In 2014, the Centers for Medicare and Medicaid Services (CMS) released two new sources of data that are intended to increase transparency related to federal payments to physicians. They also, however, present a risk of being used by whistleblowers and attorneys to support qui tam lawsuits alleging violations of the False Claims Act (FCA), the Anti-Kickback Act or the Physician Self-Referral Law, commonly called the Stark Law.
In April 2014, CMS released the first of these databases, which shows payments the federal government made to physicians and other healthcare professionals for services provided to Medicare patients. The data offers detailed information on the payments, including the specific procedure codes for which payment was made. The data has generated media reports regarding which doctors receive the most compensation from Medicare. There also have been reports that certain doctors are billing for a disproportionate number of complex or expensive services, compared to the number of less complex services they provide.
The Medicare payment information cannot serve as the sole basis for a qui tam lawsuit against a provider, because the terms of the FCA bar claims based on previously disclosed information. 31 U.S.C. § 3730(e)(4). A qui tam attorney can, however, use that payment data to bolster a complaint by a relator who alleges that he has inside information to suggest that false claims have been made. Allegations of fraud must be pleaded with particularity under the Federal Rules of Civil Procedure, so the database may provide useful additional detail to render a relator’s complaint less vulnerable to a motion to dismiss. For example, a relator who alleged that the provider was performing unnecessary procedures could use the data to illustrate that the provider performed the largest number of a particular procedure in his state or region, or that the number of times the provider performed a given procedure was disproportionate to the frequency of other treatment options the provider used for the same condition. In this way, a qui tam complaint can use public and potentially innocuous data to support allegations of fraudulent billing.
The second database, released in October 2014, provides information on payments by the manufacturers of drugs and medical devices to physicians as well as information indicating whether physicians hold ownership interests in the manufacturers. CMS was required to collect and publish the data by the Physician Payments Sunshine Act, a section of the Affordable Care Act. The law requires drug and device manufacturers to submit the information to CMS, which publishes it in an online, searchable database.
The information in the Sunshine Act database may provide evidence of violations of the Anti-Kickback Act, which prohibits soliciting or offering to pay any remuneration in exchange for referrals that could result in payments by the federal government, and violations of the Stark Law, which prohibits a physician from making referrals to entities with which he has a financial relationship. An individual could bring a qui tam case under the FCA alleging violations of either of these laws. As with the payments database, the Sunshine Act database cannot be the sole basis for a qui tam complaint because the information is public, but the database could be used to bolster allegations made by the relator. For example, a relator who claimed that a physician prescribed patients a medical device in which he had an interest or for which he had received payments from the manufacturer, could use the Sunshine Act database to prove the existence of the financial interest or payments. The database also could be used to demonstrate payments by a manufacturer to support allegations that the manufacturer was violating the Anti-Kickback Act by improperly offering to pay physicians.
Ultimately, the payments database and the Sunshine Act databases provide additional information that qui tam relators and their attorneys may be able to use to support their complaints, and make it more likely that a complaint survives a motion to dismiss. Claims that survive motions to dismiss and proceed to discovery will impose increased costs on defendants and give them additional incentive to settle. Detailed complaints that include supporting information from the databases also may do more to convince the government of the illegality or severity of the defendant’s actions and increase the chances that the government will intervene in the qui tam action.