In our July 10, 2017 post, Concierge Medicine – Is it for you?, we cautioned that Medicare compliance concerns do not fall away when moving to a concierge or direct-pay model.  HHS has determined that concierge-style agreements are permitted as long as Medicare requirements are not violated.  Unless a physician has opted out of Medicare, the predominant requirement is that an access or membership fee cannot be charged to a Medicare patient for services that are already covered by Medicare.  But how does a concierge physician know where to draw the line?  The relevant authorities have issued very limited guidance in this area.

In March 2004, an OIG Alert was issued reminding Medicare participating providers that they may not charge Medicare patients fees for services already covered by Medicare.  OIG used, as an example, a case involving physician’s charge of $600 for a “Personal Health Care Medical Care Contract” that covered, among other things, coordination of care with other providers, a comprehensive assessment and plan for optimum health, and extra time spent on patient care.  Because some of these services were already reimbursable by Medicare, the physician was found to be in violation of his assignment agreement and was subjected to civil money penalties.  The physician entered into a settlement with OIG and was required to stop offering these contracts.

In 2007, OIG settled another case involving a physician engaged in a concierge-style practice.  There, the physician, who also had not opted out of Medicar, asked his patients to enter into a contract under which the patients paid an annual fee. Under the contract, the patient was to be provided with an annual comprehensive physical examination, coordination of referrals and expedited referrals, if medically necessary, and other service amenities.  The physician was similarly found to have violated the Civil Monetary Penalties Law by receiving additional payment for Medicare-covered services and agreed to pay $106,600 to resolve his liability.

As demonstrated by these settlements, violations of a physician’s assignment agreement results in substantial penalties and exclusion from Medicare and other Federal health care programs.  It would behoove a concierge physician to tailor contracts offered to Medicare patients.  Fees charged under such contracts should relate only to noncovered services and amenities.  For example, fees could relate to additional screenings by the concierge physician that are not covered by Medicare or amenities such as private waiting rooms.

According to the GAO’s 2005 Report on Concierge Care Characteristics and Considerations for Medicare, HHS OIG has not issued more detailed guidance on concierge care because its role is to carry out enforcement, not to make policy.  However, physicians with specific concerns regarding the structure of their concierge care agreements or practices may request an advisory opinion from HHS addressing their concerns.  Advisory opinions are legally binding on HHS and the party so long as the arrangement is consistent with the facts provided when seeking the opinion.

Next week, look for the release of Medical Marijuana 105, the fifth post in a series of posts discussing the current state of law in New York regarding medical marijuana.  To read the latest post in the series, Medical Marijuana 104:  Responsibilities of Health Insurers, click here.

This blog post is the fourth in a series of articles discussing the current state of the law in New York regarding medical marijuana. To read the latest post in the series, Medical Marijuana 103: Patient and Practitioner Regulations in New York State, click here.

It will come as no surprise that patients who are thinking about getting certified for medical marijuana use have a number of questions relating to the cost of obtaining medical marijuana products.

Prices for medical marijuana products vary amongst the various registered organizations. In order to determine how much to charge for its products registered organizations must first submit to the NYS Department of Health (“DOH”) their costs to manufacture, market and distribute the products. The DOH then determines the reasonableness of the registered organization’s proposed prices and, if appropriate, approves them as the maximum price per dose each registered organization may charge.

The prices approved by the DOH remain in effect for the entire period of the registered organization’s registration, however registered organizations may charge less than the approved prices if they wish. Registered organizations may also request a price modification from the DOH either at the conclusion of the first year of their registration period or beforehand based on documented exceptional circumstances.

Health insurers doing business in New York State do not provide coverage on account of an insured’s purchase of medical marijuana products. The main reason for this restriction is that medical marijuana is still a banned substance at the federal level and therefore medical marijuana is not an FDA-approved prescription medication. The Compassionate Care Act does not provide for a discounted medical marijuana pricing program for certified patients who are unable to afford medical marijuana products. As stated above, however, registered organizations may price their products for amounts less than those approved by the DOH so in some cases registered organizations may offer reduced prices to qualifying certified patients.

After the Medical Marijuana Program launched there was much debate as to whether health insurers are required to provide coverage on account of office visits that result in a patient becoming certified for medical marijuana use. On April 12, 2017, the New York State Department of Financial Services issued a statement to clarify the situations in which health insurers must provide coverage for office visits that result in medical marijuana certification.

The guidance starts with a reminder that under New York Public Health Law Section 3362(1) “[t]he possession, acquisition, use, delivery, transfer, transportation, or administration of medical marijuana by a certified patient or designated caregiver possessing a valid registry identification card, for certified medical use” is lawful subject to certain restrictions and conditions.

The Department’s statement then provides that if office visits are covered under the insurance policy or contract, and the insured receives services during an office visit that are covered under the insurance policy or contract, the issuer may not deny coverage for the office visit solely on the basis that the visit also resulted in the insured receiving a medical marijuana certification. In other words, insurers must provide coverage for office visits, even if they result in medical marijuana certification for the patient. There is an exception to this general rule, however, Coverage is not required for office visits undertaken solely to obtain a medical marijuana certification.

In our next post we’re going to continue our review of important parties that play a role in the medical marijuana industry by focusing on the workplace and the rights that employers and employees have when it comes to medical marijuana use. To be sure not to miss the article when it comes out we invite you to subscribe to the Farrell Fritz New York Health Law Blog.

The Second Circuit recently agreed to accept an interlocutory appeal to decide the question whether a violation of the False Claims Act’s “first-to-file” rule compels dismissal of the complaint or whether it can be cured by the filing of an amended pleading.

In United States ex rel. Wood v. Allergan, Inc., Relator John Wood brought FCA claims against Allergan, a pharmaceutical company that develops and manufactures eye care prescription drugs. Wood alleged that Allergan violated the FCA and the Anti-Kickback Statute by providing free drugs and other goods to physicians in exchange for them providing the company’s brand name drugs to Medicare and Medicaid patients.  SDNY District Judge Jesse Furman denied most of Allergan’s motion to dismiss in an 89-page decision, deciding several FCA first-to-file issues and certifying two for interlocutory appeal to the Second Circuit.

The Initial Qui Tam Complaint Violated the “First-to-File” Bar

The FCA’s “first-to-file” rule states that once a qui tam action has been brought, no person other than the Government may intervene or bring a related action based on the same facts. The primary purpose of the first-to-file rule is to help the Government uncover and fight fraud. The rule encourages prompt disclosure of fraud by creating a race to the courthouse among those with knowledge of the fraud.

Wood was not the first relator to bring FCA claims against Allergan for the alleged conduct. Two prior actions had been brought and were pending when the Wood qui tam complaint was filed. Therefore, at the time Wood’s qui tam complaint was filed, it ran afoul of the first-to-file bar and was subject to dismissal.

The Prior-filed Actions Were Dismissed Before Wood’s Action Was Unsealed and the Third Amended Complaint Was Filed

The Wood complaint, however, was under seal for several years, and Wood amended his complaint twice before the seal was lifted. While the Wood complaint remained under seal, the two prior actions were dismissed.  When the Government declined to intervene in the Wood action and the case was unsealed, there were no longer any prior-filed pending actions. Wood thereafter filed a third amended complaint. Allergan moved to dismiss on several grounds, including the “first-to-file” bar, arguing that when Wood’s initial qui tam complaint was filed, there were two pending actions alleging the same factual allegations.

The “First-to File” Bar Is Not Jurisdictional

Judge Furman first addressed whether the “first-to-file” bar is jurisdictional. Although the majority of circuit courts have held that it is, the district court’s holding in its March 31, 2017 decision that the bar is not jurisdictional foreshadowed the Second Circuit’s similar holding four days later, in United States ex rel. Hayes v. Allstate Insurance Co.  The Circuit in Hayes stated that the first-to-file rule provides that “no person other than the Government” may bring an FCA claim that is “related” to a claim already “pending.” The Court noted that the statutory language did not speak in jurisdictional terms or refer to the jurisdiction of the courts, in contrast to other sections of the FCA. As Congress is presumed to act intentionally when it includes jurisdictional language in one statutory section but omits it in another, the Court held the a court does not lack subject matter jurisdiction over an action barred on the merits by the non-jurisdictional first-to-file rule.

An Amendment After Dismissal of the Prior Action Can “Cure” a First-to-File Violation

The district court next addressed the question of whether the first-to-file bar required dismissal of Wood’s qui tam complaint. In Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, the Supreme Court had held that “an earlier [FCA] suit bars a later suit while the earlier suit remains undecided but ceases to bar that suit once it is dismissed.”  Wood therefore would be able to bring a new FCA claim as the two prior actions had been dismissed.

However, during the years that the case had been sealed, the statute of limitations had expired on most of Wood’s claims, so a dismissal without prejudice and a re-filing of his complaint would result in a dismissal of the claims on limitations grounds. The district court was therefore faced with a question the Supreme Court did not decide: whether a violation of the first-to-file bar can be “cured” by amending or supplementing the complaint in the later-filed action after dismissal of the earlier actions.

The district court held that first-to file violation can be cured by an amended or supplemented pleading.  The court noted that most courts answering this question in the negative had relied in large part on a conclusion that the first-to-file bar is jurisdictional. The district court in Wood, and later the Second Circuit, held that the bar is non-jurisdictional. The district court noted that courts routinely allow plaintiffs to cure violations of non-jurisdictional rules by amendment under Fed. R. Civ. P. 15. Also, allowing an amendment to cure a violation advances the primary purpose of the FCA, to permit the government to recover for fraud. The court opined that barring a relator in Wood’s position from curing his violation of the rule would undermine, rather than advance, the purposes of the FCA.

The Amendment Relates Back to the Date of the Original Complaint

The parties also disputed whether, for purposes of the statute of limitations, the relevant complaint was the initial complaint, filed when the prior actions were pending, or the third amended complaint, the first one filed after they had been dismissed. The court recognized that the “touchstone” of Rule 15 is whether the original pleading put the defendant on notice of the relevant claims, and that an FCA defendant is often not on notice of a qui tam complaint because it is under seal. Nevertheless, the court concluded that any such delay is beyond the relator’s control, and an otherwise diligent relator should not have claims stripped away when the government and not the relator is to blame for the defendant not receiving notice. The district court therefore held that the third amended complaint related back to the original complaint for limitations purposes.

The Second Circuit Will Address The First-to-File Issues

In August, the Second Circuit accepted the interlocutory appeal of two issues:

  1. Whether a violation of the FCA’s “first-to-file” rule requires dismissal or can be “cured” through the filing of a new pleading after the earlier-filed action has been dismissed; and
  2. If a violation of the first-to-file bar is curable, whether the FCA’s limitations period is measured from the date of the relator’s curative pleading or the original complaint.

This blog post is the third in a series of articles discussing the current state of the law in New York regarding medical marijuana. To read the latest post in the series, Medical Marijuana 102: NYS Registered Organizations and Dispensaries, click here.

In today’s post we’re going to be reviewing the requirements imposed by New York’s Medical Marijuana Program upon patients and certifying practitioners. As of August 22, 2017, 1,184 practitioners have registered with the NYS Department of Health (“DOH”) for the purpose of certifying patients for medical marijuana use and 28,077 patients have been certified for such use.

The DOH authorizes physicians, nurse practitioners and physician assistants to certify patients for medical marijuana use. As we mentioned in Medical Marijuana 101, New York’s Medical Marijuana Program is available only to patients who suffer from one of the following severe, debilitating or life-threatening conditions: cancer, positive status for HIV or AIDS, amyotrophic lateral sclerosis (ALS), Parkinson’s disease, multiple sclerosis, damage to the nervous tissue of the spinal cord with objective neurological indication of intractable spasticity, epilepsy, inflammatory bowel disease, neuropathy, chronic pain, or Huntington’s disease. Patients must also have one of the following associated or complicating conditions: cachexia or wasting syndrome, severe or chronic pain, severe nausea, seizures, or severe or persistent muscle spasms.

Practitioners who wish to certify patients to use medical marijuana must meet four general criteria. First, the practitioner must be qualified to treat patients who suffer from one or more of the serious conditions listed above.

Second, the practitioner must be either (1) a licensed physician who is in good standing as a physician and practicing medicine in New York State, (2) a certified nurse practitioner who is in good standing as a nurse practitioner and practicing in New York State, or (3) a licensed physician assistant who is in good standing as a physician assistant and practicing in New York State under the supervision of a physician registered with the New York State Medical Marijuana Program.

Third, the practitioner must have completed a four-hour course approved by the NYS Health Commissioner. The course must include the following course content: the pharmacology of marihuana; contraindications; side effects; adverse reactions; overdose prevention; drug interactions; dosing; routes of administration; risks and benefits; warnings and precautions; abuse and dependence; and such other components as determined by the commissioner. Currently the Commissioner has only approved two providers, TheAnswerPage and The Medical Cannabis Institute, to offer the course. The course is available to all interested parties, meaning that you can take the course even if you are not in the medical field and/or not looking to certify patients for medical marijuana use.

Lastly, the practitioner must have registered with the DOH. Practitioners can only register with the DOH if they’ve taken the four-hour course. Once a practitioner has completed the registration process they will then have access to the Medical Marijuana Data Management System which will allow them to issue certifications to qualifying patients.

Qualifying patients suffering from the severe illnesses listed above can learn more about whether medical marijuana may help them by speaking with a practitioner that is registered with the program. To help patients locate a registered practitioner, the DOH keeps an updated list of registered practitioners on its website.

Once patients are certified by a registered practitioner for medical marijuana use, patients must register with the DOH by, among other things, providing documentation to prove their identity and NYS residency. When patients register with the DOH they can also designate up to two caregivers. Those caregivers must also register with the DOH using the same online system as the one used by patients. Pursuant to the Compassionate Care Act there is a $50 application fee but the DOH is currently waiving the $50 fee for all patients and their designated caregivers.

Once a patient or caregiver’s registration is processed, the DOH mails a registry ID card directly to the patient or caregiver. Registrations expire when the certification that was issued by the practitioner expires. At this time, New York State does not accept certifications or registry ID cards from other states. This is not unusual as there are currently only three states (Nevada, Hawaii and Maine) that practice full reciprocity and will legally allow, under certain circumstances, out-of-state patients to make purchases at licensed dispensaries.

Now that we’ve learned about the basic regulations covering patients and practitioners we’re going to turn our attention to other important parties that play a role in the medical marijuana industry. Check back soon for Medical Marijuana 104: Responsibilities of Health Insurers. To be sure not to miss the article when it comes out, we invite you to subscribe to the Farrell Fritz New York Health Law Blog.

On August 15, 2017, the Secretary of Health and Human Services, Tom Price, issued a press release reporting that almost $105 million dollars will be bestowed upon 1,333 health centers across the United States, including its territories; and Washington D.C. Secretary Price stated “Americans deserve a healthcare system that’s affordable, accessible, of the highest quality, with ample choices, driven by world-leading innovations, and responsive to the needs of the individual patient. Supporting health centers across the country helps achieve that mission.”

According to the Health Resources & Services Administration, also known as HRSA, federally qualified health centers (FQHC) “are community-based and patient-directed organizations that deliver comprehensive, culturally competent, high-quality primary health care services.”  The main function of a health center is to provide health services to underprivileged patients where affordable healthcare is either lacking or nonexistent. Services include, but are not limited to, mental health support, substance abuse aid, dental health and many other services. While there are numerous requirements for an organization to qualify as a FQHC, one interesting qualification is that the organization must elect members of the community to serve on its governing board—ensuring that the community has a role when it comes to its own healthcare.

Even though the concept of a health center may be foreign to many in the United States, health centers play an important role in our society.  HRSA has concluded that, based on data from its Uniform Data System, almost 26 million individuals (which equals 1 in every 12 people living in the United States) depended on a health center for health services in 2016, including more than 330,000 veterans. The study also found that 1 in every 3 people living in poverty relied on a health center in 2016.

Living in a politically toxic climate on the topic of healthcare and its reforms, as we currently do today, brings in a breath of fresh air to see our tax dollars being put to good use. Health centers have served as a unique and beneficial service for the underserved and underprivileged for the last 50 years, and the federal government’s continued support appears to be unwavering.

This blog post is the second in a series of articles discussing the current state of the law in New York regarding medical marijuana. To read the first post in the series, Medical Marijuana 101: The State of the Law in NY, click here.

One of the biggest questions that people have when discussing medical marijuana in New York is where can patients obtain medical marijuana products.

Before a patient can obtain medical marijuana products, he or she must first be issued a certification for medical marijuana by a practitioner, who is registered with the NYS Department of Health’s Medical Marijuana Program, and obtain a Registry Identification Card. Patients can then use that Registry Identification Card to visit a dispensing facility to obtain medical marijuana products. We’ll dive into the requirements imposed upon patients and certifying physicians in our next post and concentrate today on registered organizations and dispensaries.

Registered organizations are responsible for the manufacturing and dispensing of medical marijuana in New York State. At the time that the medical marijuana program was launched in 2016, New York approved five registered organizations: Columbia Care NY LLC, Etain, LLC, MedMen, Inc. (formerly known as Bloomfield Industries Inc.), PharmaCann LLC and Vireo Health of New York LLC (formerly known as Empire State Health Solutions).

On August 1, 2017, the NYS Department of Health announced that it has licensed five new companies to join the original five: Valley Agriceuticals, LLC, Citiva Medical LLC, PalliaTech NY, LLC, NYCanna LLC and Fiorello Pharmaceutics, Inc.

Valley Agriceuticals and Citiva are authorized to bring dispensaries to Brooklyn, Pallia and NYCanna are expected to open somewhere in Queens, and Fiorello Pharmaceutics is authorized to open a dispensary in Manhattan. Each of the new registered organizations received authority to open dispensing facilities in other delineated areas of New York as well. Under the Compassionate Care Act, each registered organization is authorized to have up to four dispensing facilities, meaning that there could be up to forty dispensing facilities statewide if each registered organization is fully developed.

Registered organizations must manufacture medical marijuana products in an indoor, enclosed, secure facility located in New York State and may only manufacture medical marijuana products in forms approved by the Commissioner of Health. These forms include liquid or oil preparations for metered oromucosal or sublingual administration or administration per tube; metered liquid or oil preparations for vaporization; and capsules for oral administration. Smoking, as of now, is not an approved route of administration. On August 10, 2017, the NYS Department of Health proposed broadening the acceptable forms to include ointments, patches, lozenges and chewable tablets.

A certified patient can go to any dispensing facility of a registered organization in New York. This provides greater options to patients as not every dispensing facility sells the same types of medical marijuana. There are currently two New York State-mandated products for medical marijuana which require set ratios of Delta-9-tetrahydrocannabinol (THC) and cannabidiol (CBD), the two main chemicals used in manufacturing medical marijuana. Those two products must be offered by each registered organization, but a registered organization may also offer other products at the dispensing facility that have varying ratios of THC to CBD. It is expected that other products will be offered over time.

In addition, certified patients who are unable to go to a dispensing facility may designate a caregiver who can go for them. Registered organizations are also permitted to offer delivery services to patients and designated caregivers to help expand access to those who are unable to travel to a dispensing facility.

As you might imagine, dispensing facilities are subject to a number of regulations in order to ensure that patient health is properly protected. Among other requirements, dispensing facilities must (1) have a licensed NYS pharmacist on site to directly supervise the facility when open, (2) not sell items other than medical marijuana products approved by the NYS Department of Health, (3) not allow the consumption of the medical marijuana by the patient at the facility, (4) not allow certified patients or their caregivers to consume any food or beverages at the facility unless necessary for medical reasons, (5) maintain a visitor log, and (6) firmly affix a patient-specific dispensing label approved by the Department of Health that is easily readable and includes a delineated list of items. The regulations allow dispensaries to provide up to a 30-day supply of medical marijuana to a certified patient.

Dispensing facilities, as well as the manufacturing facilities operated by registered organizations, must also meet a number of security regulations. Registered organizations must also provide an electronic report to the NYS Department of Health of all approved medical marijuana products that are dispensed within 24 hours after the medical marijuana was dispensed to the certified patient or designated caregiver.

Now that we have a basic understanding of registered organizations and dispensing facilities, check back soon for Medical Marijuana 103: Patient and Physician Regulations in New York State.

In follow-up to our prior blog post, Concierge Medicine – Is it for you?, we recognize that while a concierge or direct-pay practice might be a good choice for a physician or physician practice group, patients do not necessarily feel the same way.  When patients hear that a medical practice is a “concierge” or “direct-pay” practice, they often think of prohibitively high out of pocket costs.  One way for a concierge or direct-pay practice to be more enticing to patients is to structure its billing methods so patients may be able to obtain reimbursement from their health savings account (HSA) or flexible spending account (FSA) for some of the associated costs.  Generally, access fees will not be reimbursable through either a HSA or FSA.  But costs incurred for qualified medical services actually rendered to the patient may be.  Here are some quick rules of thumb for when HSA and/or FSA reimbursement may be applicable to cover such costs:

 

Fees for Qualified Medical Services:  Any fees charged for qualified medical care (generally defined under the Internal Revenue Code to include the diagnosis, cure, mitigation, treatment or prevention of disease) are generally reimbursable under a HSA or FSA, to the extent not reimbursed by the patient’s insurance.

 

Access Fees or Subscription Fees:  Fees related solely to having access to a physician will not be reimbursable under either a HSA or FSA.  This is because they are not fees for qualified medical services, but rather are more akin to insurance premiums (which are also not reimbursable under a HSA or FSA).  Such non-reimbursable fees would include fees for admission as a patient, monthly retainer fees, fees for a reduced wait time, fees for 24 hour access to a physician, or any other fees not directly related to the rendering of medical services.

 

Prepaid Fees for Qualified Medical Services:  If an access fee or subscription fee includes a prepaid fee for a qualified medical service (for example, the annual fee includes the cost of a comprehensive physical examination), any costs attributable to that medical service that are not reimbursed by insurance may be reimbursable under a HSA or FSA, but not until such time as the service is actually rendered to the patient.

 

In order for patients to be able to take advantage of reimbursement from their HSA or FSA, they must have appropriate supporting documentation for the qualified medical service.  Documentation should include the patient’s name, the date of service, the type of service, and the fair market value charge attributable to just the medical service portion of the patient’s bill.

 

In sum, concierge and direct-pay practices can work for physicians on account of the upfront fees paid by patients.  However, if such fees include prepayment for medical services, it will not only encourage patients to take advantage of preventative care but may also enable them to recoup part of their upfront costs from their HSA or FSA once such services have been rendered.

 

Next week, look for the release of Medical Marijuana 102, a follow-up blog post to Veronique Urban’s Medical Marijuana 101:  The State of the Law in NY.  This will be the second blog post in a series of articles discussing the current state of the law in New York regarding medical marijuana.

Effective March 1, 2017, the New York State Department of Financial Services promulgated regulations to help protect against cybercriminals and their efforts to exploit sensitive electronic data. These cybersecurity regulations apply to all individuals and entities that “operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the Banking Law, the Insurance Law or the Financial Services Law”, with a few exceptions.  This will undoubtedly result in insurance companies and other related healthcare entities, which hold sensitive patient health information, beefing up their internal and external rules and policies.  New York’s proactive stance should be taken with the utmost seriousness seeing that there are more than 400 cyberattacks each day over the internet, or almost 3 every minute.

The United States Congress has enacted a similar law to protect health information, the Health Insurance Portability and Accountability Act (“HIPAA”). However, because HIPAA was enacted and modified years prior to cybersecurity becoming a prominent threat to our society, HIPAA does not provide as much protection to patients’ electronic data as the New York regulations do.  HIPAA does provide important guidelines and safeguards to ensure the integrity and confidentiality of protected health information, but does not elaborate on many of the issues presented in New York’s cybersecurity regulations.

New York’s cybersecurity regulations require all “Covered Entities”, as defined in the regulations, to maintain a cybersecurity program to guard the confidentiality of Nonpublic Information, which includes a risk assessment and a comprehensive cybersecurity policy.  In addition, Covered Entities are now required to designate an individual to serve as the Chief Information Security Officer (“CISO”).  The CISO is tasked with overseeing, implementing and enforcing the Covered Entity’s cybersecurity policy, and is required to report, in writing and at least annually, to the Covered Entity’s Board of Directors or similar governing body.  The CISO’s report must include, as applicable, information on “(1) the confidentiality of Nonpublic Information and the integrity and security of the Covered Entity’s Information Systems; (2) the Covered Entity’s cybersecurity policies and procedures; (3) material cybersecurity risks to the Covered Entity; (4) overall effectiveness of the Covered Entity’s cybersecurity program; and (5) material Cybersecurity Events involving the Covered Entity during the time period addressed by the report.”

Compliance with the cybersecurity regulations will be transitioned over a two-year period with full compliance required by March 1, 2019.

Last week, the Second Circuit held that a False Claims Act relator does not have to plead details of specific alleged false billings or invoices to the government, as long as he can allege facts leading to a strong inference that specific claims were submitted and that information about them are peculiarly within the defendant’s knowledge.

In United States ex rel. Chorches v. American Medical Response, Inc., Paul Fabula was an emergency medical technician for AMR, the largest ambulance company in the United States. He alleged that AMR falsely certified ambulance transports as being medically necessary and submitted claims it knew were not medically reimbursable under Medicaid. He alleged that AMR routinely made EMTs and paramedics revise or re-create reports to include false statements demonstrating medical necessity in order to qualify for Medicaid reimbursement. Fabula subsequently declared bankruptcy, and the bankruptcy trustee became the relator.

Qui tam complaints, which allege fraud, are subject to Fed. R. Civ. P. 9(b)’s particularity requirement. The Second Circuit determined that relator had adequately alleged a scheme to defraud. Relator, however, admittedly did not have personal knowledge of exact billing numbers, dates, or amounts for claims submitted to the government.

The focus of the Second Circuit’s inquiry, therefore, was whether every qui tam complaint must allege specific identified false billings or invoices. The Court answered in the negative, holding that “a complaint can satisfy Rule 9(b)’s particularity requirement by making plausible allegations creating a strong inference that specific false claims were submitted to the government and that the information that would permit further identification of those claims is peculiarly within the opposing party’s knowledge.”

In Chorches, the Court found that the relator had met this standard by pleading sufficient facts, on personal knowledge, to demonstrate that billing information was peculiarly within the knowledge of AMR and that he was unable, without the benefit of discovery, to provide billing details for claims submitted by AMR to the government. Relator had also sufficiently alleged facts on personal knowledge supporting a scheme to defraud and a strong inference that false claims were actually submitted to the government.

This issue had been addressed by several other circuits, and in 2016, the Second Circuit noted a seeming circuit split on whether an FCA relator must allege the details of specific examples of actual false claims. In Chorches, however, the Court concluded that “reports of a circuit split are, like those prematurely reporting Mark Twain’s death, ‘greatly exaggerated.’” The Court then engaged in an extensive analysis of cases in other circuits, concluding that its pleading standard is fully consistent with both the emerging consensus in other circuits and its own precedents.

Several district courts in the Second Circuit have required a strict pleading of specific facts concerning individual billings or invoices to the government. Those decisions will now have to be re-examined in light of the pleading standard set by the Second Circuit in Chorches: “Rule 9(b) does not require that every qui tam complaint provide details of actual bills or invoices submitted to the government, so long as the relator makes plausible allegations . . . that lead to a strong inference that specific claims were indeed submitted and that information about the claims submitted are peculiarly within the opposing party’s knowledge.”

The Second Circuit also held in Chorches that the FCA’s public disclosure bar is not jurisdictional, and that an alleged refusal to falsify a patient report is sufficient at the pleading stage to qualify as protected activity for an FCA retaliation claim.

This blog post will be the first in a series of articles discussing the current state of the law in New York regarding medical marijuana.

There’s no denying that one of the hottest topics in health care law these days is the constant evolution of the state of the law as it relates to the use of marijuana. As of the date of this article, 29 states and the District of Columbia authorize the use of medical marijuana and 12 additional states have legislation pending that would likewise authorize the use of medical marijuana. In addition, 10 states and the District of Columbia have adopted more expansive laws legalizing marijuana for recreational use.

In 2014, Governor Andrew Cuomo signed the Compassionate Care Act authorizing the use of medical marijuana in the state of New York. The Medical Marijuana Program created under the Compassionate Care Act officially launched on January 7, 2016. Since its launch the New York State Department of Health (the “DOH”), tasked with regulating the program, has continued to expand the program.

Medical marijuana in New York is currently available to those suffering symptoms caused by eleven severe debilitating or life-threatening condition(s), including, but not limited to, cancer, HIV/AIDs, epilepsy, Parkinson’s disease, Huntington’s disease, chronic pain and multiple sclerosis.

The Commissioner of the DOH has authority to expand the list of conditions that qualify for medical marijuana and has done so in the past, adding chronic pain as a qualifying condition in December 2016. Most recently, in June 2017, a bill to expand New York State’s medical marijuana program to cover sufferers of post-traumatic stress disorder (PTSD) passed both houses of the New York State Legislature. It is expected that Governor Cuomo will receive the bill for consideration later this summer, although he has not yet indicated whether or not he will approve the bill.

Senators in New York have also introduced New York Senate Bill S01747, also known as the “marijuana regulation and taxation act.” The bill seeks to regulate the growth, taxation, and distribution of recreational marijuana in an attempt to generate a new source of revenue for the state.

The bill, among other items, allows for the growing and use of marijuana by persons eighteen years of age or older, the licensure of persons authorized to produce, process and sell marijuana, the levy of an excise tax on certain sales of marijuana and the repeal of certain provisions of the penal law relating to the criminal sale of marijuana. The bill proposes that regulatory oversight would be maintained by the New York State Liquor Authority. On January 6, 2016 the Bill was referred to the Senate Finance Committee and as of the date of the writing of this article remains pending there.

Check back soon for Medical Marijuana 102: Dispensaries where we’ll dive in a little deeper to explain the regulations surrounding how patients in New York can become certified for medical marijuana use and the dispensaries that make that use possible.