016.

BFCC-QIOs also perform HWDRG-related reviews. When hospitals determine that the original coding sent to the Medicare Administrative Contractor (MAC) for payment was not appropriate, a HWDRG may be requested. The BFCC-QIO reviews these HWDRG assignments post-payment to confirm accuracy.

Kepro’s announcement regarding the temporary review suspension is available here.

Reporter, Taylor Whitten, Sacramento, +1 916 321 4815, twhitten@kslaw.com.

District Court Orders HHS to Immediately Cease New Liver Transplant Allocation Policy – On May 15, 2019, United States District Judge Amy Totenberg ordered HHS to “immediately cease and desist” from further implementing its April 2019 liver allocation policy pending appellate review in Callahan, et al. v. Azar, No. 1:19-cv-1783 (N.D. Ga.). The plaintiffs, which include several transplant centers, universities, and individual transplant patients, are seeking appellate review of the district court’s denial of their request for a temporary restraining order regarding the liver allocation policy. Meanwhile, plaintiffs sought an injunction pending the Eleventh Circuit’s review. The district court granted plaintiffs’ injunction request to “maintain the pre-May 14, 2019 status quo and minimize[] major disruption in the liver transplant medical field pending further order of the [Eleventh Circuit.]”

Under HHS’s oversight, the board of directors of the Organ Procurement and Transplant Network (OPTN) and the United Network for Organ Sharing (UNOS) (the OPTN/UNOS Board) adopted a revised version of their national liver distribution policy on December 3, 2018 (Revised Policy). The OPTN/UNOS Board is the governing body that oversees and develops policies for operating the OPTN to equitably allocate organs to patients on the national transplant waiting list.

Under the former policy, liver transplants were distributed based on geographic boundaries drawn around 58 donor service areas (DSAs) and 11 transplant regions. The Revised Policy, described in detail here, prioritizes liver offers for most deceased adult donors to candidates with the highest medical urgency listed at transplant hospitals within 500 nautical miles of the donor hospital, eliminating DSAs.  The Revised Policy also provides special rules for livers from certain donor categories, including deceased donors under the age of 18 to give priority to pediatric transplant candidates listed at any transplant hospital within 500 nautical miles of the donor hospital. King & Spalding previously wrote about bipartisan congressional outreach to resolve concerns with the Revised Policy. The Callahan case is focused on the procedural correctness of the adoption of the Revised Policy, among other things, in light of the Administrative Procedure Act, 5 U.S.C. § 706.

Judge Totenberg’s May 15, 2019 order enjoined OPTN/UNOS’s enforcement of the Revised Policy just after it had become effective on May 14, 2019. Although OPTN/UNOS previously agreed to continue the effective date of the Revised Policy by two weeks from its initial rollout date of April 30 at the Court’s request, the district court noted that further “hitting the pause button” on the Revised Policy served the public interest and avoided putting transplant patients and the liver transplant system at large “unnecessarily at great risk.” The district court made it clear that further guidance was needed from the Eleventh Circuit, particularly due to the Supreme Court’s “imminent decision” in Kisor v. Wilkie, No. 18-15 (oral argument held March 27, 2019), regarding deference to an agency’s interpretation of its own rules, also at issue in Callahan.

King & Spalding will continue to monitor the Callahan litigation and its resulting effects on OPTN/UNOS’s revised liver allocation policy.

Reporter, Lee Nutini, Atlanta, +1 404 572 3533, lnutini@kslaw.com.

ALSO IN THE NEWS

No Surprises Act Introduced to Prevent Unexpected Medical Bills – On May 14th, House Energy and Commerce Chairman Frank Pallone (D-NJ), and ranking Republican Greg Walden (R-OR) introduced a draft bill to prevent patients from receiving pricey and unexpected medical bills. The draft legislation, titled the “No Surprises Act,” is available here. The No Surprises Act tracks the principles previously outlined by the White House to guide Congress in developing legislation to end surprise medical billing. The principles are summarized in a prior King & Spalding article here.  On May 16, Senators Bill Cassidy (R-LA), Michael Bennet (D-CO), Todd Young (R-IN), Maggie Hassan (D-NH), Lisa Murkowski (R-AK), and Tom Carper (D-DE) introduced H.R. 1531, the STOP Surprise Medical Bills Act of 2019.  The draft Senate bill is summarized here and the full text of the draft Senate bill is available here.  Once finalized, the official text of the Senate bill will be available here.

King & Spalding Healthcare Partner Torrey McClary Recognized as one of Top Women Lawyers in California – On May 14th, House Energy and Commerce Chairman Frank Pallone (D-NJ), and ranking Republican Greg Walden (R-OR) introduced a draft bill to prevent patients from receiving pricey and unexpected medical bills. The draft legislation, titled the “No Surprises Act,” is available here. The No Surprises Act tracks the principles previously outlined by the White House to guide Congress in developing legislation to end surprise medical billing. The principles are summarized in a prior King & Spalding article here.

King & Spalding Roundtable: Best Strategies for Defending Pharma Patents and Countering Challengers’ Trending Tricks – King & Spalding will host a webinar on Thursday, May 23, 2019 from 2:00 to 3:00 p.m. ET discussing tips and tricks for navigating through pharmaceutical patent litigation and Patent Trial and Appeal Board (PTAB) proceedings and addressing potential strategies for branded pharmaceutical companies to prepare for newly trending attacks and avoid possible pitfalls.  Topics discussed in this webinar include:

  • “Design-around” strategies in attempts to avoid patent infringement;
  • Use of the PTAB by challengers as a second front in patent litigation;
  • “Shape-shifting” patent attacks that pit infringement and validity positions or different validity positions against one another; and
  • Trends in using, or avoiding, the “patent dance” for biosimilars patent litigation under the BPCIA.

Registration for the event is available here.