Physicians that consider accepting an expensive meal or generous speaker’s fees paid by drug companies have cause for concern today. A Springfield, Massachusetts, gynecologist was arrested on October 22, 2015 in connection with allegedly accepting free meals and speaker fees from a pharmaceutical company in exchange for prescribing its drugs, allowing pharmaceutical sales representatives to access patient records and lying to federal investigators, according to the U.S. Department of Justice (DOJ).
The physician was indicted for allegedly violating the Anti-Kickback Statute (AKS), the Health Insurance Portability and Accountability Act of 1996 HIPAA, and obstructing an investigation by allegedly lying to federal agents and directing an employee to lie as well.
According to documents filed by the DOJ, Warner Chilcott, a pharmaceutical company based in Rockaway, N.J., allegedly paid the physician $23,500 to prescribe its osteoporosis drugs. On 31 occasions, a Warner Chilcott sales representative allegedly brought food to the physician’s office for she and her staff, and paid the physician $750 to speak with the representative for 25-30 minutes while she ate. On another occasion, Warner Chilcott paid to cater a home barbeque that the physician hosted for her friends. Warner Chilcott also paid the physician $250 for speaker training, despite the fact that she never spoke to any other physicians. It is alleged that the physician increased her use of company’s drugs during this time, and precipitously declined once she stopped being paid. The physician also allowed a company sales representative to access protected health information in her patients’ medical files. The remaining allegations relate to the physician’s conduct during the investigation.
Health care providers facing civil and/or criminal investigations are wise to consult with experienced counsel. The conduct of providers after commencement of the investigation often becomes the subject of additional charges. One area of obvious concern is the instructions given by the health care provider to practice employees. Competent legal counsel will guide providers on how to handle such communications.
According to the DOJ, the charge of violating the AKS provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $25,000. The charge of violating HIPAA provides a sentence of no greater than one year in prison and/or a fine of $50,000 and one year of supervised release. The charge of obstructing a criminal health care investigation provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties.
The indictment contains only allegations and the physician in this case is presumed innocent unless proven guilty in a court of law. Nevertheless, the indictment itself provides critical insight into the DOJ’s current approach to investigating and pursuing fraud cases in general, and AKS and HIPAA violations in general.
Clients seek our counsel on physician-industry relationships on a daily basis. These relationships take many forms and most, when structured properly, provide little risk of violating federal law. However, all too often physicians are approached with dubious arrangements that are packaged to seem legitimate. Anytime a proposed arrangement allows anything of value to pass from industry provider (e.g. drug company, pharmacy, imaging center, ASC, hospital, etc.) to a physician in a position to make a referral to the industry provider, the arrangement must be analyzed against the AKS.
This indictment also serves as a harbinger of future action by the DOJ. It is noteworthy that the indictment involves relatively small amounts of money paid in increments over time and that it contains criminal allegations for a HIPAA violation. The first 10-12 years since the enactment of HIPAA saw relatively sparse enforcement, and almost exclusively relating to patient complaints. Over the last several years, the government has dramatically increased enforcement of HIPAA, including random audits of providers. The inclusion of a criminal charge in this indictment is uncommon and should serve as a wake-up call to all providers to review their HIPAA compliance plans.
Frier Levitt counsels clients on all aspects of AKS, HIPAA, and the myriad of other state and federal healthcare laws. We can assist providers in analyzing and crafting relationships that are compliant under AKS and other applicable laws. We also have attorneys with years of experience in crafting HIPAA compliance plans, evaluating agreements involving the disclosure of individual identifiable information, and handling data breaches should one occur. Contact us today to speak to an attorney.
