Listening time: 9:07
Practices: Healthcare, Antitrust Laws, Antitrust Litigation, Government Enforcement / White Collar Criminal Defense, Asset Management, Private Equity
In this Ropes & Gray podcast, healthcare partner Stephanie Webster and litigation and enforcement partner Jane Willis discuss a recent announcement from the Department of Justice’s Antitrust Division and the Office of the Inspector General for Health and Human Services that the two law enforcement agencies will increase their efforts to cooperation in connection with investigations of health care providers. They look at how the announcement is part of the Biden administration’s broader effort to aggressively enforce antitrust laws, including using exclusion from federal health care programs as a remedy.
Stephanie Webster: Hello and welcome to today’s podcast. My name is Stephanie Webster and I am a partner in the Healthcare Group at Ropes & Gray. I represent a combination of hospitals, health systems and other healthcare clients before federal agencies and in federal court on healthcare payment and compliance issues. I also typically help clients navigate current developments in federal funding and reimbursement. With me today is Jane Willis, a partner in the litigation and enforcement group at Ropes & Gray. Jane focuses on antitrust matters for healthcare and life sciences clients, including both litigation and mergers and acquisitions.
A few weeks ago, we recorded a podcast about the Centers for Medicare and Medicaid Services (or CMS) recent rules targeting competition and transparency in health care, including coordination between health care and antitrust authorities. We now have further developments to discuss with you. On December 9, the Department of Justice’s Antitrust Division and the Department of Health and Human Services’ Office of the Inspector General announced the signing of a memorandum of understanding (or MOU) that includes closer coordination of their enforcement efforts.
And just to start with a little background, as many of our listeners know, the HHS Office of the Inspector General (or OIG) is an independent oversight agency that is accountable to the Secretary of Health and Human Services and to Congress. The OIG has a variety of enforcement mechanisms, partnerships with Medicaid Fraud Control Units, corporate integrity agreements, civil and monetary penalties, and affirmative exemptions.
On the other hand, the Antitrust Division of the Department of Justice was created to promote economic competition by enforcing and providing guidance on antitrust laws and principles. The department prosecutes certain violations of the antitrust laws by filing criminal cases and civil actions. The Antitrust Division also acts as a protector of competition in sectors of the economy that are or may be subject to government regulation, including most notably health care.
So with all that in mind, Jane, what are your thoughts on this latest announcement – do you find it surprising?
Jane Willis: In our previous podcast, we talked specifically about the Biden administration’s focus on promoting competition — trying to do that across all agencies — and the Biden administration is encouraging coordination among agencies. And this is really a prime example of — here you have Jonathan Canter, who is the head of the antitrust division, and Christy Grimm, who is the inspector general, making this joint announcement. Earlier we discussed that Jonathan Cantor has a very ambitious agenda – he wants to bring more litigation and enforcement actions in the antitrust area. And he and other Biden appointees are recognizing again the value of cross-agency work. We’ve previously seen HHS take steps to encourage competition through some CMS rules.
So I don’t think it’s a surprise – it’s really a continuation of that same focus. This is interesting because the DOJ and OIG have their own areas of enforcement, but now plan to identify problems in each other’s areas and refer those problems to the other agency as needed. Just for example, if the OIG is investigating a case of fraud and abuse and they identify a potential antitrust issue, they will refer that to the DOJ antitrust division and vice versa.
Stephanie Webster: Jane, what do you think will change as a result of this new MR that was just announced?
Jane Willis: A notable thing to me is the discussion about excluding health care providers from federal health care programs. I think of it as a remedy that is used by the OIG, and that is really the authority of the OIG. But here Jonathan Cantor makes it clear that he wants to use this remedy as truly punitive for criminal antitrust violations as well. And the DOJ’s threat to do so, in cooperation with the OIG, would give the DOJ more leverage when investigating health care providers — for example, price fixing or wage fixing, both of which can be criminal violations. So if a health care provider is subject to a criminal antitrust violation, the threat of exclusion from federal health care programs like Medicare raises the stakes even further.
Stephanie, can you tell the audience more about exclusions as a remedy against OIG use?
Stephanie Webster: Of course, Jane. The OIG has statutory authority to exclude certain individuals and organizations from all federal health care programs. This includes any plan or program that provides health benefits, directly or indirectly, through insurance or otherwise, that is funded, again, directly, in whole or in part, by the United States Government or by any government program for healthcare.
Because listeners are likely to be highly sensitive, exclusion can be devastating both to the excluded individuals and organizations and to the employers of those individuals who are excluded. As a result of an exclusion, no Federal payments may be made for items or services provided by an excluded person/organization, or under the medical direction or prescription of an excluded person/organization. And excluded persons are prohibited from providing even administrative and management services that are paid for by federal health care programs. If the excluded individuals or entities actually provide these services, the employer may incur a civil monetary penalty (CMP) of up to $10,000 for each item or service provided by the excluded individual or entity that is identified in the claim submitted for reimbursement under the federal program , as well as an assessment of up to two to three times the amount claimed and expulsion from the program may be imposed. So the consequences are very severe.
Jane, with that in mind, from a practical standpoint, how would you expect the cooperation between the OIG and the DOJ antitrust division to play out?
Jane Willis: Of course, the OIG and DOJ have always had the ability to refer investigations to the other agency. But here, with this collaboration, we see that they will take some concrete steps – for example, each agency will designate a “liaison agency” and the liaisons will meet periodically about the initiative. And importantly, liaisons are responsible for creating training programs so that OIG officers will be trained to identify antitrust issues in their investigations, and antitrust officers will be trained to identify OIG issues such as fraud and abuse.
So I think with more training – and now, really specific instructions to look for other types of violations – it seems likely that more referrals will occur between agencies. And I’d be remiss if I didn’t point out that antitrust staff not only investigate conduct, but also conduct merger investigations as part of the HSR process. So the antitrust division will also look for fraud and abuse issues in the course of a merger investigation that is brought to them through an HSR filing.
Stephanie Webster: That’s really interesting, Jane. Based on what you’re saying, it sounds like healthcare providers need to be even more vigilant about complying with a number of issues being addressed by the OIG and the Antitrust Division, especially given the prospect of cross-referencing. So the risk calculation is even more complicated than it was before, with exclusion risks having implications for antitrust negotiations with the DOJ and vice versa – so it looks like lawyers in different areas will really have to coordinate.
Jane Willis: I agree. And another thing is that our respective teams here at Ropes & Gray need to collaborate as well. So it’s important for our healthcare attorneys to detect antitrust issues and consult with the antitrust team, and likewise, our antitrust attorneys need to be on the lookout for fraud and abuse issues.
Stephanie Webster: Exactly. And I certainly appreciate the opportunity to work with you on this podcast, and this development underscores that need for collaboration between health regulators and compliance and antitrust counsel.
Thank you again for joining me today, Jane, and thank you to the audience for listening. And if those listening want more information on this topic or our health or antitrust groups, please don’t hesitate to contact any of us or visit our website at ropesgray.com. You can also subscribe and listen to other Ropes & Gray podcasts wherever you regularly listen to your podcasts, including Apple, Google and Spotify. Thank you again.