Continuing its focus on consumer protection enforcement, the New York State Department of Financial Services (“DFS”) recently announced an investigation into alleged price spikes for six drugs connected to treatments of COVID-19 medical conditions.[1] According to DFS, its newly-formed Office of Pharmacy Benefits (“OPB”) commenced the investigations under Insurance Law § 111 into what it characterizes as “anomalously large spikes” in the prices of the six drugs, occurring since the onset of the COVID-19 pandemic. These medications are Ascor, Budesonide, Dexonto, Mytesi, Duramorph and Chloroquine phosphate, each of which has some actual or claimed therapeutic use for COVID-19 conditions.
Category Archives: Health Care
NYDFS Uses New Powers to Investigate Alleged Price Spikes in COVID-19 Medicines, Where Targeted Pharma Manufacturers Are Not NYDFS Licensees
Continuing its focus on consumer protection enforcement, the New York State Department of Financial Services (“DFS”) recently announced an investigation into alleged price spikes for six drugs connected to treatments of COVID-19 medical conditions.[1] According to DFS, its newly-formed Office of Pharmacy Benefits (“OPB”) commenced the investigations under Insurance Law § 111 into what it characterizes as “anomalously large spikes” in the prices of the six drugs, occurring since the onset of the COVID-19 pandemic. These medications are Ascor, Budesonide, Dexonto, Mytesi, Duramorph and Chloroquine phosphate, each of which has some actual or claimed therapeutic use for COVID-19 conditions.
Competitive Health Insurance Reform Act Signed Into Law, Repeals More Than Half-Century-Old Antitrust Exemption for U.S. Health Insurers
by Corey W. Roush, Gorav Jindal, Haidee L. Schwartz, J. Matthew Schmitten, and Mitchell E. Khader
Until recently, the McCarran-Ferguson Act of 1954 made the “business of insurance,” including the business of health insurance, immune from federal antitrust laws. The Competitive Health Insurance Reform Act has amended the McCarran-Ferguson Act such that health insurers will now be subject to the same federal antitrust laws as other industries; other insurers, however, will continue to have federal antitrust immunity. Repeal of the antitrust exemption subjects health insurers to increased scrutiny by federal antitrust authorities (namely the Antitrust Division of the Department of Justice) as well as private parties seeking to bring federal antitrust claims, which may counsel for a re-examination of antitrust compliance policies.
Fifth Circuit Vacates $4.3M in HIPAA Civil Penalties, Offering New View of HHS Regulations
by David P. Saunders and Allison N. Glover
On January 14, 2021, the Fifth Circuit vacated a $4.3 million penalty imposed by the U.S. Department of Health and Human Services (HHS) on M.D. Anderson Cancer Center (M.D. Anderson) in connection with three data incidents experienced by the center. University of Texas M.D. Anderson Cancer Center v. United States Department of Health and Human Services, No. 19-6022 (5th Cir. January 14, 2021). In vacating the penalty, the Fifth Circuit held that (1) HHS had not shown that the loss of unencrypted electronic protected health information (PHI) on its own was sufficient to demonstrate a breach of any HIPAA rules and (2) the penalty imposed on M.D. Anderson was arbitrary, capacious, and unlawful because it exceeded HHS’ authority. Id. The Court’s decision potentially will have ripple effects for the future of HIPAA enforcement actions, including potentially spurring HHS to create new regulations. In the meantime, the University of Texas ruling could mean that fewer companies will report lost or stolen devices as a HIPAA data breach, turning on its head years of prior practice. Either way, the Fifth Circuit’s decision is a big one in terms of HIPAA enforcement.
Health Data Made in France – Is France Moving Towards a Sovereign Cloud Requirement for Health Data?
by Ronan Tigner and Alex van der Wolk
Since the decision of the European Court of Justice (“ECJ”) in the Schrems II case, transfers of personal data from the EU to the United States have been under scrutiny. The ECJ reviewed the situation where personal data are sent from an EU affiliate to its U.S. headquarters as part of how the company structured its business-as-usual practices. But what the ECJ did not consider is whether the mere fact that an EU company is affiliated with a U.S.-headquartered company is problematic, even if no transfer of personal data to the United States takes place.
Whether merely being affiliated with a U.S.-headquartered company is a problem from a data transfer perspective is precisely what a number of associations (“claimants”) and the French data protection authority (“CNIL”) argued in a recent appeal before the French Council of State. This question arose in the context of a case involving Microsoft Ireland in respect of its hosting of French public health data. The claimants and the CNIL argued that any affiliation of an EU hosting provider, in this case Microsoft Ireland, with a U.S. parent company, in this case Microsoft U.S., is in and of itself problematic. The claimants and the CNIL contended that because of such affiliation, U.S. authorities could have jurisdiction over data held by Microsoft Ireland in the EU. As a result, the claimants called for the immediate suspension of the use of Microsoft Ireland, even though Microsoft Ireland had already committed to storing the data in a pseudonymized form in the EU. The French Council of State, however, denied the immediate suspension of the use of Microsoft. While this seems like a good outcome for transatlantic commerce, the Council’s decision suggests that in the future, organizations will be required to use a French-based cloud solution. We provide further details below.
A Path to Data-Driven Health Care Enforcement
In recent years, the U.S. Department of Justice (DOJ) has increased guidance to entities regarding government expectations as to what I refer to as “compliant behaviors” – maintenance of an effective pre-existing compliance program, post-enforcement adoption of an effective compliance program, cooperation with a government investigation, and self-disclosure of misconduct – and increased transparency in criminal cases as to the benefits defendants can expect to receive for engaging in those behaviors. In the health care industry, however, it is not criminal prosecution but the civil False Claims Act (FCA) which represents the government’s primary means of fraud enforcement. With no parallel increase in transparency with regard to FCA cases, the health care industry and the defense bar have expressed skepticism regarding the actual payoff they might realize by engaging in compliant behaviors, even as resources devoted to health care compliance have skyrocketed. DOJ’s response has been a series of public statements amounting to, “trust us, they matter,” and there has been no mechanism to test those assurances – until now.
Selling a COVID-19 “Cure”
by Harry K. Fidler, Murad Hussain, and Kirk Ogrosky
In cities across the country, healthcare and other essential workers have been greeted in the evenings with cheers and clanging pots and pans as they return home from working tirelessly to combat the global pandemic that has changed life as we know it. As these heroes rush to and from the front lines saving lives, government prosecutors and agencies are turning their attention to companies and individuals that are supposedly rushing to promote false treatments for COVID-19. For example, the Department of Justice has announced various fraud charges against doctors and others while the U.S. Food & Drug Administration has issued 90 warning letters (so far) to entities “for selling fraudulent products with claims to prevent, treat, mitigate, diagnose or cure” the disease. In April, the FDA issued one such letter to Genesis II Church for allegedly marketing a bleaching agent as a COVID-19 cure, and the federal government sued the church and its founders (PDF: 239.97 KB) and won a preliminary injunction against their distribution of the product. Then, on June 30, DOJ filed a criminal complaint charging the church’s founders (PDF: 574 KB) with conspiring to defraud the United States and to deliver misbranded drugs, and for criminal contempt for allegedly violating the preliminary injunction.
Florida Cancer Center Admits to Violating the Federal Antitrust Laws; Agrees to Pay More than $120 million in Penalties
by Andrea Agathokolis Murino, James D. Gatta, a
In the first case of its kind, the Antitrust Division of the U.S. Department of Justice (“DOJ”) announced that it had entered into a deferred prosecution agreement (DPA) with Florida Cancer Specialists & Research Institute LLC (FCS). Specifically, FCS admitted that it violated the federal antitrust laws by participating in a criminal antitrust conspiracy to allocate medical oncology and radiation oncology treatments provided to cancer patients in Southwest Florida for almost two decades. Pursuant to the DPA, FCS agreed to pay the statutory maximum criminal penalty of $100 million, and to cooperate with the DOJ in an ongoing investigation into market allocation in the oncology industry, as well as other conditions. In addition, the Florida Attorney General announced a parallel civil settlement with FCS, requiring FCS to pay more than $20 million in disgorgement for the company’s violations of state antitrust and unfair trade practices laws in connection with the scheme. The announcement of a federal criminal action and the imposition of more than $120 million in fines and disgorgement is a bold and significant statement from federal and state authorities that healthcare providers across the country will be severely punished for engaging in anticompetitive agreements.
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NY DFS Files Enforcement Action Against Opioid Manufacturer for Insurance Fraud
by H. Christopher Boehnig, Roberto Finzi, Michael E. Gertzman, Roberto J. Gonzalez, Brad S. Karp, Elizabeth M. Sacksteder, and Patrick Cordova
On April 16, 2020, the New York Department of Financial Services (“DFS”) issued a Statement of Charges and Notice of Hearing against Irish pharmaceutical company Mallinckrodt plc and several of its U.S. subsidiaries (collectively, “Mallinckrodt”). [1] The administrative hearing will take place on August 24, 2020, before a hearing officer appointed by the DFS Superintendent. According to DFS, Mallinckrodt committed insurance fraud in violation of New York law by allegedly misrepresenting the efficacy and safety of opioids to patients and healthcare professionals, causing an over-prescription of its drugs, the cost of which was ultimately passed on to New York insurance companies and their policyholders. Continue reading