Justia U.S. 6th Circuit Court of Appeals Opinion Summaries

Michael, a licensed pharmacist at Chapmanville's Aracoma Pharmacy, separately co-owns another West Virginia pharmacy and one in Pennsylvania. The government suspected that Michael used the pharmacies to distribute on-demand prescription drugs, worth more than $4 million, over the Internet. A grand jury returned a multi-count indictment. Count 7 charged Michael with fraudulently submitting a claim for payment to Humana for dispensing medication that was never dispensed (18 U.S.C. 1347). Count 8 charged him with committing aggravated identity theft by using the “identifying information” of a doctor and a patient “in relation to the [health care fraud] offense” (18 U.S.C. 1028A(a)(1), (c)(11)). Michael had submitted a claim to Humana indicating that A.S. (doctor) had prescribed Lovaza for P.R., including the doctor’s National Provider Identifier and the patient’s name and birth date. A.S. was not P.R.’s doctor and did not issue the prescription. Section 1028A requires a person to “assume the identity” of someone else; the district court held that the statute covered only “impersonation,” and dismissed Count 8. The Sixth Circuit reversed. To “use” a means of identification is to “convert to one’s service” or “employ” the means of identification. Michael used A.S. and P.R.’s identifying information to fashion a fraudulent submission, making the misuse of these means of identification “during and in relation to” healthcare fraud. View "United States v. Michael" on Justia Law

Community, the nation’s largest for-profit hospital system, obtained about 30 percent of its revenue from Medicare reimbursement. Instead of using one of the systems commonly in use for determining whether Medicare patients need in-patient care, Community used its own system, Blue Book, which directed doctors to provide inpatient services for many conditions that other hospitals would treat as outpatient cases. Community paid higher bonuses to doctors who admitted more inpatients and fired doctors who did not meet quotas. Community’s internal audits found that its hospitals were improperly classifying many patients; its Medicare consultant told management that the Blue Book put the company at risk of a fraud suit. Community attempted a hostile takeover of a competitor, Tenet. Tenet publicly disclosed to the SEC, expert analyses and other information suggesting that Community’s profits depended largely on Medicare fraud. Community issued press releases, denying Tenet’s allegations, but ultimately corroborated many of Tenet’s claims. Community’s shareholders sued Community and its CFO and CEO, alleging that the disclosure caused a decline in stock prices. The district court rejected the claim. The Sixth Circuit reversed. The Tenet complaint at least plausibly presents an exception to the general rule that a disclosure in the form of a complaint would be regarded, by the market, as comprising mere allegations rather than truth. The plaintiffs plausibly alleged that the value of Community’s shares fell because of revelations about practices that Community had previously concealed. View "Norfolk County Retirement System v. Community Health Systems, Inc." on Justia Law

Michigan mandates that school-age children be vaccinated before entering the public school system but offers exemptions for certain medical and nonmedical reasons. To get an exemption, a parent must visit a local health department. A devout Catholic, Nikolao, sought a religious waiver for her children. At the mandatory meeting, Wayne County nurses tried to disabuse Nikolao of the notion that her faith prohibited vaccination. The Religious Waiver Note contained a quote falsely attributed to Pope Benedict XVI stating that parents who chose not to vaccinate their children “would be in more proximate cooperation with evil" because of the life-saving nature of vaccines. Nikolao received the waiver. On the compliance form, the nurses wrote that Nikolao objected because she wanted her “child to have natural immunity.” Nikolao wanted the form to report her religious objection . She sued, 42 U.S.C. 1983, alleging violations of the First Amendment. The district court dismissed. The Sixth Circuit affirmed in part and vacated in part. The state is merely voicing its own opinion on religious objections to prevent the outbreak of communicable diseases. This does not constitute excessive entanglement for an Establishment Clause challenge. Nikolao has not presented any facts to suggest that the state has coerced her religious practices and did not suffer an injury-in-fact under the Free Exercise Clause; she did not have standing to pursue that claim. View "Nikolao v. Lyon" on Justia Law

Abilify is approved to treat schizophrenia, Bipolar Disorder, major depressive disorder and irritability associated with autism. There are no disapproved treatments for elderly patients, but the FDA has included a warning since 2007 that Abilify is associated with increased mortality in elderly patients with dementia-related psychosis. Relators, former BMS employees, alleged in a qui tam suit that BMS and Otsuka engaged in a scheme to encourage providers to prescribe Abilify for unapproved (off-label) uses and improperly induced providers to prescribe Abilify in violation of the Anti-Kickback Statute. Nearly identical allegations were leveled against the companies years earlier. In 2007-2008, the companies each entered into an Agreement as part of a settlement of qui tam actions concerning improper promotion of Abilify. Relators allege that, despite those agreements, the companies continued to promote Abilify off-label and offer kickbacks, causing claims for reimbursement for the drug to be submitted to the government, in violation of the False Claims Act (FCA), 31 U.S.C. 3729. The district court dismissed in part. The Sixth Circuit affirmed; the complaint did not satisfy Rule 9(b)’s requirement that relators adequately allege the entire chain to fairly show defendants caused false claims to be filed. As sales representatives, relators did not have personal knowledge of provider’s billing practices.The alleged plan was to increase Abilify prescriptions through improper promotion, which does not amount to conspiracy to violate the FCA. View "Ibanez v. Bristol-Myers Squibb Co." on Justia Law

Federal Medicaid funds are not available for state medical expenditures made on behalf of “any individual who is an inmate of a public institution (except as a patient in a medical institution),” 42 U.S.C. 1396d(a)(29)(A). "Inmate of a public institution" means a person who is living in a public institution. However, an individual living in a public institution is not an “inmate of a public institution” if he resides in the public institution “for a temporary period pending other arrangements appropriate to his needs.” Ohio submitted a proposed plan amendment aimed at exploiting this distinction: it sought to classify pretrial detainees under age 19 as noninmates, living in a public institution for only “a temporary period pending other arrangements appropriate to [their] needs,” for whom the state could claim Medicaid reimbursement. The Centers for Medicare and Medicaid Services rejected the amendment, finding that the inmate exclusion recognizes “no difference” between adults and juveniles, or convicted detainees and those awaiting trial. The Sixth Circuit denied a petition for review, agreeing that the involuntary nature of the stay is the determinative factor. The exception does not apply when the individual is involuntarily residing in a public institution awaiting adjudication of a criminal matter. View "Ohio Department of Medicaid v. Price" on Justia Law

Harold Persaud, M.D., a cardiologist in private practice, was charged with one count of health-care fraud, 18 U.S.C. 1347, 14 counts of making false statements relating to health-care matters, 18 U.S.C. 1035, and one count of money laundering, 18 U.S.C. 1957. The grand jury also returned a forfeiture finding, requiring Persaud to forfeit all property linked to the charges, including $343,634.671 seized from bank accounts associated with Persaud and his wife. At trial, the government presented 34 witnesses, including 11 physicians, eight patients, and four nurses. The defense relied on five witnesses, including an expert cardiologist, two referring physicians, and a coding expert. The jury convicted Persaud on all charges, except for one false-statement count. The jury concluded that the $343,634.67 seized from the Persauds’ bank accounts was forfeitable; the $250,188.42 seized from Persaud’s wife’s account was related to his money-laundering conviction; and Persaud’s scheme generated gross proceeds of $2,100,000. The district court sentenced Persaud to 20 years of imprisonment, a $1,500 special assessment, and restitution of $5,486,857.03, which consists of money damages to be paid to Persaud’s patients, their private insurers, and the government. The Sixth Circuit affirmed. The jury was entitled to accept the view of the government’s experts over those of Persaud’s experts. View "United States v. Persaud" on Justia Law

Parrino worked as a pharmacist for NRS. He was responsible for preparing medications, mainly inhalers. After leaving NRS, Parrino was contacted by the FDA and FBI, which were investigating reports that NRS was filling prescription medications for Pulmicort, a steroid used for the treatment of asthma, with a sub-potent amount of the active ingredient. Parrino cooperated and pleaded guilty to introducing misbranded drugs into interstate commerce, 21 U.S.C. 331(a), 352(a), and 18 U.S.C. 2, a strict liability misdemeanor. Parrino was sentenced to one year of probation and ordered to pay $14,098.24 in restitution for Medicaid and Medicare payments. The Department of Health and Human Services notified Parrino that it was required to exclude him from participation in any capacity in the Medicare, Medicaid, and all federal healthcare programs for at least five years, under 42 U.S.C. 1320a-7(a). Rejecting Parrino’s argument that he lacked any mens rea to commit a crime and was convicted of a strict liability misdemeanor, an ALJ and the Appeals Board upheld HHS’s decision. The Sixth Circuit affirmed dismissal of Parrino’s suit, finding that HHS’s action affected no substantive due process right because “health care providers are not the intended beneficiaries of the federal health care programs” and that the decision to exclude Parrino was “not so shocking as to shake the foundations of this country.” View "Parrino v. Price" on Justia Law

Critical Access Hospitals are reimbursed by Medicare for the reasonable and necessary costs of providing services to Medicare patients. The Medicaid program requires states to provide additional (DSH) payments to hospitals that serve a disproportionate share of low-income patients, 42 U.S.C. 1396a(a)(13)(A)(iv). In Kentucky, DSH payments are matched at 70% by the federal government. Kentucky’s contribution to DSH programs comes from payments from state university hospitals and Kentucky Provider Tax, a 2.5% tax on the revenue of various hospitals, including Appellants, The amount of DSH payments a hospital receives is unrelated to the amount of KP-Tax it paid. During the years at issue, DSH payments covered only 45% of Appellants' costs in providing indigent care. Appellants filed cost reports in 2009 and 2010 claiming their entire KP-Tax payment as a reasonable cost for Medicare reimbursement. Previously, they had received full reimbursement; for 2009 and 2010, however, the Medicare Administrative Contractor denied full reimbursement, offsetting the KP-Tax by the amount of DSH payments Appellants received. The Provider Reimbursement Review Board and Centers for Medicare and Medicaid Services upheld the decision. The Sixth Circuit affirmed, reasoning that the net economic impact of Appellants’ receipt of the DSH payment in relation to the cost of the KP-Tax assessment indicated that the DSH payments reduced Appellants’ expenses such that they constituted a refund. View "Breckinridge Health, Inc. v. Price" on Justia Law

Raymond, injured in a slip-and-fall accident, received medical treatment at Mercy Health Anderson Hospital. Strunk, injured in a car accident, received medical treatment at Mercy Health Clermont Hospital. Both have health insurance. Each of their insurers has an agreement with Mercy for the provision of services. Raymond and Strunk provided all information necessary for the hospital to submit claims. Mercy did not submit claims to the insurers. Instead, Avectus, on behalf of Mercy, sent letters to Raymond’s and Strunk’s attorneys stating the balance due for medical services and requesting that, to prevent collection efforts against their respective clients, the attorneys sign a “letter of protection” against any settlement or judgment, agreeing “to withhold and pay directly to Mercy Health the balance of any unpaid charges ... should my firm obtain any settlement or judgment for this patient." Raymond and Strunk claimed that Mercy and Avectus sought compensation from them for their medical expenses, in violation of Ohio Revised Code 1751.60. The district court dismissed. The Sixth Circuit reversed. The defendants sought payment “from a health-insuring corporation’s insured” while in a healthcare services contract with their health-insurance providers. The court rejected a claim that the defendants effectively sought compensation from a third party. View "Raymond v. Avectus Healthcare Solutions, LLC" on Justia Law

In 2006, Congress amended 42 U.S.C. 1396p(c)(1)(F)(i), which permits individuals and married couples to dispose of their assets (to qualify for Medicaid) by purchasing an annuity, under which the state is named as the remainder beneficiary in the first position for the amount of medical assistance paid. The federal law initially contained a drafting error. It was subsequently amended. A corresponding Kentucky regulation, promulgated four months later, mistakenly included the pre-amendment language, stating that the state had to be the beneficiary for the amount of assistance paid on behalf of the annuitant, rather than the institutionalized spouse. The state agency enforced the corrected federal statute. The Singletons sought Medicaid benefits to support Claude’s full-time nursing home care; in purchasing an annuity, Mary wanted to name the state as a beneficiary for the value of care provided to her, rather than Claude, as the Kentucky regulation seemed to permit. Claude obtained Medicaid eligibility after the purchase of an annuity that complied with the federal regulation. The government paid $98,729.01 in medical expenses before Claude's death. Mary later died, leaving $118,238.41 in the annuity. In compliance with the federal rule, the government’s claim left $19,509.40 for the secondary beneficiaries. The Singleton children sued. The Sixth Circuit rejected their argument that the Medicaid statute gave the state discretion to be more generous concerning annuities and the general spend-down rules. The Kentucky regulation departed from the Medicaid statute’s clear instructions and was preempted. View "Singleton v. Commonwealth of Kentucky" on Justia Law