This transcript was auto generated
00;00;00;00 - 00;00;22;27
Jonathan Porter
Welcome to another episode of Husch Blackwell's False Claims Act Insights podcast. I'm your host, Jonathan Porter. A couple of weeks ago, The Wall Street Journal wrote an interesting article about all the changes that we're seeing at the Justice Department. The article talks about DOJ's pause on enforcing foreign bribery and how DOJ is ending some corporate monitor ships early.
00;00;22;29 - 00;00;54;00
Jonathan Porter
The article talked about how DOJ has signaled coming changes in antitrust and securities fraud enforcement, too. But then The Wall Street Journal article asked this question. If DOJ isn't doing all of those other things, what will it do? And the answer was health care fraud. The Journal noted that their sources told them that DOJ is moving people out of those antitrust and securities fraud areas and moving them into health care fraud, meaning the health care industry will likely be seeing more investigations soon.
00;00;54;01 - 00;01;11;27
Jonathan Porter
Once those new prosecutors get a handle on, you know, the basics of health care, which, believe me, that takes some time. This is coming at a fascinating time because the Seventh Circuit just narrowed up what can be enforced under the anti kickback statute in the Sorenson case. And so this health care enforcement landscape is going to be changing.
00;01;11;28 - 00;01;40;17
Jonathan Porter
And we're going to follow it on this podcast as best we can. One potential DOJ pivot with more health care fraud focus. But a narrowed up and back statute is to look to EKRA the Eliminating Kickbacks in Recovery Act of 2018. That's what we're talking about on the podcast today. EKRA. Whether EKRA enforcement could be about to take off, and what people in those fields covered by EKRA might want to think about right now.
00;01;40;20 - 00;02;03;27
Jonathan Porter
Joining me to talk about EKRA is my Husch Blackwell colleague, Brandon Hall. Brandon is a healthcare regulatory lawyer in Husch Blackwell's St. Louis office. Brandon is a lot like me in the sense that we both spend a lot of time keeping on top of new developments in healthcare, figuring out how those developments could impact various healthcare sectors, and then helping our clients in a proactive way get ready for change.
00;02;03;29 - 00;02;21;21
Jonathan Porter
It's always fun for me to compare notes with Brandon, and EKRA is one of the many areas I've enjoyed picking Brandon's brain on recently, and that's what we're doing on the podcast today talking EKRA with Brandon. And so Brandon, welcome to the podcast. Thanks for joining me and telling our listeners a little bit about EKRA.
Brandon Hall
Thanks, Jonathan. Thanks for having me.
00;02;21;22 - 00;02;37;25
Brandon Hall
And it's a pleasure to be with you today.
Jonathan Porter
All right, Brandon, before we get started with EKRA. I actually want to take us in a slightly different direction at first. So one of the things that I like about you, Brandon, is that you've got real world health care experience, and that's something that I know our clients value in you.
00;02;37;26 - 00;02;58;24
Jonathan Porter
So before you went to law school, you sold medical devices. Regular listeners may remember a podcast episode I did with my friends Mara Smith and Tynan Kugler about how life sciences companies can market products to healthcare providers without crossing a kickback line. But I want to take a few minutes, Brandon, talk with you about that topic as well, and then we'll talk EKRA.
00;02;58;24 - 00;03;26;09
Jonathan Porter
So, Brandon, could you tell us how you and other sales reps went about educating physicians while not crossing any compliance lines? And did you ever hear stories of anyone, you know, egregiously crossing some sort of a compliance line?
Brandon Hall
Yeah. So I sold medical devices, as you mentioned, from 2013 till about the end of 2015. Right before I went to law school, I worked for a cardiac monitoring company, and the company was commercial insurance.
00;03;26;09 - 00;03;48;00
Brandon Hall
It was covered by Medicaid, Medicare, so triggered all of the right things for fraud and abuse concerns. By that time, pharma had laid a pretty good example of some of the more egregious stuff not to do the sort of wild parties, the really elaborate meals, the concert and super Bowl tickets sort of things. Those things had, you know, the glory days, as the doctors like to call them.
00;03;48;07 - 00;04;12;25
Brandon Hall
Those were, by and large, gone. But what we did kind of see where I would say efforts to be innovative and creative, to get in front of the doctors that weren't just sort of the staple, bring a lunch for the doctors in the staff, talk about some of the material you've got and maybe your product a little bit, and try to sell them or move them from maybe the product they use for finding that problem that they had with the service provider they had.
00;04;12;27 - 00;04;52;20
Brandon Hall
So that was kind of the staple were those lunches that was just kind of the industry staple. The government more or less approved those. There were some requirements with those, but definitely there was a creative period of time where, you know, we were seeing people do things from, not me or my colleagues, but certainly in the industry. I would see things from private whiskey tastings in arrangements, you know, Napa, certain experiences maybe go up to a lake house of somebody who was a friend for a weekend and kind of take and do some things where it wasn't necessarily an explicit sort of funding or expenditure, but there were definitely some benefits or some, you know,
00;04;52;20 - 00;05;13;14
Brandon Hall
perceived kickbacks. And so I think slowly or not necessarily slowly, but over time, I think the government really clamped back on those as I shifted in from the device world into the legal world. Some of the structures out there as corporate practice sort of prevailed. We're still sort of hanging on to some of those is they were not quite as heavily enforced.
00;05;13;14 - 00;05;35;21
Brandon Hall
And in my understanding as some of the MSOs and DHSs got clamped down on two. And so now we're kind of in this space where nobody is really trying to be creative in that sense anymore. It's really trying to button things up. So, yeah, I think certainly we're in a different time now where the government's looking for different areas of fraud as opposed to these blatant sort of expenditures, because people hopefully have wised up.
00;05;35;21 - 00;05;59;05
Brandon Hall
And that's the result of folks like you providing the guidance over the years. While I was out on the ground trying to make those sales.
Jonathan Porter
Yeah, it is funny to hear some of the more egregious ones and then go and talk to clients about, you know, hey, what is DOJ or OIG or whoever going to think about a meeting in the Phoenix Airport, Ramada Inn or whatever it is, where it's talking about this new drug that you prescribed a bunch of your people?
00;05;59;05 - 00;06;27;12
Jonathan Porter
I mean, it's very interesting because the cases that I talk about at conferences and I hear on this podcast are pretty egregious. It's very private flights to Super Bowls and fancy hunting trips that you're sort of exchanging some for SkyMiles for it. It's just interesting to hear some of the more egregious ones, and then try to tell people like, there still is risk if you receive any sort of benefit under the anti kickback statutes, because you never know what a whistleblower might disagree and say, no, this is a kickback.
00;06;27;12 - 00;06;44;07
Jonathan Porter
So Brandon, before we talk about EKRA just any thoughts on how we can advise our clients, both on the life sciences side and the health care provider side, to make sure that we're advising them, make sure they're going to stay clearly on the right side of that compliance line. Any thoughts on that?
Brandon Hall
Yeah, I think communication is key, right.
00;06;44;12 - 00;07;06;06
Brandon Hall
We want our clients to be honest with us, to let us know what they're doing. And we certainly can understand the creativity and the nuance and the importance of it. But also our job is to stay on top of what the government is doing and where the government is going. And so if we can lend a hand in that case, I think us continually monitoring and staying in constant communication is always helpful.
00;07;06;08 - 00;07;28;27
Brandon Hall
And then providing that secondary level of concern and making sure that everything is buttoned up and compliant for clients.
Jonathan Porter
Thanks, Brandon. Yeah, I totally agree with what you're saying. A lot of my clients, they're under federal investigation. And so when they're under federal mitigation, we have a big, long conversation and say, all right, here are all of the things that we should not be doing right now, because you never know what a DOJ investigation could look like.
00;07;28;29 - 00;07;45;18
Jonathan Porter
It could turn, take a hard left and go suddenly toward something that we didn't see coming. And so one of the things I often tell them is, all right, are you guys taking any sort of, you know, life sciences funded trips somewhere? Let's make sure that we got some processes in place where we're not going to do something dumb here while we're under investigation.
00;07;45;18 - 00;08;03;26
Jonathan Porter
And so I get these calls and they say, you know, hey, one of our doctors just got invited to go to this thing in some European island that I've never heard of. I'm not fancy enough to hear of places like that. And they'll say, is that okay? And I'll say, no, no, that's not okay. Unless like, there's some reason that's got to be done on this European island.
00;08;03;28 - 00;08;27;02
Jonathan Porter
That's just a bad idea. And so it is interesting these things are still happening. And so Brandon, it's on us to sort of make sure our clients know there is risk to accepting these types of things, even though it's all being reported through CMS Open Payments, which is a really fascinating concept. AKS is a willful statute, and I don't think you can really commit a crime and then report it to the government that you're doing it and still do that willfully so.
00;08;27;03 - 00;08;44;27
Jonathan Porter
I'm fascinated by that topic. Couldn't resist the chance to pick your brain on that. But speaking of willful statutes, let's talk about EKRA. Brandon. A lot of our listeners may not know about EKRA all that much, but a lot of them should. So watch this conversation off by telling us about EKRA and how it ties into the False Claims Act.
00;08;45;00 - 00;09;13;14
Brandon Hall
Yeah. So EKRA is an interesting rule of law statute sort of idea came about in 2018. It was originally a standalone bill introduced by Senators Marco Rubio and Amy Klobuchar. Ultimately, what happened was it was sort of consolidated into an omnibus bill that really dealt with opioids in opioid addiction recovery and that sort of thing. And so it's found at 18 U.S.C. 220.
00;09;13;16 - 00;09;43;22
Brandon Hall
I'm going to go ahead and just read a little bit of the statute just to kind of tee it up, and it reads, whoever with respect to service is covered by a health care benefit program, which will be important in or affecting interstate or foreign commerce, knowingly and willfully solicits or receives any remuneration directly or indirectly, overtly or covertly, in cash or in-kind, for referring a patient or patient age to a recovery, home, clinical treatment or laboratory.
00;09;43;24 - 00;10;10;12
Brandon Hall
And then it goes on and on shall be fined up to $200,000 and in prison, just not more than for ten years or both. And so I mentioned that the health care benefit program, you know, that's one thing that's really important here because EKRA, unlike, any kickback statute, unlike stark, unlike the False Claims Act, does not only and solely apply to federal government health care programs.
00;10;10;20 - 00;10;42;29
Brandon Hall
What it does, it actually extends the scope of some of those sort of concerns to private payers and private insurers. And so that's why the health care program, is really important. So again, dealing with three sorts of areas recovery homes, clinical treatments, facilities and laboratories. Clinical treatment facilities are defined as a medical setting other than a hospital that provides detox, risk reduction, outpatient treatment and care, residential or treatment, or rehab for substance use.
00;10;43;02 - 00;11;12;28
Brandon Hall
A recovery home is a shared living environment that is free from alcohol or illicit drug use, and centered on peer support in connection to services designed to promote and sustain recovery from substance use disorders. And a laboratory is a cross-reference definition that's basically under clear. And so for for our life sciences clients in the laboratory. And the clinical treatment centers kind of have the two broader sort of definitions that could be more applicable here.
00;11;12;28 - 00;11;36;03
Brandon Hall
I think a recovery home is more straightforward to kind of summary snapshot of the overall, you know, dealing with opioids, dealing with recovery centers, clinical treatment centers and labs. It's illegal to make referrals in exchange for remuneration or any sort of kickback, any sort of payment scheme, unless it fits into one of our safe harbors.
Jonathan Porter
Thanks, Brandon. That's a good summary.
00;11;36;03 - 00;11;54;03
Jonathan Porter
So I remember when this is a 2018 statute. I was working for DOJ at the time when this came out, and all of a sudden my HHS agents started pitching me the EKRA cases saying, hey, you know, there's this there's this case that we want to go after this lab or this recovery to sober home or this clinical treatment facility.
00;11;54;03 - 00;12;12;14
Jonathan Porter
Let's go do it. And I remember pausing and saying, let's just figure out what EKRA is, because it's a willful statute. Willfulness always has meant something to me. I think a lot of people like to skip over it. OIG advisory opinions like to skip over it, but for a statute that you cannot violate except willfully, that's a big thing to me.
00;12;12;14 - 00;12;37;07
Jonathan Porter
And so what I would tell agents is, I don't know that I feel comfortable staying before a jury and telling them this is willful conduct for a statute that just got passed. Maybe you got something in your emails that says, hey, there's this new thing called EKRA. Let's go commit all the fraud and violate EKRA. Sure. Then you're acting willfully, but sort of just asking the jurors to say that people are going to know about EKRA and that people will have to have violated it willfully.
00;12;37;09 - 00;12;53;07
Jonathan Porter
That was a bit of a stretch for me, but I think now we're coming up on this time where all of a sudden it's been around long enough, and I think it's going to be easier to tell jurors that you can violate it willfully. And so I think EKRA is going to be bigger and bigger. That said, you know, it has been around now like seven years.
00;12;53;07 - 00;13;11;02
Jonathan Porter
And so, Brandon, can you tell us, has there been case law out there interpreting EKRA and trying to figure out like how it's going to be enforced? These are case law out there that helps us guide those in aqua and force industries on how they should be thinking about risk.
Brandon Hall
Yeah, certainly. And I think you made a good point.
00;13;11;02 - 00;13;45;12
Brandon Hall
Before I get into the case law, I just circling back on one of the points you made to your judgment or your your review of the government enforcement, I think it's really important because one of the little nuances about excise, that there's no private right of action under EKRA, as opposed to the key time sort of claims. And so I think the fact that the government is going to have to have a handle on these sorts of things to really prove and scrutinize the willful conduct that leads right into the first sort of case that came out, you know, back in 2021, which was this SNG Labs Hawai'i versus Graves case.
00;13;45;19 - 00;14;15;13
Brandon Hall
And in that case, it was marketing employee compensation arrangement. And the idea or the question there was, you know, were some of the payments made more for marketing sort of purposes or were they designed to induce referrals? And so the court ultimately determined that the compensation was more to induce business from physicians in the overall scheme and not to directly make the referrals that were sort of designed or intended for under EKRA.
00;14;15;20 - 00;14;42;12
Brandon Hall
So ultimately, that case in that case did deal with a little bit of knowledge of in kind of the tiptoeing around sort of the compensation arrangement sort of requirements. So SNG Labs versus Graves referrals of physician business generally, but not for referrals of these services was okay. The next year, also out of the ninth circuit, second case kind of came out and this was the US version of came.
00;14;42;14 - 00;15;06;07
Brandon Hall
And this was sort of conflicted or contradicted SNG Labs, in which the ultimate outcome of the case and other compensation arrangement and other sort of marketing sort of play with the sales arrangement, the court there ultimately sound that EKRA prohibited both direct and indirect referrals. The overall sort of scrutiny and takeaway there was induce is really meant to be a sort of plethora of states.
00;15;06;07 - 00;15;34;00
Brandon Hall
It's not meant to be strictly one for one tit for tat, meaning you wouldn't induce a long term business without expecting some sort of referrals. And so sort of walked back the Graves interpretation and holding, even within its own circuit. Things went quiet for a little while after that. We didn't really hear much on EKRA. And I think, you know, part of that is because potentially of the shifting of focuses in just not understanding it or trying to get a grasp about it.
00;15;34;02 - 00;16;03;14
Brandon Hall
Fast forward to the end of last year, and a new case came out from the eastern District of Pennsylvania, GF Industries of Missouri, LLC versus Lehigh Valley Genomics. And that case dealt with this sort of nuanced issue that was much more in the weeds down granular sort of analysis and interpretations and court scrutiny of things, scrutinizing the issue of whether a laboratory could legally compensate a consultant on a per sample basis.
00;16;03;20 - 00;16;32;22
Brandon Hall
And so, ultimately, we got back to more or less finding and getting to that line in Graves versus in China. Like, which of those two decisions sort of prevails. And the court in this case ultimately determined that performance based compensation structures may not necessarily violate EKRA. More or less this case, it differentiates between marketing activities and inducing referrals.
00;16;32;22 - 00;16;57;05
Brandon Hall
So we're sort of back to that Graves sort of analysis. And so in four years we've gone full circle. And whether that is that the court maybe initially got it right and graves and is back to getting it right now or we don't know or potentially just that, you know, this was the first time that a court has really taken analyzed DOJ enforcement opinions
00;16;57;05 - 00;17;18;13
Brandon Hall
other sort of circuits, and really gotten into the weeds, into the depth that it did to make this determination. And so where we stand overall is it's about as clear as mud. But overall, I think reading the tea leaves here, there could be a little bit of room to to design some payment arrangements that are permissible under EKRA.
00;17;18;19 - 00;17;37;10
Brandon Hall
I think it would be important, you know, obviously to do it and do it right. But reading the tea leaves of the recent trends, you know, that may be the thing.
Jonathan Porter
Thanks, Brandon. Yeah. Clear as mud is a good way of summarizing all of this down into a nice, succinct phrase. To me, EKRA enforcement's an interesting issue because I this is an area of priority.
00;17;37;10 - 00;17;57;27
Jonathan Porter
I know that for years, DOJ and the people who think about high level policy, they're very interested in sober homes, are very interested in clinical treatment facilities. They're very interested in labs and the very interested about in general marketing efforts, selling patient data, those types of things and what could be a kickback and what couldn't be a kickback.
00;17;58;00 - 00;18;16;08
Jonathan Porter
There's a lot of just very interesting things happening in the health care space right now where you're buying and selling leads, and it's just really interesting that EKRA's coming along and you got the Sorensen case out of the Seventh Circuit that I mentioned before. All of this is sort of coming together and it's not clear at all what's okay, what's not okay.
00;18;16;10 - 00;18;38;09
Jonathan Porter
And it's a little frustrating to me that we're doing this in the context of criminal law. You know, as a criminal law, it's a felony. You can go to prison for up to ten years per account of conviction. And so all of this is happening with this threat of going to federal prison behind you. The way I think about these things, if we're going to send people to federal prison, it should be clear what is legal and what's not legal.
00;18;38;11 - 00;18;57;19
Jonathan Porter
So it's a little frustrating that we've got this clear as mud statute that could result in clients or whoever going to federal prison. And so great. I'm glad that we got people like you advising clients on what is okay and what's not okay, because the stakes are high here. When you're talking about potentially going to federal prison. So, Brandon, I've got a question for you about state law.
00;18;57;20 - 00;19;19;10
Jonathan Porter
You know, when I was at DOJ, I used state law, commercial bribery statutes from time to time to sort of have federal charges. But I know it gets complicated sometimes, and I think this may be one of those areas where it could get complicated. So could you tell us about how EKRA works with state law?
Brandon Hall
Yeah. So EKRA again, is unique and strange in its preemption scope.
00;19;19;18 - 00;19;54;01
Brandon Hall
Unlike most sort of federal laws, it does not preempt state law. So there could be state law. Versions of EKRA that go further is a floor, not a ceiling, but arcs partially preempt the kickback set. You partially preempt EKRA, so it's got a little bit of federal preemption built into it where it's sort of subservient. And I think that's an interesting takeaway because under the law is a service would be charged or conduct would be charged or brought under the anti kickback statute, or it's not permissible to bring it under EKRA.
00;19;54;03 - 00;20;13;03
Brandon Hall
And I think that could also be why EKRA includes no explicit provision that a violation of EKRA constitutes a false or fraudulent claim for the purposes of the FCA. But I don't really know that because we don't have a whole lot of guidance or thought or regulations or some regulatory guidance that we've gotten since the law has come out.
00;20;13;05 - 00;20;38;03
Brandon Hall
So, again, just as it relates to the preemption aspect, no state law preemption but itself is quasi preempted by the federal kickback statute.
Jonthan Porter
Thanks. Brandon. Yeah, I'm with you. It's interesting the way that Congress scoped out preemption in EKRA. I think it’d be really interesting for someone to get indicted over EKRA. And then the defense being, no, this this is actually conduct that's prohibited under the anti kickback statute.
00;20;38;03 - 00;20;58;04
Jonathan Porter
And so I didn't violate EKRA. We're not going to say that I violated the anti-kickback statute. But you indicted me right. So therefore I've got a defense here because this conduct clear statute. 220 De says that you can't enforce EKRA for something that's already prohibited under the ECS. The super nerd in me thinks that that's an interesting concept.
00;20;58;06 - 00;21;14;28
Jonthan Porter
So Brandon. Let’s land this plane. Let's talk about some sort of new areas of healthcare. I'm always fascinated by the new areas that people think of to deliver health care services. My wife right now, she's the president of the Georgia Board of Nursing, and from time to time, she'll be able to tell me about something that they're looking at.
00;21;14;28 - 00;21;43;01
Jonathan Porter
And there's all these amazing, like, you know, some amazing, some concerning new types of health care facilities. Botox facilities are showing up all over the place. And my wife gets involved because oftentimes they don't have the right medical professional overseeing what's being done there. And so the board of nursing gets involved. But there's one one of those areas, sort of non-conventional health care clinics that I think may have potentially EKRA implications that's hangover clinics.
00;21;43;01 - 00;22;04;10
Jonthan Porter
So my question for you, Brandon, and close closes out on this vein. Do hangover clinics risk falling under the definition of a clinical treatment facility and thus, you know, fall under EKRA’s regulatory scheme? Tell us about hangover clinics and the conversation with hangover clinics, as we ought to do on this podcast. Tell us about hangover clinics and whether those could be enforced under EKRA.
00;22;04;12 - 00;22;25;10
Brandon Hall
Sure. So to provide a broader answer, the worst lawyer answer ever. I mean, it depends, right? It depends on the scope and the services in the nature. If you're talking your general sort of mom and pop clinic that's doing vitamin supplements and, you know, just doing the quick sort of IV fluid treatments and that sort of thing, probably not, at least not right now.
00;22;25;10 - 00;22;59;08
Brandon Hall
We're not seeing any indication that the definitions are intended to go that far. And frankly, probably most of those businesses, in my experience, are probably cash pay. So they don't even quite get to the benefit program. Now, that said, if you are truly a recovery clinic, if you are somebody who does specialize in alcohol recovery, whether that's hangovers or a long term sort of withdrawals or the others, and you are providing some of those more services, I guess, that are more in the scope of, of actual addiction or other health care treatments, then
00;22;59;08 - 00;23;26;24
Brandon Hall
yes, if you are not preparing for and if you're not triaging against complying with EKRA now, and you use sales folks for anybody, for marketing, for generating referrals, anything, I advise to be very cautious contact with your legal counsel and just make sure that everything is shored up just because you don't want DOJ to come knocking, as Jonathan said, you know, accusing you of criminal violations that also carry some pretty hefty fines.
00;23;26;27 - 00;23;53;24
Brandon Hall
So differentiating between the two true, true. You know, hangover clinic that is really dealing with substance use and maybe governed by, you know, 42 CFR part two and its regulatory scheme, those sort of facilities are at risk if they're not already under governance of falling under it. The sort of vitamin clinics in the IV sort of fluid sort of mom and pop sort of stations that are popping up or adjacent to the Botox type of clinics.
00;23;53;24 - 00;24;20;18
Brandon Hall
Probably not. So that's where we'll end it.
Jonthan Porter
Thanks, Brandon. Yeah, I'm fascinated by the many creative ways that people have when they're opening up health care facilities. And they say, oh, this to be perfect. There's a big demand for a hangover clinic. And so I'll just do it without realizing. This is a heavily regulated field. There's reasons that lawyers like you and me, we do this for a living because it's so complicated, and you run a lot of risk by just opening up something without thinking.
00;24;20;21 - 00;24;35;27
Jonathan Porter
Let me run this by a healthcare lawyer and just make sure that we're not doing something. It's going to obviously step on some big egregious thing. So Brandon, thanks for what you do. Thanks for what you do for our clients. And thanks for joining the podcast today to talk about EKRA and your background as a medical device sales rep to close this out
00;24;35;27 - 00;24;57;05
Jonthan Porter
like I said, that the open healthcare enforcement is coming. That's what is clear is that health care enforcement is coming as a record number of qui tams filed last year, and there will continue to be enforcement in the health care space. That much is clear and the enforcement landscape is changing. If you're in the health care industry, you've got to have a grasp on what's happening in the law.
00;24;57;09 - 00;25;12;08
Jonathan Porter
And so I'm happy to practice here at Husch Blackwell, We've got this amazing group of health care lawyers like Brandon and a lot of other people who can help advise clients on how to stay on the right side of the law. We're going to continue to bring you that type of content on this because, again, health care enforcement is coming.
00;25;12;15 - 00;25;24;25
Jonathan Porter
But I appreciate everyone listening today and we'll continue to bring you stuff like this. So thanks for listening and we'll see you next time.