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| Dear Friend,
What do you know about potential False Claims Act (“FCA”) liability? The U.S. Supreme Court says it makes all the difference.
The plaintiff in an FCA case, whether the government or a whistleblower, must establish two elements to prove liability: (1) The falsity of the claim submitted to the government, and (2) the defendant’s knowledge of the claim’s falsity.
But what standard or definition is used to determine a defendant’s knowledge? Is it an objective standard, as in what you should know, or is it a subjective standard, as in what you actually thought of the claim’s truth/falsity at the time you submitted it to the government?
The question was answered last week (on June 2, 2023) by way of a unanimous U.S. Supreme Court opinion in United States ex rel. Schutte V. Supervalu: it’s a subjective standard.
Although the opinion involves pharmacy claims by supermarket chains SuperValu and Safeway, Justice Thomas, writing for the Court, used this analogy:
"The False Claims Act (FCA) imposes liability on anyone who “knowingly” submits a “false” claim to the Government. . . . . In some cases, that rule is straightforward: If a law authorized payment of $100 for “each” medical test, and a doctor knows that he did five tests but submits a claim for ten, then he has knowingly submitted a false claim. But sometimes the rule is less clear. If a law authorized payment for only “customary” medical tests, some doctors might be confused when it came time for billing. And, while some doctors might honestly mistake what that term means, others might correctly understand whatever “customary” meant in this context—and submit claims that were inaccurate anyway.
"The cases before us today involve a legal standard similar to that latter example: In certain circumstances, pharmacies are required to bill Medicare and Medicaid for their “usual and customary” drug prices. And, critically, these cases involve defendants [SuperValue and Safeway] who may have correctly understood the relevant standard and submitted inaccurate claims anyway. The question presented is thus whether respondents could have the scienter [i.e., the knowledge] required by the FCA if they correctly understood that standard and thought that their claims were inaccurate.
"We hold that the answer is yes: What matters for an FCA case is whether the defendant knew the claim was false. Thus, if respondents correctly interpreted the relevant phrase and believed their claims were false, then they could have known their claims were false.” [Emphasis added.]
The opinion, which relates to two underlying FCA cases, one against SuperValu and the other against Safeway, also shed light on the meaning of the term “usual and customary”, at least as applicable in regard to the particular type of pharmacy claims submitted by the two retail chains.
At issue were claims filed under each of the Medicaid and Medicare programs.
As to Medicaid, CMS regulations, and most state’s Medicaid plans, limit a pharmacy’s reimbursement to the lower of two amounts, one of which is the healthcare provider’s “usual and customary charges [for the drug] to the general public.”
Medicare Part D, a prescription-drug coverage plan, is administered via contracts awarded by CMS to private plan sponsors which, in turn, enter into contracts with pharmacies and pharmacy benefit managers. Many of the contracts at issue underlying the SuperValu and Safeway cases limited any reimbursement to the pharmacy’s “usual and customary” price.
In connection with their submission of claims, SuperValu and Safeway were required to disclose their “usual and customary” price. The whistleblower is bringing the underlying cases alleged that the reported higher prices to these entities than the ones that they usually and customarily charged to the public.
In essence, what the whistleblowers argued was that SuperValu and Safeway were reporting list price type numbers as their “usual and customary” price, when, in reality, they gave so many retail customers significant discounts that those prices could not be “usual and customary”. For example, the opinion states:
“. . . [The whistleblowers] presented evidence that Safeway charged just $10 for 94% of its cash sales for a 90-day supply of a cholesterol drug between 2008 and 2012. Yet Safeway apparently reported prices as high as $108 as “usual and customary” during that time. And [the whistleblowers] presented evidence that, at least at some times and for some drugs, SuperValu made more than 80% of its cash sales for prices less than what it disclosed as its “usual and customary” price.” [Emphasis added.]
What you know, both about the FCA and about the falsity of claims is now even more relevant. |
| | Wednesday - “Physicians, Lower Your Expectations” and Other Manipulation - Medical Group Minute
Watch the video here, or just keep reading below for a slightly polished transcript: I wish I could remember where I read it. But I can't.
His comment still sticks in my craw. The so-called expert said something like, "In the new economy, physicians need to lower their income expectations."
Why?
To enable hospitals to hire you for less and increase their profit? So that payors can refuse to increase reimbursement? Because you are really a sacrificial lamb on the altar of patient care, set to be beaten to death by guilt?
"Lowered expectations" and "fair share" and "reasonable compensation" are concepts designed to allow someone else to steal from you. So, too, is, "Just practice medicine while we run the business."
Raise your expectations. Not because you are entitled to receive more for less or even for the same thing. But because by raising your expectations you'll look for, and implement, ways to expand your business opportunities, deliver more value, and increase your income.
Most of you won't do it. The world is filled to the brim with people who actually believe that their future is smaller, with people who will, indeed, lower their expectations.
But that's OK, because you'll need someone to work for you.
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| | | Listen to the podcast here, or just keep reading for the transcript.
Over the past five, ten or twenty years, your group has worked long and hard to develop its business. You've become successful.
But now, you see threats everywhere: threats from the hospital that wants to employ you, threats of forced ACO participation, threats of replacement by paraprofessionals, threats of competition from national groups and the staffing services masquerading as groups, threats of competition by breakaway partners, employees and subcontractors who think that they can do it for less (and who fear replacement more than you do), and threats of competition from those of your colleagues who see no need for you to earn a profit in return for your financial contributions and years of management work.
So, as a result, you're circled the wagons, protecting your group from both internal and external threats.
Not a bad move in and of itself -- but bad if that's where you've stopped.
That's because adopting a purely defensive position can never advance your group's future, it can only delay something from happening to you.
In order to succeed, you need to cause the "happening," you need to take charge of creating your own transformative future.
What if your partners won't agree? That's why strong leaders are required and why participatory "leadership" is in reality an absence of leadership. Get new partners. Go out on your own.
It won't work, you say.
You're right, it won't work for you. Send me your resume, I may know someone who's looking to hire, just about when you'll be looking for a job.
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| | Help Us Help You With Helpful Content
What tailored content would you most like to see during this
time? How can we focus on solutions to your most pressing strategic concerns?
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| | | | We all hear, and most of us say, that the pace of change in healthcare is quickening. That means that the pace of required decision-making is increasing, too. Unless, that is, you want to take the “default” route. That’s the one is which you let someone else make the decisions that impact you; you’re just along for the ride. Of course, playing a bit part in scripting your own future isn’t the smart route to stardom. But despite your own best intentions, perhaps it’s your medical group’s governance structure that’s holding you back.
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| In fact, it’s very likely that the problem is systemic. The Medical Group Governance Matrix introduces a simple four-quadrant diagnostic tool to help you find out. It then shows you how to use that tool to build your better, more profitable future. Get your free copy Free.
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| | | | Whenever you're ready, here are 4 ways I can help you and your business:
1. Download a copy of The Success Prescription. My book, The Success Prescription provides you with a framework for thinking about your success. Download a copy of The Success Prescription here.
2. Be a guest on “Wisdom. Applied. Podcast.” Although most of my podcasts involve me addressing an important point for your success, I’m always looking for guests who’d like to be interviewed about their personal and professional achievements and the lessons learned. Email me if you’re interested in participating.
3. Book me to speak to your group or organization. I’ve spoken at dozens of medical group, healthcare organization, university-sponsored, and private events on many topics such as The Impending Death of Hospitals, the strategic use of OIG Advisory Opinions, medical group governance, and succeeding at negotiations. For more information about a custom presentation for you, drop us a line.
4. If You’re Not Yet a Client, Engage Me to Represent You. If you’re interested in increasing your profit and managing your risk of loss, email me to connect directly. |
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