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By Eric Topor
Lack of evidence tying specialty pharmacy Accredo Health Group’s hemophilia charity donations to improper Medicare claims from charity members doomed a whistleblower lawsuit against the company.
The U.S. Court of Appeals for the Third Circuit said Jan. 19 that there has to be some link connecting patient referrals made through a patient assistance charity to an alleged violation of the anti-kickback law to transform the referrals and resulting Medicare claims into False Claims Act violations. The court affirmed a victory for Accredo, a subsidiary of Express Scripts, over former Accredo area vice president and whistleblower Steve Greenfield, who claimed donations made to New Jersey hemophilia charities were inducements to garner patient referrals.
Industry donations to patient assistance charities, like the hemophilia charities at issue in this case, have been under increased scrutiny from federal health-care fraud investigators in recent months, including an investigation that resulted in a $210 million FCA settlement with United Therapeutics over alleged improper charity donations. Although the decision represents a clear win for Accredo in this matter, the Third Circuit’s opinion provides potential whistleblowers with a “roadmap on how to file a False Claims Act case” over improper charity donations, according to attorney Brian J. Markovitz, with Joseph Greenwald & Laake PA in Greenbelt, Md., who frequently represents whistleblowers in FCA litigation.
Greenfield alleged that annual donations from Accredo of between $200,000 and $550,000 from 2007 through 2012 to New Jersey charities Hemophilia Services and Hemophilia Association of New Jersey were specifically intended to induce referrals, and resulted in Medicare false claims from patients referred from those charities. Greenfield did an analysis while at Accredo predicting that a planned decrease in donation levels would wipe out their hemophilia drug business.
The absence of a clear link between Accredo’s donations and referrals from the two charities was enough for the appeals court to affirm summary judgment for Accredo. “It’s essential that relators who bring cases like this not just make assumptions but be able to articulate the basic elements of a false claim,” Kirk Ogrosky, a health-care attorney with Arnold & Porter Kay Scholer LLP in Washington and former Department of Justice prosecutor, told Bloomberg Law Jan. 22. Ogrosky is a Bloomberg Law advisory board member,
Markovitz said the litigation showed whistleblowers that the type of evidence Greenfield did have, a temporal link between Accredo’s donations and Medicare claims, was enough to survive a motion to dismiss and enter the litigation discovery process. The ability to enter into discovery is key for private whistleblowers to obtain the type of evidence the appeals court deemed necessary to support an FCA claim, even though Greenfield ultimately was unsuccessful.
Neither party’s counsel responded to Bloomberg Law’s requests for comment on the decision.
The trial court’s ruling from December 2016 held that Greenfield needed to show that Medicare patients were referred to Accredo because of the alleged kickbacks in the form of annual donations, but the appeals court said this was too stringent a standard. On appeal Greenfield argued Accredo’s donations violated the anti-kickback law, and therefore Accredo’s certification of compliance with the anti-kickback law when submitting Medicare claims for hemophilia medication for New Jersey beneficiaries was false and violated the FCA.
The appeals court, however, rejected the argument, saying Greenfield needed to show more than just a temporal association between Accredo’s Medicare claims and its charitable donations. The appeals court said Greenfield needed to show an example of a Medicare claim from Accredo for a patient referred through the charities receiving the alleged kickbacks (Accredo’s donations) regardless of whether the kickback was the reason for the referrals.
Greenfield failed to allege that any of the 24 Medicare patients with claims through Accredo during the relevant time period were actually referred through the two hemophilia charities. Ogrosky said that the appeals court “is spot-on when it writes that an alleged kickback does not somehow ‘morph into’ a false claim without a scintilla of evidence that patients were even exposed to an illegal referral.”
The DOJ filed a neutral amicus brief but urged the court toward its eventual ruling that a claim to Medicare violates the FCA if it was provided in violation of the anti-kickback law.
Begelman & Orlow represented Greenfield. Williams & Connolly LLP, Christie & Young PC, and Greenbaum Rowe Smith & Davis LLP represented Accredo.
The case is United States ex rel. Greenfield v. Medco Health Sols., Inc. , 2018 BL 17641, 3d Cir., No. 17-1152, 1/19/18 .
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